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Corn:

July corn lost 14.50 cents on heavy volume of 627,132 contracts. Volume fell from April 21 when the July contract lost 10.00 cents on volume of 754,890 contracts and total open interest increased by 12,315. This indicates that short sellers were the force driving prices lower on the 21st.

On April 22, total open interest declined by a massive 40,590 contracts, which relative to volume is approximately 150% above average meaning liquidation was extremely heavy on Friday’s decline. The May contract accounted for a loss of 57,874 of open interest.

On April 14, OIA announced that May and July corn generated short and intermediate term buy signals. Usually, after the generation of buy signals using our protocols, markets have a tendency to pullback from one to-three days. In this particular case, corn continued to rally for the next four sessions. This occurs when there is strong upside momentum, but the correction set-in as always, and it began on April 21 and continued through April 22 for total of 24 1/4 cents. On Friday, the July contract made a low of 3. 74 1/2 and this is been taken out slightly on April 25 (3.72), which takes the July contract to its 20 day moving average of 3.72 7/8 and close to the 50 day moving average of 3.70 7/8.

The COT report, which was released Friday showed that managed money has dramatically shifted its position. They added 26,955 contracts to their long positions and liquidated 90,157 of their short positions. Commercial interests did the opposite: liquidating 33,013 of their long positions and adding 80,052 to their short positions.

As of the current report, manage money remains short corn by ratio of 1.16:1, which is down sharply from the previous week of 1.94:1 and the ratio two weeks ago of 2.19:1. Keep in mind that the report released Friday was tabulated on Tuesday, April 19, therefore it is likely that managed money has already assumed a net long position and this will be reflected in this week’s report.

As this report is being compiled on April 25, the July contract is trading 12.25 cents above Friday’s close and is trading on the highs of the day. If in fact corn has experienced the bulk of its corrective activity, it should attempt a run at the April 21 high of 4.07 1/4. However, more likely corn should to consolidate its gains over the past two weeks. If corn is to continue its move higher, the 50 day moving average should act as support. A short-term sell signal will occur, if the high of the day is below OIA’s key pivot point for April 25 of 3.68. July corn remains in a bearish moving average set up with the 50 day moving average standing at 3.70 7/8 and the 200 day moving average at 3.89 1/8. We have no recommendation.

Soybeans:

July soybeans lost 31.25 cents on heavy volume of 540,063 contracts. Volume fell from April 21 when the July contract gained 8.50 cents on volume of 645,977 contracts and total open interest declined by 489. On April 22, total open interest declined by a massive 36,138 contracts, which relative to volume is approximately 165% above average meaning liquidation was extremely heavy. The May contract lost 61,845 of open interest.

On April 20, soybeans advanced 24.25 cents on record volume of 804,244 contracts and total open interest declined by 36,531. As mentioned earlier, open interest declined by 489 on the 21st as soybeans made a new contract high of 10.43 3/4. This is a cautionary sign as soybeans attempt to test the April 21 high. In summary, July soybeans advanced 32.75 cents into new high territory during two days and open interest declined each day. This indicates a reluctance on the part of new buyers to make commitments at ever higher prices.

As this report is being compiled on April 25, the July contract is trading sharply higher, up 30.75 cents and has made a daily high of 10.29 3/4. Although we think the move in soybeans is the real deal, the market will likely consolidate its gains rather than make substantial new highs near term. July soybeans are in a bullish moving average set up with the 50 day moving average standing at 9.15 1/8 and the 200 day 9.06 5/8. The 50 and 200 day moving averages represent solid support.

The COT report revealed that managed money continues to pile into the long side of soybeans and added 19,308 contracts to their long positions and liquidated 16,558 of their short positions.. As a result, managed money is now long soybeans by ratio 3. 65:1, up sharply from the previous week of 2.43:1 and the ratio two weeks ago of 2.01:1. Commercial interests added 10,248 to their long positions and also added 54,390 to their short positions.

In our view, the substantial increase in the net long position of managed money is another reason for caution. On March 7, OIA announced that May and July soybeans generated short-term buy signals and intermediate term buy signals on March 11. We have no recommendation.

Soybean meal:

July soybean meal lost $13.40 on substantial volume of 213,310 contracts. Volume fell from April 21 when the July contract gained 6.50 on volume of 277,693 contracts and total open interest declined by 4,359. On April 22, total open interest declined by 9,789 contracts, which relative to volume is approximately 75% above average. The May contract accounted for loss of 15,500 of open interest.

During April 20 and 21, July soybean meal advanced $20.10 and total open interest declined by 2,861. The open interest action on the advance of the past several days has been negative even as prices advanced to the highest level since last summer. This is in stark contrast to the action in soybeans which has been consistently bullish.

The COT report revealed that managed money has shifted to a net long position and added 5,814 to their long positions and liquidated 14,304 of their short positions. Note: the addition of long positions was substantially less than the liquidation of short positions. This leaves managed money long soybean meal by ratio of 1.35:1, which is a complete reversal from the previous week when they were short by ratio of 1.15:1. Two weeks ago, managed money was short by a ratio of 1.50:1. Commercial interests liquidated 4,005 of their long positions and added 27,290 to their short positions.

On March 7, soybean meal generated short-term buy signals and intermediate term buy signals on March 28. Despite this, July soybean meal remains in a bearish moving average set-up with the 50 day moving average standing at 278.30 and the 200 day at 292.10.

As this report is being compiled on April 25, the July contract is trading $10.70 above Friday’s close and has made a daily high of 328.30, which is below Friday’s print of 328.90 and the high for the move of 334.50 made on April 21. Now that managed money has been sufficiently blown out of soybean meal, the market has lost a substantial amount of impetus to send prices higher. We remain cautious in the near-term, although if soybeans continue their trajectory higher, soybean meal will follow. We have no recommendation.

Live cattle: On April 24, we released a research note on live cattle, and are providing a truncated note today.

June live cattle lost 2.25 cents on volume of 66,995 contracts. Total open interest declined by 3,765 contracts, which relative to volume is approximately 120% above average. As this report is being compiled on April 25, the June contract is trading 1.40 higher. As we said in our live cattle research note, we expect rallies to be met with selling from speculators who are underwater. Please see the April 24 research note for further details.

WTI crude oil:

June WTI crude oil gained 55 cents on light volume of 837,856 contracts. Volume was the lowest since April 5 when WTI gained 19 cents on volume of 820,360 contracts and total open interest increased by 4468 contracts. On April 22, total open interest declined by 10,304 contracts, which relative to volume is approximately 45% below average, but an open interest decline on Friday’s price advance is negative.

Although crude oil can continue its advance, rallies appear to be labored, and the June contract remains in a bearish set up with the 50 day moving average standing at 39.52 and the 200 day at 44.35. As this report is being compiled on April 25 the June contract is trading 61 cents below Friday’s close and is made a daily high of 44.45, which is the exact high made on April 22.June WTI remains on short and intermediate term buy signals

The COT report revealed that managed money is long WTI by a ratio of 3.93:1, which is up from the previous week of 3.29:1 and the ratio two weeks ago of 2.56:1. Managed money added 8,733 to their long positions and liquidated 12,118 of their short positions. Note: managed money added fewer long positions than they liquidated short positions. Another reason for caution: managed money is long by the highest ratio in in several weeks. 

Dollar index: The June dollar index will generate a short-term buy signal if the low of the day is above OIA’s key pivot point for April 25 of 94.997.

June dollar index advanced sharply by 50.6 points on volume of 21,596 contracts. Total open interest declined by 206 contracts, which relative to volume is approximately 50% below average. The dollar index has been performing in a consistently bearish fashion: open interest declines on price advances and increases when price declines.

As this report is being compiled on April 25 the June contract is trading 39 points lower.The June dollar index remains in a deeply bearish moving average set up with the 50 day moving average standing at 95.914 and 200 day at 97.318. For the dollar index to reverse the current bearish moving average set up, the euro, which comprises approximately 58% of the weight in of the dollar index would have to fall sharply. However, the euro is in a bullish moving average set up, though it may generate a short term sell signal shortly. The euro like the yen is acting is as a funding currency due to negative interest rates. This increases fund flows into the two currencies, which serves to strengthen them. We have no recommendation.

British pound: The June British pound will generate an intermediate term buy signal on April 25 after generating a short-term buy signal on April 20.

The June British pound advanced 81 pips on volume of 98,866 contracts. Total open interest increased by 1,634 contracts, which relative to volume is approximately 35% below average, and a total open interest increase on Friday’s advance is positive. From April 13 through April 22 the June pound has been acting in a consistent bullish fashion with respect to price and open interest: when the pound advances, total open interest increases and when price declines open interest decreases.

This is causing problems for the large number of short-sellers in the pound who are taking bearish positions based upon the possibility of an exit from the European union by the United Kingdom. According to the latest COT report, managed money is short by a ratio 1.83:1, which is up from the previous week of 1.71:1 and the ratio two weeks ago of 1.74:1.

We are advising a sideline stance until more short-sellers get blown out. As this report is being compiled on April 25, the June pound is trading higher again, up 89 pips and has made a new high for the move of 1.4525, which is the highest print since 1.4519 made on March 18.

Swiss franc: On April 22, the June Swiss franc generated a short-term sell signal, but remains on an intermediate term buy signal.