For Bloomberg access:{OIAR<GO>}

Soybeans:

July soybeans lost 9.50 cents on volume of 268,779 contracts. Total open interest increased by 6,169 contracts, which relative to volume is approximately 10% below average, however the July contract lost 14,937 of open interest, which makes the total open interest increased by more impressive (bearish). In summary new short-sellers were entering the market and driving prices lower (9.38).

As this report is being compiled on June 12, the July contract is trading 0.50 cent lower on light volume.The market has struggled to rally, and has been unable to generate a short-term buy signal. For this to occur, the July contract must make a daily low above OIA’s key pivot point for June 12 of 9.49 3/4. The down trend will accelerate if the July contract makes a daily high below OIA’s key pivot point for June 12 of 9.36 1/8.

Usually, after the generation of a buy or sell signal, the market has a tendency to have a counter trend move from 1-3 days. Since July soybeans are already on a short and intermediate term sell signal, if it makes a daily high below the pivot point, there may not be much of a rally. Like many commodity markets, soybeans look tired, and it will likely take a major weather event to awaken from its slumber.

Soybean oil:

July soybean oil lost 58 points on volume of 128,850 contracts. Total open interest declined by 3,842, which relative to volume is approximately 5% above average meaning that liquidation was heavier than usual on yesterday’s decline. The July contract lost 9,557 of open interest. The open interest decline accompanying yesterday’s loss is positive, especially because there was a substantial build of open interest on the rally.

We do not want to see open interest increases on a consistent basis when soybean oil declines. For the past four sessions beginning on June 8, July soybean oil has declined each day and the total open interest decline for four days amounts to 5,275 contracts while July soybean oil lost 1.49 cents.This is positive.

It is difficult to ascertain whether the decline is the beginning of a new bear market or whether it is a consolidation for another run  at the high of 35.29 made on June 5. It is important to keep in mind that managed money is long soybean oil by a ratio of 3.15:1, which means if the decline accelerates, managed money liquidation will add fuel to the downside move. As this report is being compiled on June 12, the July contract is trading 12 points higher on the day. For July soybean oil to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for June 12 of 32.67.

Corn:

July corn lost 0.75 cents on heavy volume of 547,147 contracts. Volume declined dramatically from June 10, the day the WASDE report was released by the US Department of Agriculture when July corn lost 7.75 cents on extraordinary volume of 699,375 contracts and total open interest increased by 9,345. The action on June 10 was very bearish because the July contract lost 42,475 of open interest, which means there was sufficient open interest increases in the forward months to offset the decline in July and increase total open interest to a positive number.

On June 11, total open interest declined by 225 contracts, which is essentially an unchanged number. However, the July contract shed 55,562 of open interest which means there was sufficient open interest increases in the forward months to offset almost all of the decline in the July contract.However, this was unable to break prices substantially lower on June 11. As this report is being compiled on June 12, the July contract is trading 2.50 cents lower and has made a daily low of 3.53, which is below yesterday’s print of 3.54, and is the lowest price since 3.51 3/4 made on June 2.

July corn remains on a short and intermediate term sell signal, and we think the selling will accelerate if the July contract makes a daily high below OIA’s key pivot point for June 12 of 3.56 3/8. The high for June 12 has been 3.56 3/4, which is close enough to be concerned about increased selling pressure and downside momentum.

For July corn to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for June 12 of 3.63 3/8, but it may take a weather event for this to occur.

Chicago wheat:

July Chicago wheat lost 9.35 cents on volume of 180,704 contracts. Total open interest increased by 4,684 contracts, which relative to volume is average. The July contract lost 8013 of open interest, which makes the total open interest increase more impressive (bearish). Despite the sharp move lower from the high of 5.37 1/2 made on June 10, the July contract remains on a short and intermediate term buy signal.

For a short-term sell signal to occur, the high of the day must be below OIA’s key pivot point for June 12 of 4.93. An intermediate term sell signal will be generated if the high of the day is below OIA’s key pivot point for June 12 of 5.03 3/8.

Live cattle:

August live cattle lost 60 points on light volume of 42,082 contracts. Total open interest increased by 196 contracts, which relative to volume is approximately 75% below average. The June contract lost 1,942 of open interest, August 2015 -419 and there were sufficient open interest increases in the forward months to offset the decline in June and August.

As this report is being compiled on June 12, the August contract is trading sharply lower down 2.275 cents or -1.49%. We have been warning clients for quite some time that the advance did not have much momentum due to tepid increases of open interest on rallies. Additionally, managed money is heavily long the live cattle market and according to last week COT report, they held long positions by a ratio of 8.24:1. In summary, there is plenty of fuel to accelerate the downside move if live cattle generates a short term sell signal. This would occur if the daily high is below OIA’s key pivot point for June 12 of 1.50210.

WTI crude oil:

July WTI crude oil lost 66 cents on volume of 719,560 contracts. Total open interest increased by 10,460, which relative to volume is approximately 40% below average. However, the July contract lost 40,202 of open interest, which means there was sufficient open interest increases in the forward months to offset the decline in July and increase total open interest to a positive number. This is bearish. As this report is being compiled on June 12, the July contract is trading 61 cents lower and has made a daily low as 59.73, which is the lowest print since June 9 (58.23). July WTI remains on a short term sell signal, but an intermediate-term buy signal.

Natural gas: We are suspending coverage on natural gas until we announce a signal change or see a trading opportunity. July natural gas remains on a short and intermediate term sell signal.

Dollar index:

The September dollar index advanced 30.5 points on heavy volume of 103,084 contracts.Volume declined from June 10 when the September contract lost 52.1 points on volume of 124,064 contracts and total open interest increased by 3,257. On June 11, total open interest declined by 978 contracts, which relative to volume is approximately 50% below average, however, an open interest decline on yesterday’s price advance confirms the bearish trend of the index.

The June contract accounted for loss of 19,712 of open interest and there was an insufficient amount of open interest increases in the forward months to offset the decline in June.As this report is being compiled on June 12, the September contract is trading 21.6 points lower on the day.The September dollar index generated a short-term sell signal on June 10 after generating an intermediate term sell signal on June 4.

Euro:

The September euro lost 53 pips on heavy volume of 570,461 contracts. Volume declined somewhat from June 10 when the euro advanced 35 pips on volume of 582,800 contracts and total open interest increased by a massive 30,329. On June 11, total open interest increased by 2,864 contracts, which relative to volume is approximately 75% below average.

The June contract lost 81,880 of open interest, which means there was sufficient open interest increases in September and December to offset the decline in June and increase total open interest to a positive number. While this is bearish, the euro is on a short and intermediate term buy signal. We think it is headed higher and is likely to test the June 10 high of 1.1401.

Copper: July copper will generate an intermediate term sell signal on June 12 if the high of the day is below OIA’s key pivot point for June 12 of $2.6883. On May 26 July copper generated a short term sell signal. 

July copper lost 7.80 cents on heavy volume of 112,812 contracts.Volume exceeded that of April 14 when 109,894 contracts were traded and the July 2015 copper contract closed at 2.7005.On June 11, total open interest increased by massive 7,900 contracts, which relative to volume is approximately 185% above average meaning aggressive new short-sellers were entering the market in very large numbers and driving prices to a new low for the move (2.6575), which is the lowest print since 2.6600 made on April 23. As this report is being compiled on June 12, the July contract is trading 25 ticks below yesterday’s close, but has not taken out yesterday’s low.