Bloomberg access:{OIAR<GO>}

Corn:

July corn lost 10.00 cents on very heavy volume of 754,890 contracts. Total open interest increased by 12,315 contracts, which relative to volume is approximately 35% below average, but an open interest increase on yesterday’s price decline is negative. The May contract lost 18,478 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in May and increase total open interest.

As this report is being compiled on April 22, the July contract is trading sharply lower again, down 10.75 cents and has made a daily low of 3. 77 3/4 which is the lowest print since 3.75 made on April 18. On April 14, OIA announced that May and July corn generated short and intermediate term buy signals, and yesterday was the first day of corrective activity since the buy signals. It appears likely the correction will continue thru early next week.

The first sign of a reversal of the buy signals would occur if the daily high is below OIA’s pivot point for April 22 of 3.76 1/8. The short-term buy signal will reverse if the daily high is below OIA’s key pivot point for April 22 of 3.68 1/8. We have no recommendation.

Chicago wheat:

July Chicago wheat lost 8.75 cents on big volume of 258,626 contracts. Total open interest declined by 10,459 contracts, which relative to volume is approximately 30% above average meaning liquidation was substantial on yesterday’s decline. Yesterday, the July contract made a high of 5.18 1/2, which is the highest print since made on 5.29 made on November 9.

As this report is being compiled on April 22, the July contract is trading sharply lower, down 28.50 cents, or -5.66% and has made a daily low of 4. 72 1/2, which is the lowest print since 4.67 3/4 made April 18. On April 19, OIA announced that May and July Chicago wheat generated short and intermediate term buy signals.

For the short term sell signal to reverse, the July contract must make a daily high below OIA’s key pivot point for April 22 of 4. 69 7/8. The first sign this is likely to occur will be if the daily high is below OIA’s pivot point for April 22 of 4.73 1/2. We have no recommendation.

Soybeans:

July soybeans advanced 8.50 cents on heavy volume of 644 5977 contracts. Volume fell from April 20 when the July contract gained 24.25 cents on record-setting volume of 804,244 contracts and total open interest declined by 36,531. On April 21, total open interest declined by 489 contracts, and though a insignificant decline, it does confirm that soybeans have reached a temporary top. The May contract accounted for a loss of 7,234 of open interest and new crop November -5639. Yesterday, the July contract made a high of 10.43 3/4, which is the highest print since 10.45 made during the week of July 13, 2015 on the weekly continuation chart.

As this report is being compiled on April 22, the July contract is trading sharply lower, down 33.25 cents, or -3.24% and has made a daily low of 9.88 1/4, which is above the April 20 low of 9.85. As we pointed out in yesterday’s report, the 50 day moving average has crossed above the 200 day moving average and in our view increases the likelihood that beans are in a bull market. This means that soybeans should be traded from the long side only until a short term sell signal is generated.

On March 7, OIA announced that May and July soybeans generated a short-term buy signal and an intermediate term buy signal on March 11.For the short-term sell signal to reverse, the high of the day must be below OIA’s key pivot point for April 22 of 927 5/8. The first sign of trouble would be if the July contract makes a daily high below OIA’s pivot point for April 22 of 9.53 3/4. Do not attempt to pick a top in this market and the other grains.

Soybean meal:

July soybean meal advanced $6.50 on very heavy volume of 277,693 contracts. Volume declined from the from April 20 when the July contract gained 13.60 on volume of 278,423 contracts and total open interest increased by 1,498. On April 21, total open interest declined by a substantial 4,359 contracts, which relative to volume is approximately 35% below average, but a total open interest decline on yesterday’s strong advance confirms that short sellers were powering the market higher. The May contract lost 9,670 of open interest. There were only enough open interest increases in the forward months to cut the loss in the May contract by half. Yesterday, the July contract made a high of $334.50, which is the highest print since $344.00 made the week of August 10, 2015.

As this report is being compiled on April 22 the July contract is trading sharply lower, down $14.80 or -4.51% and is the weakest member of the soybean complex. On March 7, OIA announced that soybean meal generated a short-term buy signal and an intermediate term buy signal on March 28.

Yesterday, it appears the July contract made a temporary top as evidenced by the substantial decline of open interest on yesterday’s strong advance. For the past three days beginning on April 19 the July contract has gained 32.30 and total open interest for the three day period has declined by 2,275.

In summary, short sellers have been powering soybean meal higher and it will be interesting to see what the COT report reveals. The report will be released today at 2:30 CDT. We have no recommendation.

WTI crude oil:

June WTI crude oil lost $1.00 on surprisingly light volume of 1,038,870 contracts. Volume was the weakest since April 14 when WTI lost 26 cents on volume of 999,097 contracts and total open interest declined by 30,266. On April 21, total open interest declined by 18,407, which relative to volume is approximately 25% below average. The May contract accounted for a loss of 17,374 of open interest.

Yesterday the June contract made a new high for the move of $44.69 and as this report is being compiled on April 22, the June contract has made a high of 44.45. WTI looks a bit tired at the $44 level and it will take a new catalyst to send the market substantially higher from here. We have no recommendation.

Gold:

June gold lost $4.10 on heavy volume of 283,852 contracts. Total open interest increased by 4,520 contracts, which relative to volume is approximately 40% below average.Yesterday, the June contract made a daily high of 1272.40, which is the highest print since 1271.90 made on March 17 and gold proceeded to sell off for the remainder of the session. As this report is being compiled on April 22, the June contract is trading $19.40 lower and has made a daily low of 1228.50, which is the lowest print since 1231.70 made on April 18.

As clients know, we have been reluctant to recommend bullish positions because of the lopsided position of managed money. Also, from a seasonal point of view, the next couple of months are unfavorable for gold prices. We recommend a stand aside posture.

Copper: On April 21 July copper generated short and intermediate term buy signals.

Swiss franc: On April 22, the June Swiss franc will generate a short-term sell signal, and it remains on an intermediate term buy signal.

British pound:

The June British pound lost 41 pips on heavy volume of 105,538 contracts. Total open interest declined by 471 contracts, which relative to volume is approximately 80% below average. Yesterday, the June contract made a high of 1.4444 and this has been taken out in trading on April 22 (1.4453).

On April 20, the June pound generated a short-term buy signal, and yesterday it had one day of corrective activity and currently is trading 72 pips higher on the day. It appears likely the June contract will make a new high close for the move and generate an intermediate buy signal next week.

As we have said in numerous research notes on the pound, we expect a substantial rally whose purpose is to blow out a good portion of short-sellers before the pound resumes its downtrend in earnest. Keep in mind that the vote to exit the European Union is two months away. A lot can happen in two months. Stand aside for now.

10 Year Treasury Note: On April 21, the June 10 year note generated a short-term sell signal, but remains on an intermediate term buy signal.

The June 10 year note lost 4.5 points on volume of 1,400,281 contracts. Total open interest declined by a substantial 35,961 contracts, which relative to volume is average. As this report is being compiled on April 22, the June contract is trading lower again, this time by 4 points and has made a new low for the move of 129-115, which is the lowest print since 129-065 made on March 31. We expect the June contract to have its typical counter trend rally, and our only reservation about recommending bearish positions is a distinct possibility the equity market may begin to roll over, and this could easily reverse the sell signal.