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Soybeans:

September soybeans advanced 17.75 cents on volume of 225,559 contracts. Volume fell dramatically from August 12 when the September contract lost 62.50 cents on volume of 428,732 contracts and total open interest increased by 10,716.Additionally, volume was below that of August 11 when the September contract lost 27.25 cents on volume of 226,900 contracts and total open interest declined by 366.

On August 13, total open interest declined by 2,471 contracts, which relative to volume is approximately 50% below average. Open interest declines were across the board with the August contract losing 503 of open interest, September -1,248, new crop November -109, January 2016 -141, March 2016 -903, May 2016-183.

The open interest declines in yesterday’s trading is bearish and indicates that short sellers were powering the market higher, not new buying, which is not a big surprise. We know speculators have large losses and will be looking to trim these on any rally. As this report is being compiled on August 14, the September contract is trading 13.75 cents lower and has made a daily low of 9.21 3/4, which is above yesterday’s low of 9.20 and the August 12 print of 9.11. Lower prices are ahead. September soybeans remain on a short and intermediate term sell signal.

Soybean meal: On August 13, September, October and December soybean meal generated short term sell signals, but remain on intermediate term buy signals.

September soybean meal advanced $7.20 on volume of 112,690 contracts. Volume declined from August 12 when the September contract lost $18.00 on volume of 201,029 contracts and total open interest declined by 3,053. However, volume was above that of August 11 when the September contract lost $11.90 on volume of 98,414 contracts and total open interest increased by 1,402

On August 13, total open interest declined by 2,277 contracts, which relative to volume is approximately 25% below average, but an open interest decline on yesterday’s advance is bearish. The August contract lost 99 of open interest, September -1,965, new crop December -3,722, May 2016-607. Short-sellers were powering the market higher and the total open interest decline in soybean meal was nearly the same the soybeans, but soybean meal traded half the volume of soybeans.

The upcoming COT report will likely reveal that managed money still holds a fairly hefty net long position, and this will continue to pressure the market. As this report is being compiled on August 14, the September contract is trading $5.20 lower and has made a daily low of 324.60, which is above yesterday’s print of 323.70 and the August 12 low of 320.70.

Corn: On August 13, September and December corn generated intermediate term sell signals after generating short-term sell signals on July 27.

September corn advanced 6.50 cents on heavy volume of 508,815 contracts. Volume declined substantially from August 12 when the September contract lost 19.25 cents on volume of 777,037 contracts and total open interest increased by 17,765. Additionally, volume was above that of August 11 when the September contract lost 13.75 cents on volume of 423,516 contracts and total open interest declined by 9,642.

On August 13, total open interest increased by 6,557 contracts, which relative to volume is approximately 45% below average. However, the September contract lost 19,443 of open interest, March 2016 -2,165, September 2016 -272, which means there were sufficient open interest increases in the forward months to offset the decline in the three delivery months and increase total open interest.

Although, new buying lifted prices in yesterday’s trading, we think this is a temporary phenomenon, and suspect this may have been commercial buying at the low end of the trading range. As this report is being compiled on August 14, the September contract is trading 0.25 cents lower and has made a daily low at 3.59 3/4, which is above yesterday’s print of 3.55 1/4 and the August 12  contract low of 3.46 1/2.

Cotton: December cotton will generate a short-term buy signal if the daily low on August 14 is above OIA’s key pivot point at 65.17. Thus far in trading, the low has been 65.25.

December cotton advanced 1.10 cents on volume of 53,902 contracts. Volume fell from August 12 when the December contract gained 2.87 cents on volume of 62,768 contracts and total open interest increased by 405. On August 13, total open interest increased by 765 contracts, which relative to volume is approximately 40% below average. The October contract lost 43 of open interest and December 2015 cotton lost 47.

The fact that the December contract lost open interest in yesterday’s trading is negative because the December contract holds the bulk of total open interest in cotton. Additionally, on August 12 when the December contract advanced 2.87 cents the December contract lost open interest as well.

For the past two days, December cotton has gained 3.97 cents, yet total open interest has increased by a minor 1,170 contracts. To put a finer point on the open interest stats: if open interest increased by an average amount on August 13, the total increase would have been 1,347 contracts not 765. On August 12 the increase would have been 1,569, not 405

The unimpressive open interest increases on a substantial two-day advance confirms that there is a lack of enthusiasm on the part of new buyers for cotton even though the USDA report was bullish. However, China has large cotton stocks and with consumption on a global basis globally down sharply, we view the current rally as a seasonal trade rather than a sustained move. On a seasonal basis, cotton bottoms in August and rallies into mid-September.

As this report is being compiled on August 14, the December contract is trading 62 points higher and has made a new high for the move of 66.51, which is the highest print since 67.23 made on July 10. At this juncture, the December contract is trading +8.66% above the August 12 contract low of 61.20, and 7.11% below the 52-week high of 71.59.

Coffee:

September coffee gained 5.20 cents on heavy volume of 78,232 contracts. Volume increased from August 12 when the September contract lost 5.35 cents on volume of 76,353 contracts and total open interest declined by 4,511. On August 13, total open interest declined again, this time by 2,799 contracts, which relative to volume is approximately 20% above average, meaning that liquidation was fairly substantial on yesterday’s strong advance. The September contract lost 8,143 of open interest, and though this number was whittled down, total open interest declined by an above average number.

For the past four sessions beginning on August 10 through August 13, September coffee has advanced 9.25 cents, yet total open interest has declined by 11,222 contracts.This is extremely negative and in order for coffee to advance, new buyers must be willing to pay ever increasing prices. At this juncture, this does not seem likely.

As this report is being compiled on August 14, the September contract is trading near unchanged on the day after making a daily high of 1.3900, which is just 1.00 cent above yesterday’s print of 1.3800 and the August 12 print of 1.3805.

On August 11, September and December coffee generated short and intermediate term buy signals, but we recommend a stand aside posture due to the abysmal open interest action relative to the four day price advance.

Dollar index: On August 13, the September and December dollar indices generated short-term sell signals, but remain on intermediate term buy signals.

The September dollar index gained 16.6 points on volume of 37,643 contracts. Total open interest declined by a massive 2,285 contracts, which relative to volume is approximately 140% above average. The September contract lost 2,285 of open interest as it approaches first notice day. Now that the dollar index is on a short-term sell signal, the market should have a counter trend rally that lasts from 1-3 days. We discourage bearish positions because we think the longer-term trend is higher.

Euro: On August 13, the September and December Euro generated short-term buy signals, but remain on intermediate term sell signals.

The September euro lost 28 pips on volume of 199,381 contracts. Total open interest declined by 2,029 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on August 14, the September contract is trading 17 pips lower after making a daily high of 1.1193, which matches yesterday’s print of 1.1193. The high for the move thus far occurred on August 12 when the September contract printed 1.1220.

Now that the euro is on a short term buy signal, the market should pull back for 1-3 days before resuming the uptrend. It appears the pullback has begun on August 14. We discourage new bullish positions because we think the longer-term trend of the euro is down.

British Pound: On August 13, the GBP/EUR cross generated a short term sell signal.

The September British pound gained 1 pip on volume of 59,774 contracts. Total open interest declined by 2,536 contracts, which relative to volume is approximately 30% above average meaning liquidation was heavy on an essentially an unchanged day. The September pound remains on a short-term sell signal, but an intermediate-term buy signal.

S&P 500 E mini:

The September S&P 500 E mini lost 3.75 points on volume of 1,504,360 contracts. Total open interest increased by 8,577 contracts, which relative to volume is approximately 75% below average. The open interest increase in yesterday’s trading confirms the bearish setup of the market, and we see lower prices ahead.

On July 27, the September contract generated a short term sell signal, and remains on an intermediate term buy signal. We think it is only a matter of time before an intermediate-term sell signal is generated.

As this report is being compiled on August 14, the September contract is trading 1.75 points higher and has made a daily high of 2085.75, which is below yesterday’s print of 2093.00. We continue to advocate long option straddles or strangles in the December S&P 500 E mini contract.