For Bloomberg access:{OIAR<GO>}

Soybeans:

July soybeans lost 5.75 cents (August 2015 -5.50) on moderate volume of 266,625 contracts. Volume was the lowest since June 19 when the July contract lost 6.50 cents on volume of 239,311 contracts and total open interest declined by 11,455. On June 24, total open interest declined by 7,063 contracts, which relative to volume is average. The July contract lost 13,086 of open interest, August 2015 -421, September 2015 -1596.

As this report is being compiled on June 25, the July contract is rocketing higher, up 17.25 cents, or +1.76% and has made a new high for the move of 10.01, which is the highest print since 10.01 3/4 made on March 12 and takes out the previous high of 9.96 made on June 23.

On June 17, July soybeans generated a short-term buy signal and an intermediate term buy signal on June 23. We remain concerned the market has only had a shallow two day correction on June 23 and 24, considering that on June 15 the July contract closed at 9.37 3/4.The market is chasing out short-sellers in large numbers, and we suspect by the time the June 30 report rolls around the momentum upwards will have stalled.

As we have said before, once short covering has been spent, new buyers must be willing to aggressively enter the market to bid prices higher. Unless, there is a major weather event, we do not see this as a likely outcome. This makes the market vulnerable to a resumption of the down trend, especially if the June 30 report contains some bearish surprises. For now, the trend is up.

Soybean oil:

August soybean oil lost 45 points on volume of 153,722 contract. Total open interest declined by just 142 contracts, however, the July contract lost 10,076 of open interest, which means there were sufficient open interest increases in the forward months to reduce total open interest to a negligible number. We consider the action yesterday as constructive.

However, August soybean oil remains on a short-term sell signal (June 18), and an intermediate-term buy signal, which simply means that for now the trend is sideways to lower. As this report is being compiled on June 25, the August contract is trading  2 points higher after making a high of 33.76, which is slightly above yesterday’s high of 33.65. In previous reports we have recommended light bearish positions with an exit of 34.07, which is the June 11 high.

Soybean meal:

July soybean meal lost $3.90 (August 2015 -4.80)  on total volume of 106,238 contracts.Total interest increased by 2,483 contracts, which relative to volume is average. The July contract lost 4,242 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in July and increase total open interest. The action yesterday was bearish.

On June 23, the July contract lost 1.70 on the highest volume of 2015 of 166,571 contracts and total open interest increased by massive 9,162. In short, during the past two days prices have declined and total open interest has increased. We suspect the selling is coming from commercial interests because speculators are on the bullish side of the market. As this report is being compiled on June 25, the July contract is trading 8.30 higher and has made a daily high at 337.20, which takes out the previous high for the move of 335.90 made on June 23 and is the highest print since 340.50 made on March 2.

In the June 23 report referencing soybean meal, we cautioned clients about markets topping on massive volume and open interest increases and though the July contract has taken out the June 23 high, we want to remind clients that soybean meal tends to top in the July-August time frame. For soybeans the topping process tends to occur in June or July. On June 16, July soybean meal generated a short-term buy signal and an intermediate term buy signal on June 19.

From the June 23 report:

“Due to the very strong recent advances in addition to huge volume and a massive open interest increase in yesterday’s trade, we strongly encourage a cautious approach to the long side of this market. As we have pointed out in many reports in the past, very often, markets top on major volume spikes, especially when they are accompanied by massive increases of open interest.”

Corn: On June 24, July corn generated a short-term buy signal, but remains on intermediate-term sell signal. The September contract will generate a short-term buy signal on June 25.

July corn lost 1.00 cent on volume of 549,434 contracts. Volume declined from June 23 when 581,701 contracts were traded and July corn advanced 7.50 while total open interest declined by 8,487 contracts.On June 24 total open interest declined by a massive 23,515 contracts, which relative to volume is approximately 65% above average meaning liquidation was extremely heavy on the fractional loss. The July contract lost 43,309 of open interest.

As this report is being compiled on June 25, the July contract is rocketing higher, up 9.50 cents, or +2.52% and is the second best performer in the grain complex on June 25, with soybean meal in first place. The July contract has made a high of 3.77, which is the highest print since 3.77 1/4 made on April 24.

As we have pointed out before, massive short covering is powering the grain complex higher, not new buying. Unless there is a big surprise in the June 30 report, or major weather event, after the short covering has dissipated, there needs to be a new round of aggressive buyers to push prices higher and we do not think this is in the cards with current fundamentals.

Chicago wheat:

July Chicago wheat lost 3.75 cents on volume of 161,215 contracts. Total open interest declined by 8,114 contracts, which relative to volume is approximately 100% above average meaning liquidation was extremely heavy on the modest decline. The July contract lost 10,091 of open interest, December 2015 -234.

As this report is being compiled on June 25, the July contract is skyrocketing higher, up 12.75 cents and has made a new high for the move of 5.31 3/4, which takes out yesterday’s high of 5.30 and is the highest print since 5.37 1/2 made on June 10. July Chicago wheat remains only short term buy signal, but an intermediate-term sell signal.For an intermediate term buy signal to be generated, the low the day must be above OIA’s key pivot point for June 25 of 5.16 3/4, and the low thus far has been 5.13.

Live cattle:

August live cattle lost 1.50 on surprisingly light volume 38,818 contracts. Total open interest though declined by a massive 4,957 contracts, which relative to volume is approximately an astounding 400% above average meaning that liquidation was extremely heavy on the decline though participation was restricted as evidenced by the low volume. Open interest declines occurred across the board with the June contract losing 1,175, August -3,403, October 2015 -60, December 2015 -610.

As this report is being compiled on June 25, the August contract is trading 1.925 cents lower and has made a daily low of 1.47850, which is the lowest print since 1.47775 made on May 7. The August contract will not generate a short term sell signal on June 25 because the high of the day (1.50300) is above the pivot point of 1.50150, but will likely do so tomorrow. The August contract will generate an intermediate term sell signal if the daily high  is below OIA’s key pivot point for June 25 of 1.48585.

OIA has been warning clients to stay away from the long side of cattle and advised writing out of the money calls in the August contract, which has proven to be a profitable trade (see extract from the June 14 report below). We didn’t recommend outright bearish positions because August live cattle was on a short and intermediate term buy signal.

From the June 14 Weekend Wrap:

“Three weeks ago, managed money was long live cattle by 9.82:1, which has been the highest ratio for the past couple of months. Despite firm prices, managed money is losing its enthusiasm for live cattle. Additionally, the longer-term moving averages are flattening out with the 50 day standing at 1.49597 and the 200 day average of 1.49410.”

“This is not a bullish set up and the year to date and second quarter performance stats (see below) confirm the stagnant moving averages. Despite bullish fundamentals talked up by analysts, the fact is the cattle market does not have this momentum to move substantially higher. We have advised a stand aside posture, but for those of you who want to be involved in the market, a more conservative approach is to write out of the money calls in the August contract.”

WTI crude oil:

August WTI crude oil lost 74 cents on volume of 540,675 contracts. Total open interest declined just 389 contracts and the July contract lost 752 of open interest. As this report is being compiled on June 25, the August contract is trading 39 cents lower and has made a daily low of 59.43, which is the lowest print since 59.55 made on June 23. The August contract remains on a short-term sell signal, but an intermediate-term buy signal.

Gold:. On June 24, August gold generated a short-term sell signal, which reversed the June 19 short-term buy signal. The August contract remains on intermediate term sell signal.

This will be our last report on gold until we announce a signal change or see a trading opportunity.

August gold lost $3.70 on light volume of 124,106 contract. Total open interest increased by a sizable 5,202 contracts, which relative to volume is approximately 55% above average meaning that aggressive new short-sellers were entering the market in large numbers and driving prices lower (1168.10). As this report is being compiled one June 25, August gold is trading $1.90 lower on the day and has not taken out yesterday’s low