Bloomberg access:{OIAR<GO>}

Corn:

March corn advanced 1.00 cent on volume of 304,384 contracts. Volume declined from January 19 when the March contract advanced 4.50 on volume of 377,638 contracts and total open interest declined by 3,204. On January 20, total open interest increased by 525 contracts, which is substantially below average. However, the March contract accounted for loss of 5,639 of open interest and the December 2016 contrast lost 159, which means there were sufficient open interest increases in the forward months to offset the decline in the two delivery months and increase total open interest slightly. This is positive

As this report is being compiled on January 21, the March contract is trading nearly unchanged on the day, but has made a new high for the move of 3.72, which takes out the previous high of 3.69 1/2 made on January 19 and is the highest print since 3.74 1/2 made on December 22.

On January 19, OIA announced the March contract generated a short-term buy signal and since then the March contract has not had its usual 1 to 3 day pullback. Currently, March corn contract is trading approximately 20 cents from its contract low of 3. 48 1/2 made on January 7.

It appears corn needs some kind of catalyst to send it higher and thus far, shorts are holding their own. In order for corn to move substantially higher, one of two things need to occur: shorts covering en masse and/or new buying. The March contract will generate a short-term sell signal if the high of the day is below OIA’s key pivot point for January 21 of 3.58. We have no recommendation.

Soybeans:

March soybeans lost 9.50 cents on volume of 243,473 contracts. Volume was the strongest since January 12 when March soybeans gained 13.25 cents on volume of 316,321 contracts and total open interest increased by a very robust 9,206 contracts. On January 20, total open interest increased by 1.317 contracts, which relative to volume is approximately 70% below average, however a total open interest increase on yesterday’s decline is negative. The March contract accounted for loss of 3,947 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.

As this report is being compiled on January 21, the March contract is trading 3.75 cents above yesterday’s close and has made a daily high 8.85 3/4, which is the highest print since 8.88 made on January 19. On January 19, OIA announced that the March contract generated a short-term buy signal, and yesterday was the first day of the typical pullback that occurs after the generation of a buy signal. Like corn, soybeans need a catalyst to send it sharply higher. Additionally, the fact that both soybean meal and soybean oil are on short and intermediate term sell signals does not support the bullish case for soybeans. We have no recommendation.

WTI crude oil:

March WTI crude oil lost $1.23 on heavy volume of 1,214,226 contracts. However, volume declined from January 19 when the March contract lost 82 cents on volume of 1,345,570 contracts and total open interest declined by 18,048 contracts. On January 20, total open interest increased by 12,997 contracts, which relative to volume is approximately 50% below average. The February contract lost 20,525 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in February and increase total open interest.

It should be noted that yesterday’s total open interest increase is the largest going back to January 6 when WTI lost $2.00 on volume of 1,004,350 contracts and total open interest increased by 50,601. On January 6, the March contract closed at $35.20.

It appears that yesterday’s action was the Johnny-come-lately crowd getting bearish at the extreme low of the trading range going back 18 months. Yesterday, the March contract made a contract low of $27.56, which takes WTI prices back to levels last seen during the summer of 2003. As this report is being compiled after the release of the EIA storage report, the March contract is having one of its rare counter-trend rallies and trading $1.56 above yesterday’s close or + 1.56 %. 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 4.0 million barrels from the previous week. At 486.5 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 4.6 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 1.0 million barrels last week but are near the upper limit of the average range for this time of year. Propane/propylene inventories fell 1.9 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories increased by 6.6 million barrels last week.

Euro:

The March euro lost 33 pips on volume of 202,217 contracts. Total open interest declined by 742 contracts, which relative to volume is approximately 80% below average. As this report is being compiled on January 21, the euro is trading 53 pips lower and has made a new low for the move of 1.0789, which is the lowest print since 1.0788 made on January 7.

The head of the European Central Bank has indicated it must do more to stimulate the European economy and raise the rate of inflation. In yesterday’s report, we described the dilemma about initiating bearish positions in an environment where the euro is a flight to safety currency and yet at the same time the ECB feels it needs to stimulate European economies.

At this juncture, it appears that the path of least resistance is lower and OIA will receive confirmation of this if the March contract makes a daily high below OIA’s pivot point of 1.0859. This will confirm the downtrend in the euro has begun in earnest.The March euro remains on short and intermediate term sell signals.

From the January report on the euro:

“We have cautioned clients away from the bearish side of the euro due to our concern that a global equity meltdown would temporarily send the euro sharply higher. At this juncture, it appears that the 1.1000 level may be a point of resistance, but we really will not know the answer to this until after the meltdown. On the other hand, the fact that global economies are slowing, the euro’s advance may be stymied because market participants will project that more quantitative easing is in the cards by the European Central Bank.”

Yen:

The March yen advanced 47 pips on heavy volume of 239,483 contracts. Volume exceeded that of January 19 when the March contract lost 31 pips on volume of 232,754 contracts and total open interest declined by 8,144. On January 20, total open interest increased by a substantial 6,500 contracts, which relative to volume is average. Yesterday, the March contract made a new high for the move of .8631, which is the highest print since .8608 made on August 24 the day equity market had a meltdown.

As this report is being compiled on January 21, the March contract is trading sharply lower, down 64 pips or -0.75% and has made a daily low of .8496, which takes out yesterday’s print and is the lowest price since .8474 made on January 19. We have cautioned clients not to initiate new positions on the latest run-up in the yen because the market is massively overbought and chock full of new speculative longs. Maintain a sideline stance on new positions.

S&P 500 E-mini:

The March S&P 500 E-mini lost 18.00 points on huge volume of 3,937,696 contracts. Volume exceeded that of December 11 and 14 when 3,922,791 contracts were traded on December 14. On January 20, total open interest increased by 28,049 contracts, but this was approximately 60% below average.

As this report is being compiled on January 21, the March contract is trading 10.75 points above yesterday’s close and has made a daily high of 1883.25, which is only slightly above yesterday’s print of 1878.50. The rally on January 21 looks weak and though the market is massively oversold, we are more inclined to think that a test of yesterday’s contract low of 1804.25 is more likely in the short-term than a substantial rally. At this juncture, we have no recommendation