For Bloomberg access:{OIAR<GO>}

Soybeans:

August soybeans lost 4.25 cents on light volume of 141,713 contracts. Volume was the lowest since July 13 when the August contract gained 5.50 cents on volume of 140,581 contracts and total open interest increased by 772. On July 17, total open interest declined by 849 contracts, which relative to volume is approximately 70% below average. The August contract lost 2,053 of open interest, new crop November -351.

For the past three trading sessions beginning on July 15, August soybeans have declined each day along with open interest. The cumulative total decline of open interest has been 4,423 contracts during the time that August soybeans lost 18.75 cents.Because we think that soybeans have topped, we expect to see more liquidation as prices move lower.

As we pointed out in the weekend report, managed money remains net long by over 73,000 contracts, which will pressure prices once fund managers realize that the move in soybeans is over. Additionally, soybean meal is performing abysmally and soybean oil remains on a short and intermediate term sell signal.

As this report is being compiled on July 20, the August contract is trading 5.50 cents lower and has made a daily low of 9.98 1/4, which is the lowest print since 9.95 3/4 made on July 9. The August contract will generate a short-term sell signal if the daily high is below OIA’s key pivot point for July 20 of 9.85 3/4.

Soybean oil:

August soybean oil gained 32 points on volume of 75,945 contracts. Total open interest declined by 281 contracts, which relative to volume is approximately 80% below average, but a total open interest decline on Friday’s advance is negative.The August contract lost 1,335 open interest, October 2015 -29, December 2015 -644. As this report is being compiled on July 20, the August contract is trading 12 points lower and has made a daily low of 31.34, which is above Friday’s print of 31.26. Maintain bearish positions originally recommended in the June 23 report and lower stops to protect profits.

Soybean meal:

August soybean meal lost $2.50 on volume of 71,368 contracts. Total open interest increased by massive 3,791 contracts, which relative to volume is approximately 110% above average meaning that aggressive new short-sellers were entering the market in heavy numbers and driving prices lower (358.70). The August contract lost 3,296 of open interest, each means there was sufficient open interest increases in the forward months to offset this decline and increase total open interest substantially above average.

We view Friday’s price and open interest action as extremely negative. Soybean meal has been the leader and the aggressive selling at the high end of the range indicates in all likelihood that commercial trade interests entered the market. Additionally, the COT report showed that managed money liquidated long positions and the only reason the ratio increased was due to the liquidation short positions. As this report is being compiled on July 20, the August contract is trading $5.40 lower, or -1.52% versus soybeans trading -0.69%. August soybean meal remains on short and intermediate term buy signals.

Corn:

September corn lost 9.75 cents on surprisingly light volume of 304,944 contracts. Volume was the lowest since June 4 when 250,969 contracts were traded and the September contract closed at 3.70 1/4. On July 17, total open interest declined just 1,505 contracts, which relative to volume is approximately 75% below average. The September contract lost 6.474 of open interest, new crop December -417, which means there were enough open interest increases in the forward months to reduce total open interest substantially below average.

We are concerned that volume was extremely low relative to the price decline and that total open interest decreased by a minor amount. This tells us that the substantial long position held by managed money is not yet panicking. This concerns us, because we think that corn prices have likely topped for the time being and that lower prices are in store. As this report is being compiled on July 20, the September contract is trading 8.75 cents lower and has made a daily low of 4.10, which takes out Friday’s print of 4.18 1/4 and the July 1 low of 4.12.We recommend that clients review the weekend report of July 19 for more on the corn.

Chicago wheat:

September Chicago wheat lost 8.25 cents on volume of 108,879 contracts. Total open interest increased by 1,473 contracts, which relative to volume is approximately 40% below average, but an open interest increase on Friday’s price decline is bearish. There were open interest increases across the board and the only contract to lose it was May 2016 -164. From July 13 through July 17, September wheat has declined each day while open interest has increased each day with the exception of July 16 when it declined by 4,213 contracts.

As this report is being compiled on July 20, the September contract is trading sharply lower, down 15.75 cents, or -2.84%. Although wheat is trading sharply below OIA’s pivot point for July 20 of 5.50 1/4, a short-term sell signal is generated when the high of the day is below the pivot point. Thus far in trading on July 20 the September contract has made a high of 5.53. A short-term sell signal is a certainty tomorrow.

Live cattle:

August live cattle gained 15 points on surprisingly heavy volume of 59,035 contracts. Volume was the strongest since July 14 when the August contract gained 55 points on volume of 72,682 contracts and total open interest increased by 1,012.On July 17, total open interest increased by 209 contracts, which relative to volume is 85% below average. The August contract lost 4,439 of open interest, which means there were sufficient open interest increases in the forward months to offset this decline and increase total open interest.

As this report is being compiled on July 20, the August contract is trading 45 points higher, and has made a daily high of 1.47275, which is below OIA’s recommended exit point of 1.47925 for bearish positions originally recommended on July 1. August live cattle remains on short and intermediate term sell signals.

Sugar: October sugar will generate a short-term sell signal on July 20, which reverses the short term buy signal of July 13. October sugar remains on intermediate-term sell signal.

October sugar lost 31 points on volume of 82,295 contracts. Total open interest increased by 1,624 contracts, which relative to volume is approximately 20% below average, but a total open interest increase on Friday’s decline is bearish. The October 2015 contract lost 1,235 open interest, July and October 2016 contracts lost 562, which makes the total open interest increase more impressive (bearish).

From the July 13 report:

“Now that October sugar is on a short term buy signal, the market should pull back from 1-3 days, however we do not think this is an opportunity to initiate bullish positions because the fundamentals of sugar are bearish. Sugar has a habit of making sharp moves to the upside only for these to reverse.”

Cotton: It appears that December cotton will generate short and intermediate term sell signals this week, possibly as early as tomorrow.