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Soybeans:

August soybeans advanced 11.00 cents on very light volume of 140,026 contracts. Volume traded on July 21 was lower than July 20 (145,454) and July 17 (141,713) when the August contract lost 7.00 cents and 4.25 cents respectively.Remarkably, volume was the lowest since May 11 when 99,284 contracts changed hands and the August contract closed at 9.66 1/2.

On July 21, total open interest increased by 6,574 contracts, which relative to volume is approximately 75% above average meaning aggressive new buyers were entering the market in large numbers and pushing prices higher (10.20). The August contract lost 554 of open interest and the May 2016 contract lost 362, which makes the total open interest increase more impressive (bullish). As this report is being compiled on July 22, the August contract is trading 3.25 cents higher and has made a daily high of 10.27 1/2, which is the highest print since 10.38 1/4 made on July 16.

Although, the open interest increase was impressive, the volume was decidedly the opposite. In summary, many potential market participants were sitting on the sidelines while soybeans advanced. Because of the sizable open interest increased in yesterday’s trading, we cannot discount a further advance, but do not think that the July 1 high of 10.54 3/4 will be taken out. Ultimately, we think the trajectory is for lower prices, but the market may have a short term bounce at this juncture. August soybeans remain on a short and intermediate term buy signal.

Soybean oil:

August soybean oil gained 25 points on volume of 100,267 contracts. Total open interest increased by 1,602 contracts, which relative to volume is approximately 35% below average. The August contract lost 3,803 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on July 22, the August contract is trading 57 points lower and has made a daily low with 31.31, which is the lowest print since 31.26 made on July 17.August soybean oil remains on a short and intermediate term sell signal. Maintain bearish positions recommended originally on June 23, but lower stops to protect profits.

Soybean meal:

August soybean meal advanced $3.90 on light volume of 68,982 contracts. Volume was the lowest since July 13 when the August contract gained 1.10 on volume of 58,416 contracts and total open interest declined by 1,310. On July 21, total open interest increased by a massive 3,739 contracts, which relative to volume is approximately 120% above average meaning aggressive new buyers were entering the market in large numbers and moving prices higher (360.50), which is the highest print since July 17 (365.30). The August contract lost 1,310 of open interest, October 2015 -684, which makes the total open interest increase more impressive (bullish).

Like soybeans, the open interest increase in yesterday’s trading indicates that longs showing losses/profits are not quick to takes losses/profits. As a consequence, soybean meal may get a bounce in the short term. As this report is being compiled on July 22 the August contract is trading 5.30 higher, or +1.47% versus soybeans +0.54%. Ultimately, we think soybean meal prices are headed lower. August soybean meal remains on a short and intermediate term buy signal.

Corn:

September corn advanced 1.50 cents on light volume of 288,361 contracts.Volume with the weakest since June 4 when 250,969 contracts were traded and the September contract closed at 3.70 1/4. On July 21, total open interest declined by 3,833 contracts, which relative to volume is approximately 45% less than average. The September contract lost 949 of open interest, new crop December 2015 -5,322.

As this report is being compiled on July 22, the September contract is trading 2.00 cents lower and has made a daily low of 399 3/4, which is the lowest print since 3.90 1/2 made on June 30. Since September corn topped at 4.43 1/4 on July 14, total open interest has declined on only two occasions: July 17 when the September contract lost 9.75 cents and in yesterday’s trading. The decline from the July 14 high has been characterized by substantial open interest increases and undoubtedly there are a fair number of speculative longs showing losses. The question is when do they decide to liquidate. Although, corn may experience a short-term rally, ultimately we think prices are headed lower unless there is a major weather scare.

Chicago wheat: On July 21, September Chicago wheat generated a short-term sell signal, but remains on intermediate term buy signal.

September Chicago wheat lost 8.00 cents on volume of 121,588 contracts. Volume was the strongest since July 15 when 122,836 contracts were traded and September contract lost 4.25 cents while total open interest increased by 2,585. On July 21, total open interest increased by 2,468 contracts, which relative to volume is approximately 20% below average, however the September contract lost 1,471 of open interest, which makes the total open interest increase more impressive (bearish).

The decline in Chicago wheat has been characterized by open interest increases, and there remains a hefty net long position held by managed money. This class of speculator will continue to pressure the market when they are forced to liquidate. As this report is being compiled on July 22, the September contract is trading 6.00 cents lower, and has made a daily low of 5.15 1/4, which is the lowest print since 5.06 1/2 made on June 23.

As we said in yesterday’s report, now that Chicago wheat is on a short-term sell signal, the market should have a counter trend rally lasting 1-3 days and this is the opportunity to initiate bearish positions. Do not chase this market lower. Wait for the rally.

Live cattle:

August live cattle lost 1.60 cents on volume of 45,760 contracts. Volume was surprisingly light considering the magnitude of the decline, and was the strongest since July 17 when the August contract gained 15 points on volume of 59,035 contracts and total open interest increased by 209.  Though volume was light, the total open interest increase was heavy with an addition of 2,742 contracts, which relative to volume is approximately 140% above average meaning aggressive new short-sellers were entering the market in large numbers and driving prices to a new low for the move (1.45075).

As this report is being compiled on July 22, the August contract is trading lower again, this time by 55 points and has made a new low for the move of 1.44525, which is the lowest print since 1.43950 made on April 22. Previously, we recommended lowering stops to 1.47500, the high print on July 17. However, as of today’s trading this is a 3 cent disparity and we think it is unwise to lose this much potential profit on a counter trend rally. Also, the massive open interest increase in yesterday’s trading indicates the Johnny-come-lately’s are entering the market in large numbers, which almost guarantees a sharp rally in the days ahead.

As a consequence, we recommend taking profits on bearish positions either day or by tomorrow at the latest. The live cattle trade recommended in the July 1 report has been lucrative and we see no reason to squeeze the last dime out of it.

Lean hogs: It appears that August lean hogs have generated a short-term buy signal on July 22. We will report on this tomorrow.

Gasoline: On July 22, September gasoline will generate an intermediate term sell signal after the August contract generated a short-term sell signal on July 7.

September gasoline lost 38 points on volume of 146,730 contracts. Total open interest increased by 240 contracts, which is minuscule and dramatically below average. The August contract lost 4,757 of open interest, which makes the total open interest increase by more impressive (bearish). As this report is being compiled on July 22, the September contract is trading 4.52 cents lower on the day. As of today, gasoline and heating oil and WTI crude are on short and intermediate term sell signals and the trend for all three is lower.