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Soybeans:

August soybeans lost 7.00 cents on light volume of 145,454 contracts.Volume was only slightly above that of July 17 when the August contract lost 4.25 cents on volume of 141,713 contracts and total open interest declined by 849. On July 20, total open interest increased by 1,127 contracts, which relative to volume is approximately 55% below average, but this is the first open interest increase since July 14 when the August contract lost 4.00 cents on volume of 193,196 contracts and total open interest increased by 3,675. The August contract lost 4,646 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 21, the August contract is getting a bounce of 7.75 cents, and is being helped by the sharp pullback in the dollar index. We continue to think that the path of least resistance is downward and though the reduced volumes on recent declines has been positive, we take no comfort in this. Although August soybeans remain on the short and intermediate term buy signal, we think a short-term sell signal is inevitable. This will occur when the daily high is below OIA’s key pivot point for July 21 of 9.85 3/4.

Soybean oil:

August soybean oil lost 10 points on volume of 72,596 contracts. Total open interest increased by 1,358 contracts, which relative to volume is approximately 20% below average. The August contract lost 989 of open interest. Basically, buyers and sellers engaged in a battle for dominance and sellers were able to edge the market slightly lower.

As this report is being compiled on July 21, the August contract is trading 50 points higher and has made a daily high 32.30, which is the highest print since 32.58 made on July 15. August soybean oil remains on a short and intermediate term sell signal, and we recommend that clients lower stops on bearish positions originally recommended on June 23. We think the soybean complex is headed lower.

Soybean meal:

August soybean meal lost $5.10 on volume of 83,882 contracts. Total open interest increased by 1,372 contracts, which relative to volume is approximately 35% below average, but an open interest increase on yesterday’s price decline is bearish. This follows the massive open interest increase on July 17 when the August contract lost 2.50 on volume of 71,368 contracts and total open interest increased by a massive 3,791.The August contract lost 3,315 of open interest in yesterday’s trading, which means there were sufficient open interest increases in the forward months to offset the decline in August and increase total open interest.

The bearish open interest action in soybean meal is problematic for the entire complex because soybean meal has been the leader. As this report is being compiled on July 21, the August contract is trading 1.60 higher and has made a daily low of 355.80, which is above yesterday’s low of 354.40. August soybean meal remains on a short and intermediate term buy signal.

Corn:

September corn lost 15.25 cents on surprisingly light volume of 358,453 contracts. Although volume was above that of July 17 when the September contract lost 9.75 cents on volume of 304,944 contracts and total open interest declined by 1,505, it was below that of July 16 when the September contract gained 0.50 cents on volume of 404,948 contracts and total open interest increased by 11,779.

Though volume was surprisingly light, the total open interest increase was massive having gained 21,535 contracts, which relative to volume is approximately 140% above average meaning large numbers of new aggressive short-sellers were entering the market and driving prices lower (4.04 1/2). The September contract lost 3,582 of open interest, which makes the total open interest increase by more impressive (bearish).

As mentioned in the July 17 report, we are concerned about the low volume and the substantial long position held by managed money is relatively intact. The action yesterday confirms this and liquidation has been rather minor since the September contract topped on July 14 at 4.43 1/4. In summary, there is plenty of fuel to fund a continued downside move. As this report is being compiled on July 21, the September contract is getting a bounce with the dollar index trading sharply lower.We see lower prices ahead.

From the July 17 report:

“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.”

Chicago wheat: September wheat will generate a short-term sell signal on July 21, but will remain on an intermediate term buy signal.

September Chicago wheat lost 21.25 cents on surprisingly light volume of 111,977 contracts. Volume increased only slightly from July 17 when the September contract lost 8.25 cents on volume of 108,879 contracts and total open interest increased by 1,473. On July 20, total open interest declined only 182 contracts, which is really surprising since we know managed money is net long Chicago wheat and prices fell to 5.30 1/2, which took out the June 26 low of 5.36.

The relatively light liquidation that we have seen since during the past week as prices have fallen indicate there are sufficient numbers of speculative longs that have yet to liquidate and will add fuel to the downside move, especially now that the September contract is on a short-term sell signal.

Tomorrow, we should see the beginning of a 1-3 counter trend rally, which will be an opportunity to initiate bearish positions after the rally has dissipated. As this report is being compiled on July 21, the September contract is trading 3.75 cents lower and has made a new low for the move of 5.27 3/4.

Live cattle:

August live cattle gained 10 points on very light volume of 32,247 contracts. However, total open interest declined by a massive 1,485 contracts, which relative to volume is approximately 75% above average meaning liquidation was the extremely heavy on the almost unchanged number.The August contract lost 3,617 of open interest. As this report is being compiled on July 21, the August contract is trading sharply lower, down 1.35 cents and trading at the lows of the day having taken out the July 17 print of 1.45525.We recommend lowering stops to 1.47500, (the July 17 high ) on bearish positions originally recommended in the July 1 report.

Sugar #11: On July 20, October sugar generated a short-term sell signal, which reverses the short term buy signal of July 13. The October contract remains on an intermediate term sell signal.

October sugar lost 52 points on volume of 147,830 contracts. Total open interest increased by 8,722 contracts,which relative to volume is approximately 140% above average meaning large numbers of new short-sellers were entering the market and driving prices lower (11.35). The October 2016 contract lost 983 of open interest. As this report is being compiled on July 21, the October contract is trading 3 points higher on the day and made a daily low 11.38.There is no reason to be involved in the sugar market.