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Soybeans:

August soybeans lost 2.50 cents on volume of 217,189 contracts. Volume was reduced in a holiday shortened session and was below that of July 1 when the August contract lost 8.75 cents on volume of 287,622 contracts and total open interest increased by 2,307. On July 2, total open interest increased by 2,144 contracts, which relative to volume is approximately 50% below average. However, the July contract lost 2,359 of open interest, August -1,410, which makes the total open interest increase more impressive (potentially bearish).

July 2 was the second day in a row in which prices declined and total open interest increased.This is a bit concerning because out of the 6 grains we cover, the performance of August soybeans was in fifth place during the second quarter and also was in fifth place for performance during June 1-July 2 when the rally began. These stats will be in the weekend report, and will be released later on today. In summary, soybeans are lagging the grain complex during two important time frames and this is being borne out on July 6 with the August contract trading 14.00 cents lower. As we have pointed out before, soybeans tend to top in the June-July time frame. August soybeans remain on a short and intermediate term buy signal.

Soybean oil:

August soybean oil advanced 35 points on volume of 87,670 contracts. Total open interest increased by a substantial 5,212, which relative to volume is approximately 140% above average meaning aggressive new buyers were entering the market and driving prices higher (33.60), but this was below the highs of July 1 and June 30. The July contract lost 843 of open interest, August -573.

As this report is being compiled on July 6 the August contract is trading 53 points lower and has made a new low for the move of 32.61, which is the lowest print since 32.56 made on June 22. On June 23, OIA recommended the initiation of light bearish positions and have subsequently advised to liquidate the position upon the penetration of the June 26 high of 33.84. Those that entered the trade when we recommended it have profits and positions should continue to be held. Clients may want to consider lowering their stop somewhat to protect profits.On June 18, August soybean oil generated a short-term sell signal and remains on intermediate term buy signal.

Soybean meal:

August soybean meal lost $2.10 on volume of 84,624 contracts. Total open interest increased by 1,094 contracts, which relative to volume is approximately 45% below average. The July contract lost 1,460 of open interest, August -1,127, which makes the total open interest increase potentially bearish. As this report is being compiled on July 6 the August contract is trading 1.70 lower and has made a daily low of 343.80, which is the lowest print since 331.90 made on June 30. As we have pointed out before, soybean meal has a seasonal tendency to top in the July-August time frame. August soybean meal remains on a short and intermediate term buy signal.

Corn:

September corn advanced 6.00 cents on pre-holiday volume of 450,548 contracts in a truncated session. Volume was the lightest since June 22 when corn advanced 6.75 cents on volume of 417,983 contracts and total open interest declined by 7,872 contracts. On July 2, total open interest increased by a strong 12,449 contracts, which relative to volume is average, but this is the second best total open interest increase on a price advance that we have seen since the 17,204 open interest increase on June 30 when September corn advanced by the daily 30.00 percent limit.

On July 2 the September contract made a high of 4.30 3/4, which is the highest print since the September contract printed 4.33 3/4 on December 29, 2014. Additionally, the September contract has taken out the December 29 continuation high of 4.17 made by the March 2015 contract.

Although, we think corn can inch its way higher, the market has come very far in a short period of time, which makes it vulnerable to renewed selling pressure if it is perceived that corn prices are stalling at multi-month highs. We recommend an abundance of caution at current levels. Corn has a distinct seasonal tendency to top in the month of July and if the large contingent of short-sellers have been blown out by the rally, the market is going to lose one more source of potential buying power. We will know more about this after the CFTC releases the COT report this afternoon. On June 25, September corn generated a short-term buy signal and an intermediate term I signal on June 26

Chicago wheat:

September Chicago wheat advanced 2.00 cents on volume of 129,481 contracts. Total open interest increased by 5,094 contracts, which relative to volume is approximately 30% above average meaning that aggressive new longs and shorts were battling for dominance by entering the market in large numbers and buyers were able to move the market slightly higher. The July contract lost 1,164 of open interest, which makes the total open interest increase by more impressive (potentially bullish). As this report is being compiled on July 6 the September contract is trading 8.00 cents above the July 2 close.It will be interesting to see the extent to which short-sellers have been blown out of the wheat market in today’s COT report. September Chicago wheat remains on a short and intermediate term buy signal.

Live cattle:

August live cattle advanced 15 points on volume of 51,827 contracts.Volume declined from July 1 when the August contract advanced the 3.00 cent daily limit on volume of 58,462 contracts and total open interest increased 854.On July 2, Total open interest increased by 645 contracts, which relative to volume is approximately 45% below average. The August contract lost 2,072 of open interest. As this report is being compiled on July 6 the August contract is trading 1.10 cents below the July 2 close.

On June 26, the August contract generated a short-term sell signal, but remains on an intermediate term buy signal. For those clients who initiated bearish positions per our recommendation of July 2, maintain these and use the July 2 high of 1.51975 as an exit point.

From the July 1 report:

“Considering the magnitude of yesterday’s move the total open interest increase is a disappointment and in our mind confirms that managed money has for the most part lost interest in live cattle. Yesterday, the August contract made a high of 1.51075, and this has been taken out on July 2 with another high print of 1.51975, which is slightly above the June 24 high of 1.51800.”

“The market opened at 1.51650, then immediately made its high for the day and has been trading lower ever since. On June 26, August live cattle generated a short-term sell signal, and for this to reverse, the August contract must make a daily low above two of OIA’s key pivot points of 1.51640 and 1.51935.”

“We do not think this is likely and think live cattle will soon resume its down trend. Clients should be looking to initiate bearish positions, and could use today’s high (1.51975) or more preferably the June 22 high of 1.52425 as exit points for these.”

WTI crude oil: On July 3, August WTI crude oil generated an intermediate term sell signal after generating a short term sell signal on May 20.

On July 2, the August contract lost 3 cents on volume of 579,925 contracts. Total open interest declined by just 158. The August contract lost 3,311 of open interest. However, on July 3, the August contract lost $1.41 and made a daily high 56.79, which is below OIA’s key pivot point of 57.39 for July 3. Unfortunately, the exchange does not publish stats for holiday shortened sessions, but an intermediate term sell signal was generated on July 3 nonetheless. As this report is being compiled on July 6, the August contract has collapsed, trading $3.48, or -6.10% lower on the day.

From the June 30 report:

“August WTI crude oil advanced $1.14 on volume of 552,638 contract. Total open interest increased by 2,733 contracts, which relative to volume is approximately 75% below average. The August contract lost 12,592 of open interest. The total open interest increase was weak and as we pointed out in yesterday’s report, total open interest had been increasing for the previous three days on price declines, which is negative. The lack of a sizable open interest increase in yesterday’s trading indicates a lack of enthusiasm on the part of new buyers. On May 20, WTI crude oil generated a short-term sell signal, and it appears to be headed toward an intermediate term sell signal. For this to occur, the high of the day must be below OIA’s key pivot point for July 1 of $57.41.”

Brent crude oil: On July 3, August Brent crude oil generated an intermediate term sell signal after generating a short-term sell signal on May 20.

On July 3, the August Brent contract lost $1.77 on light volume of 320,097 contracts. However, total open interest increased by a massive 17,037 contracts, which relative to volume is approximately 105% above average meaning aggressive new short-sellers were entering the Brent market and driving prices to a new low for the move (60.12).As this report is being compiled on July 6 the August contract is trading $2.79 lower, or -4.64% and trading on the lows of the day.

Heating oil: On July 3, August heating oil generated an intermediate term sell signal and remains on a short term sell signal.

Dollar index:

The September dollar index lost 21.9 points on volume of 41,254 contracts. Total open interest declined by 1,279 contracts, which relative to volume is approximately 10% above average meaning liquidation was heavier than usual on the decline, but this is normal market activity. As this report is being compiled on July 6, the September contract is trading 30 points above the July 2 close, and will not generate a short-term buy signal on July 6.For this to occur, the low of the day must be above OIA’s key pivot point for July 6 of 96.320.

Euro:

The September euro gained 37 pips on volume of 174,426 contracts. Total open interest declined by a minuscule 247 contracts.As this report is being compiled on July 6, the September contract is trading 30 pips lower and has made a daily high of 1.1108, which is below OIA’s key pivot point for July 6 for the generation of a sell signal. If the daily high for trading on July 6 continues to be below 1.1117, a short term sell signal will be generated.

10 Year Treasury Note:

The September 10 year treasury note gained 13 points on volume of 1,207,014 contracts. Total open interest declined by 10,847 contracts, which relative to volume is approximately 55% below average, however the total open interest decline on the July 2 advance indicates that new buying was not fueling the gains, rather it was short sellers moving prices higher.

As this report is being compiled on July 6, the September contract is trading 20 points higher and has made a daily low of 126-075, which is above OIA’s key pivot point for July 6 of 126-068. If the September contract maintains today’s low, a short-term buy signal will be generated on July 6. The September contract will remain on an intermediate term sell signal.