For Bloomberg access:{OIAR<GO>}

Soybean oil:

July soybean oil lost 34 points on volume of 139,544 contracts. Total open interest declined by a massive 6,377 contracts, which relative to volume is approximately 75% above average meaning that liquidation was extremely heavy on the decline. The July contract lost 7,173 of open interest, and the large open interest decline on June 2 is healthy for the market. During the advance, there was a substantial open interest build. As this report is being compiled on June 3, the July contract is trading 60 points higher and has made a daily high of 34.88, which is below yesterday’s print of 34.94. On April 16 OIA announced that July soybean oil generated a short-term buy signal and an intermediate term buy signal on May 5.

Chicago wheat:

July Chicago wheat advanced 18.75 cents on volume of 150,083 contracts. Total open interest declined by 5,164 contracts, which relative to volume is approximately 20% above average meaning that liquidation was substantial, as the market rallied sharply. The July contract lost 10,416 of open interest.

As this report is being compiled on June 3, the July contract is trading 9.25 cents higher and has made a daily high of 5.26 1/4, which is the highest print since May 22 (5.29). Short sellers continue to get blown out of the market, and yesterday’s action confirms this. In order for the advance to continue, the July contract must make a daily low above OIA’s key pivot point for June 3 of 5.17. This would generate an intermediate term buy signal. On May 15, the July contract generated a short-term buy signal, but remains on the intermediate term sell signal.

Live cattle:

August live cattle lost 15 points on volume of 37,430 contracts. Total open interest declined by 1.035, which relative to volume is average. The June contract accounted for loss of 3,208 of open interest. As this report is being compiled on June 3, the August contract is trading 1.225 cents lower and has made a daily low of 1.50750, which is the lowest print since 1.49950 made on May 27. We advise a stand aside posture.

From the May 29 report:

“On May 29, the June contract lost 9,147 of open interest, however the August contract gained 907 of open interest. The August contract contains approximately 40% of the outstanding open contracts and is where the bulk of speculators hold positions. That the August contract did not show a decline of open interest is a yellow flag.”

“We remain concerned there was no follow-through on May 29 from the move on the 28th.The August contract made a high of 1.53250 on May 29 and the high on June 1 has been 1.52150. This is the kind of action (lower highs) that increases our level of caution. With the massive increase of open interest on high-volume on May 28, the market should have had substantial follow-through in subsequent days.”

WTI crude oil:

July WTI crude oil advanced $1.06 on relatively heavy volume of 703,460 contracts. Volume was the strongest since May 29 when the July contract advanced $2.62 on volume of 843,959 contracts and total open interest increased by 15,141. On June 2, total open interest increased by a hefy 21,985 contracts, which relative to volume is approximately 10% above average meaning that aggressive new buyers were entering the market in large numbers and driving prices higher (61.58), which is the highest print since 61.71 made on the May 18.

As this report is being compiled on June 3, the July contract is trading down $1.40, or -2.29%.While open interest action in WTI has been favorable, we have been skeptical of its ability to reverse the May 20 short term sell signal (see the May 29 extract).

From the May 29 report:

“The fact there has been no follow through on Friday’s strong move is indicative that WTI is not likely to generate a new short-term buy signal immediately. On May 20, July WTI generated a short term sell signal, but remains on an intermediate term buy signal. For the short-term buy signal to reverse,the high of the day must be below OIA’s key pivot point for June 1 of $60.67.”

Brent crude oil:

July Brent crude oil advanced 61 cents on volume of 745,690 contracts. Total open interest increased by massive 32,360 contracts, which relative to volume is approximately 60% above average meaning large numbers of new buyers were entering the market and driving prices higher (65.88). The July contract lost 4,107 of open interest. During the past three trading sessions beginning on May 29, total open interest increased by 77,995 contracts while the July contract has gained $2.91. As this report is being compiled on June 3, the July contract is trading down 1.60. On May 20, Brent crude oil generated a short-term sell signal, but remains on intermediate-term buy signal.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.9 million barrels from the previous week. At 477.4 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories decreased by 0.3 million barrels last week, but are above the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 3.8 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories rose 3.8 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 7.4 million barrels last week.

Dollar index:

The June dollar index lost 1.595 points on heavy volume of 96,166 contracts.Volume was the strongest since April 29 when 104,051 contracts were traded in the June contract closed at 95.322. Total open interest increased by just 133 contracts and the June contract lost 955 of open interest. As this report is being compiled on June 3, the June contract is trading down 37.8 points on the day. The June and September dollar index remained on a short and intermediate term buy signal.

Euro:

The June euro advanced 2.34 cents on huge volume of 433,515 contracts. Volume was the strongest since April 30 when 448,719 contracts were traded and the June euro closed at 1.1266.On June 2, total open interest increased by 402 contracts, which is minuscule and dramatically below average. However, the June contract lost 5,082 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in June. This is a positive short-term positive factor.

As this report is being compiled on June 3, the June contract is trading 60 pips higher and has made new high for the move of 1.1288, which is the highest print since 1.1331 made on May 19.For the euro to reverse the short term sell signal, the low of the day must be above OIA’s key pivot point for June 3 of 1.1190 and an intermediate term buy signal will be generated if below with the day is above 1.1099.

British Pound:

The June British pound advanced 1.45 cents on volume of 111,577 contracts. Total open interest declined by 2.550 contracts, which relative to volume is approximately 10% below average,, but an open interest decline on yesterday’s strong price advanced is bearish. The June contract lost 3,570 of open interest. As this report is being compiled on June 3, the June pound is trading 20 pips lower. The June and September pound remain on short-term sell signals, but intermediate-term buy signals.

Australian dollar:

The June Australian dollar advanced 1.76 cents on volume of 131,171 contracts. Volume was the strongest since April 30 when 143,272 contracts were traded and the June contract closed at 78.66. On June 2, increased by 935 contracts, which relative to volume is approximately 60% below average, but an open interest increase on a price advance of the magnitude seen on June 2 is short-term positive. The June contract accounted for loss of 2,668 of open interest and there were sufficient open interest increases in the forward months to offset the decline in June.

As this report is being compiled on June 3, the June contract has made a new high for the move at 78.19, which is the highest print since 78.30 made on May 26.The June and September Australian dollar remain on short and intermediate term sell signals.