Bloomberg access:{OIAR<GO>}

Corn:

March corn advanced 1.25 cents on heavy volume of 361,731 contracts. Volume was the strongest since January 29 when the March contract gained 6.50 cents on volume of 342,045 contracts and total open interest increased by 10,093. On February 2, total open interest increased by 2,856 contracts, which relative to volume is approximately 55% below average. The March contract accounted for loss of 2,662 of open interest.

As this report is being compiled on February 3, the March contract is trading 1.75 cents lower and has made a daily high of 3.73 1/4, which is below yesterday’s print of 3.73 3/4. Although the low in today’s trading of 3.70 1/4 is above OIA’s pivot point of 3. 69 3/8, the corn market does not seem to have the strength to move beyond low 3.70 resistance. Also, concerning is that the dollar index is trading sharply lower, and this is giving many commodities prices a bid, but NOT grains. We are thinking that the current short term buy signal, which was generated on January 19 will reverse. We have no recommendation.

Soybeans:

March soybeans advanced 5.50 cents on volume of 254,971 contracts. Volume was the strongest since January 28 when the March contract lost 15.25 cents on volume of 254,413 contracts and total open interest increased by 3,832 contracts. On February 2, total open interest increased by a massive 13,279, which relative to volume is approximately 105% above average meaning aggressive new buyers were entering the market in large numbers and driving prices to a new high for the move (8.89 1/2).

As this report is being compiled on February 3, the March contract has reversed course and trading 8.75 cents lower on the day after making a daily high of 8.86. Like corn, we are concerned that the short term buy signal in soybeans will be reversed. We have no recommendation.

WTI crude oil:

March WTI crude oil lost $1.74 on strong volume of 1,165,489 contracts. Total open interest increased just 3,100 contracts, which is substantially below average. However, the March contract lost 18,016 of open interest which means there were sufficient open interest increases in the forward months to offset the decline in March and increase total open interest slightly. This is bearish.

As this report is being compiled on February 2, the March contract is trading $1.72 above yesterday’s close and has made a daily high of $31.95, which is the highest print since 34.18 made on February 1. For the March contract to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for February 3 of $33.63. We have no recommendation.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 7.8 million barrels from the previous week. At 502.7 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 5.9 million barrels last week, and are well above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories decreased by 0.8 million barrels last week but are near the upper limit of the average range for this time of year. Propane/propylene inventories fell 5.6 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories increased by 9.5 million barrels last week.

Dollar index:

The March dollar index lost 13.5 points on light volume of 19,836 contracts. Total open interest declined by a substantial 761 contracts, which relative to volume is approximately 30% above average meaning liquidation with substantial on the modest decline.

As this report is being compiled on February 3 the March contract is trading sharply lower, down 1.428, or -1.44%. For the past couple reports, we have been warning clients that the dollar index was trading negatively, and now appears likely that a short term sell signal will be generated in tomorrow’s trading. We have no recommendation.

Euro:

The March euro advanced 23 pips on volume of 153,371 contracts. Total open interest increased by 927 contracts, which relative to volume is approximately 65% below average, but an open interest increase on yesterday’s modest price advance is positive.

As this report is being compiled on February 3, the euro is rocketing higher, up 1.80 cents and has made a new high for the move of 1.1128, which is the highest print since 1.1102 made on October 30, 2015. We have been warning clients we thought it was likely the euro would generate a short-term buy signal in the not-too-distant future, and it appears likely this will occur in tomorrow’s trading. We have no recommendation.

Yen:

The March yen advanced 73 pips on volume of 150,840 contracts. Total open interest declined by 8,639 contracts, which relative to volume is approximately 120% above average. This follows the massive open interest decline of 11,020 contracts on February 1.

However, the story is vastly different on February 3 as the March yen has reversed course dramatically and is trading 180 pips above yesterday’s close on extremely heavy volume. On February 1, the March yen generated short and intermediate term sell signals, and in yesterday’s report we said we would be evaluating the yen for potential bearish positions after the end of the counter trend rally. At this juncture, we are advising clients to stay away from the yen long or short. It is too volatile.

Australian dollar: The March Australian dollar is trading sharply higher on February 3, however it will NOT generate a short-term buy signal on February 3. This is likely to occur in tomorrow’s trading.

S&P 500 E-mini:

The March S&P 500 E-mini lost 33.75 points on volume of 2,106,992 contracts. Total open interest increased by a sizable 54,380 contracts, which relative to volume is average, and an open interest increase of yesterday’s magnitude is very bearish.

As this report is being compiled on February 3, the March contract is trading sharply lower, down 20.75 points and has made a new low for the move of 1865.00, which is the lowest print since 1865.75 made on January 28. The March contract is headed for a test of the January 20 low of 1804.25, and we think there is a high likelihood this will be taken out. We have no recommendation at this juncture, except to say the Emini should be traded from the bearish side.