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Soybeans:

July soybeans advanced 18.50 and the August contract gained 19.75 cents on total volume of 336,254 contracts. Volume was the strongest since June 23 when soybeans lost 2.00 cents on volume of 347,658 contracts and total open interest declined by 10,636.

On June 25, total open interest increased by 9,216 contracts, which is the first time it has increased during the current rally. Relative to volume the open interest increase was average. The July contract lost 14,689 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 to an average number. Again, this is an impressive performance. While the open interest increase in yesterday’s trading is positive, it also may signify market participants who are late to the party as the June 30 report approaches.

It would have been far more positive if open interest had increased at the earlier stages of the rally, rather than after  beans have advanced of over 70 cents. Also, while volume was above average, the fact that it could not surpass that of June 23 when the daily range was just 18 cents versus yesterday’s range of 22 cents indicates that many potential participants remained on the sidelines.

Another sign of caution is that the August contract has been gaining on July during the past 4-5 days while soybeans advanced, and this is negative spread action. As this report is being compiled on June 26, the August contract is trading 10.00 cents higher and has made a new high for the move of 10.11 3/4, which is the highest print since 10.16 3/4 made on March 4.

All in all, the soybean market has done to the short selling speculator crowd on the way up what it just finished doing to holders of long positions (cash or futures) on the way down. As a result, the market has attained a level of equilibrium at current levels. Our basic premise is: Unless there is a major fundamental change in the supply demand outlook going forward, we expect prices eventually to resume their decline.

The rally has likely blown out a substantial number of speculative shorts, and this will reduce potential buying power in the immediate future. The market is going to need new buyers willing to step up to pay ever higher prices in order for the advance to continue.On June 17 soybeans generated a short-term buy signal and an intermediate term buy signal on June 23.

Soybean oil:

August soybean oil gained 10 points on volume of 157,581 contracts.Total open interest increased 550 contracts, which relative to volume is approximately 85% below average. However, the July contract lost 6,500 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on June 26, the August contract is trading 19 points lower after making a daily high of 33.84, which is below OIA’s exit point of 34.07 for previously recommended light bearish positions. On June 18, August soybean oil generated a short-term sell signal and remains on an intermediate term buy signal.

Soybean meal:

August soybean meal advanced $8.00 on volume of 123,855 contracts. Total open interest increased by 2,671 contracts, which relative to volume is approximately 20% below average. However, the July contract lost 7,384 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on June 26, the August contract is rocketing higher, up $7.40, or +2.24% versus soybeans +1.47% and has made a new high for the move of 341.60, which is the highest print since $343.70 made on February 24.

The performance of soybean meal has been nothing short of spectacular and after making its major low of 291.10 on June 1, through today’s high, the August contract has gained $50.50. Additionally, the open interest action in soybean meal has been outstanding throughout the rally. It is clearly the leader of the complex, but as we have said before, the meal market tends to top in July or August. On June 16, soybean meal generated a short-term buy signal and an intermediate term buy signal on June 19.

Corn: On June 25, September corn generated a short term buy signal and will likely generate an intermediate term buy signal on June 26. For this to occur, the low of the day must be above OIA’s key pivot point for June 26 of 3.78 1/4. The July contract generated a short-term buy signal on June 24.

July corn advanced 10.00 and the September contract gained 11.25 cents on volume of 565,363 contracts. Volume was somewhat above that of June 24 when corn lost 0.50 cents on volume of 549,434 contracts and total open interest declined by 23,515. However, volume was below that of June 23 when corn gained 7.50 cents on volume of 581,701 contracts and total open interest declined by 8,487.

On June 25, total open interest declined by 10,660 contracts, which relative to volume is approximately 25% below average. The July contract lost 31,792 of open interest. As this report is being compiled on June 26, the September contract is trading 9.50 cents higher and has made a high of 3.97, which is the highest print since 4.01 made on April 8.

The September contract has been gaining on July during the rally, and this is negative spread action, which is a sign of caution. Unless there is a huge surprise in the June 30 report, we would expect corn prices to resume their downtrend, especially if more short-sellers are blown out of the market between now and the June 30 report.

Chicago wheat: September Chicago wheat will generate an intermediate term buy signal if the daily low is above OIA’s key pivot point for June 26 of 5.24 7/8. Chicago wheat generated a short-term buy signal on May 15, and this has not been reversed.

September Chicago wheat advanced 14.75 cents on volume of 144,508 contracts. Volume was below that of June 24 when wheat lost 3.75 cents on volume of 161,250 contracts and total open interest declined by 8,114 contracts. Additionally, volume was below that of June 23 when wheat gained 20.25 cents on volume of 180,792 contracts and total open interest declined by 7,983.

On June 25, total open interest declined by 7,037, which relative to volume is approximately 75% above average meaning that liquidation was extremely heavy on yesterday’s strong advance. The July contract lost 12,121 of open interest, which means there were insufficient open interest increases in the forward months to have a substantial impact on total open interest.

As this report is being compiled on June 26, the September contract is rocketing higher, up 29.50 cents, or +5.48% and is the performance leader in today’s session.Managed money has been heavily short Chicago wheat and the market is undoubtedly blowing out huge numbers of short-sellers who are powering the market higher. Once sufficient numbers have been taken out, the wheat market will need fresh new buyers willing to step up and pay ever higher prices for the rally to continue. Wheat has a history of making very large moves in compressed periods of time and then reverting to the dominant trend.

Live cattle: August live cattle will generate a short term sell signal on June 26. It appears that an intermediate term sell signal is not far off. 

August live cattle lost 1.75 cents on heavy volume of 63,484 contracts. Volume was the strongest since May 29 when 87,637 contracts were traded when live cattle lost 1.475 cents and total open interest declined by 9,205 contracts. On June 25, total open interest declined by a massive 9,860 contracts, which relative to volume is approximately 420% above average meaning that huge numbers of market participants were liquidating as live cattle prices moved to their lowest level since May 7 (1.47775).

Open interest declines occurred across the board in the most heavily traded months with the June contract, which is going off the board losing 1,465 of open interest, August 2015 -8,758 and October 2015 -609. June 25 was the second day in a row in which total open interest declined by a massive amount. However, it has been apparent for quite some time that managed money has been liquidating their long positions and had become disillusioned with the market.

WTI crude oil:

August WTI crude oil lost 57 cents on very light volume of 376,279 contracts. Remarkably, it appears that volume traded on June 25 was the lowest of 2015.On June 25, total open interest increased by 7,269 contracts, which relative to volume is approximately 20% below average, but an open interest increase on yesterday’s price decline is bearish. As this report is being compiled on June 26, the August contract is trading 3 cents higher after making a new low for the move of 58.76, which is the lowest print since $58.70 made on June 9. The August contract remains on a short term sell signal, but an intermediate-term buy signal. An intermediate-term sell signal will be generated if the high of the day is below OIA’s key pivot point for June 26 of 57.39.

S&P 500 E mini:

The September S&P 500 E mini lost 5.50 points on volume of 1,220,905 contract. Total open interest declined just 1,328. As this report is being compiled on June 26, the September contract is trading 1.75 points lower and has made a daily low of 2086.25, which is the lowest print since 2082.00 made on June 18. On June 23, the September contract generated a short-term buy signal, and June 26 is the third day of the counter trend move, which usually occurs after the generation of a buy signal. Unless the buy signal is about to be reversed, today’s decline should be the extent of it.A substantial break below today’s low would set up a short term sell signal.