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Soybeans:

May soybeans gained 15.75 cents on volume of 262,984 contracts. Total open interest declined by 6,625 contracts, which relative to volume is average. The March contract accounted for loss of 14,367 of open interest. As this report is being compiled on February 27, May soybeans are trading 6.00 cents higher and have made a new high for the move of 10.38, which takes out the previous high of 10.32 made on February 24.

On February 20, May soybeans generated a short-term buy signal, but remains on intermediate term sell signal. As we said in yesterday’s report, the market can to continue its rally, but we view this as a rally in a bear market and do not think the move is sustainable. However, we think it is premature to initiate short positions, especially since soybeans are on a short term buy signal. Also, soybean oil is showing renewed strength, and looks like it may generate a short-term buy signal next week. The strength in the products will support higher soybean prices.

Soybean meal:

May soybean meal gained $4.30 volume of 95,851 contracts. Total open interest declined by 2,218 contracts, which relative to volume is approximately 10% below average. The March contract accounted for loss of 6,430 of open interest. As this report is being compiled on February 27, May soybean meal is trading 1.60 lower. On February 19, May soybean meal generated a short-term buy signal and remains on an intermediate term sell signal. Like soybeans, we think meal can continue its rally, but ultimately the supply demand fundamentals are unfavorable going forward.

Corn:

May corn gained 4.75 cents on volume of 337,832 contracts. Total open interest declined by 4,385 contracts, which relative to volume is approximately 40% below average. The March contract accounted for loss of 33,495 of open interest, which means there were sufficient open interest increases in the forward months to bring total open interest down substantially below average. As this report is being compiled on February 27, May corn is trading 6.75 cents higher and is trading at the highs of the day. May corn remains on a short and intermediate term sell signal. Stand aside.

WTI crude oil:

April WTI crude oil lost $2.82 on volume of 988,259 contracts. Total open interest declined by 7,225 contracts, which relative to volume is approximately 60% less than average. The April contract lost 8,458 of open interest. As this report is being compiled on February 27, April W TI is trading $1.18 higher and has made a daily high of 49.72, which is above OIA’s key pivot point for February 27 of 49.56 to generate a short-term sell signal. The high of the day must be below the pivot point to generate the sell signal. On February 13, OIA announced that WTI generated a short-term buy signal. The spread between WTI and Brent crude continues to widen and is currently trading at $12.60 premium to Brent. Stand aside.

Brent crude oil:

April Brent crude oil lost $1.58 on volume of 744,891 contracts. Total open interest declined by 12,933 contracts, which relative to volume is approximately 25% less than average. The April contract accounted for loss of 10,130 of open interest. As this report is being compiled on February 27, April Brent is trading $1.80 higher, or +3.01% versus WTI trading +1.59%. On February 3, Brent crude generated a short-term buy signal, but remains on an intermediate term sell signal.

Silver:

May silver gained 15.0 cents on volume of 62,956 contracts. Total declined by 3,152 contracts, which relative to volume is approximately 100% above average meaning liquidation was extremely heavy on the modest advance. The March contract accounted for loss of 7,862 of open interest. As this report is being compiled on February 27, May silver is trading unchanged on the day and has made a daily high of 16.700, which is significantly above OIA’s key pivot point of 16.420 for February 27, which is the trigger for an intermediate term sell signal. The high must be below the pivot point. Stand aside.

Cocoa:

May cocoa gained $22.00 on volume 28,653 contracts. Total open interest increased by 1,079 contracts, which relative to volume is approximately 45% above average. The March contract accounted for loss of 432 of open interest, which makes the more impressive (bullish). The  massive increase of open interest during the past 10 days is nothing short of astounding, and it will be fascinating to review the contents of the COT report to see the extent to which managed money has increased their net long positions versus commercial interest activity. As this report is being compiled after the close, May cocoa has advanced $24.00. We continue to recommend a stand aside posture.

Coffee:

May coffee lost 2.90 cents on volume of 25,192 contracts. Total open interest increased by 2,617 contracts, which relative to volume is approximately 300% above average meaning that aggressive new short-sellers were entering the market in large numbers and driving prices to a new low for the move (1.4030). The March contract accounted for loss of 117 of open interest. The low in the March contract on February 26 was 1.3655 and as trading closes on February 27, the March low has been 1.3645.

In short, the March contract has forged only a fractional new low on February 27.We are keeping an eye on this low because it may represent the bottom for the May contract as well. Another important point: total open interest during the past two days has increased by 6,675 contracts while May coffee has declined 8.35 cents.The massive increase of open interest during the past two days indicates the likelihood of a near-term bottom. We will discuss this in greater detail in the upcoming Weekend Wrap. May coffee remains on a short and intermediate term sell signal. Stand aside.