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Soybean oil:

July soybean oil lost 20 points on volume of 83,415 contracts. Total open interest declined just 6 contracts. The July contract lost 1,529 of open interest. As this report is being compiled on June 5, the July contract is trading higher again, this time by 29 points and has made a new high for the move of 35.29, which is the highest print since November 3, 2014 (35.66). On April 16, July soybean oil generated a short-term buy signal and intermediate term buy signal on May 5.

Chicago wheat:

July Chicago wheat advanced 13.00 cents on volume of 169,708 contracts. Volume fell from June 3 when 184,528 contracts were traded and total open interest declined by 2,303 after the July contract fell from its daily high of 5.26 1/4 and closed 1.75 cents lower. On June 4, total open interest increased by 2,189 contracts, which relative to volume is approximately 45% below average, but an open interest increase on yesterday’s price advanced is positive. The July contract lost 5,170 of open interest, which makes the total open interest increase more impressive (bullish).

As this report is being compiled on June 5, the July contract is trading 1.25 cents higher after making a daily high of 5.34, which takes out the previous high print of 5.30 1/4 made on May 18. It is difficult to ascertain the degree to which the rally will continue, but we see this as primarily technical in nature with a large number of speculative short sellers who are likely experiencing a degree of pain at this juncture. On May 15, July Chicago wheat generated a short-term buy signal, but remains on intermediate-term sell signal.

Live cattle:

August live cattle advanced 82.5 points on volume of 40,339 contracts. Volume declined from June 3 when the August contract lost 1.375 cents on volume of 54,744 contracts and total open interest declined by 5,619 contracts. On June 4, total open interest increased by 1,821 contracts, which relative to volume is approximately 75% above average meaning that large numbers of new buyers were entering the market and driving prices higher (1.51775). The June contract accounted for loss of 1,839 of open interest, which makes the total open interest increase by more impressive (bullish).

As this report is being compiled on June 5, the August contract is trading 80 points lower after making a daily high of 1.52225, which is the highest print since 1.52450 made on June 2.The live cattle market has been trading in the consolidation pattern for well over a month and is not able to muster the strength to sustain a major move higher. Conceivably, the market may have one last shot to the upside between now and the Fourth of July holiday, but despite very positive open interest action lacks momentum at this juncture. Clients should avoid long positions, however they may want to consider writing out of the money calls on rallies.

Lean hogs: On June 4, August lean hogs generated a short term sell signal, but remains on an intermediate term buy signal.

August lean hogs lost 1.875 cents on volume of 40,905 contracts. Total open interest increased by 741 contracts, which relative to volume is approximately 25% below average, however an open interest increase on yesterday’s price decline is bearish. Adding to this, the June contract lost 2023 of open interest, which makes the total open interest increased by more impressive (bearish). As this report is being compiled on June 5, the August contract is trading 1.30 cents higher, which is typical after the generation of a sell signal. Usually, the market has a counter trend rally lasting from 1-3 days and this is the opportunity to initiate bearish positions.

WTI crude oil:

July WTI crude oil lost $1.64 on volume of 697,485 contracts. Volume declined somewhat from June 3 when the July contract lost 1.62 on volume of 721,990 contracts and total open interest declined by 9,360. On June 4, total open interest increased by a sizable 17,314 contracts, which relative to volume is average The July contract accounted for a gain of 123 of open interest, which is a short term negative. Usually, as the nearby month approaches expiration, it is typical that open interest declines in the front month. As this report is being compiled on June 5, the July contract is trading 23 cents lower and has made a daily low at 56.83, which is the lowest price in the July contract since May 28 (56.51). On May 20, the July contract generated a short-term sell signal, but remains on an intermediate term buy signal.

Gold:

August gold lost $9.70 on volume of 162,020 contracts. Total open interest increased by 3,565 contracts, which relative to volume is approximately 10% below average, however an open interest increase on yesterday’s price decline is bearish.The June contract lost 281 of open interest, which makes the total open interest increase more impressive (bearish).

For the past two days, August gold prices have declined and open interest has increased on both days. This confirms the downtrend.

On May 27, August gold generated an intermediate term sell signal and a short term sell signal on June 3. As this report is being compiled on June 5, August gold is trading down $7.40 and has made a new low for the move of 1162.10, which is the lowest print since 1161.20 made on March 19, 2015.

Silver: On June 5, July silver will generate short and intermediate term sell signals.

July silver lost 37.7 cents on volume the 63,368 contracts. Total open interest increased by 2,539 contracts, which relative to volume is approximately 55% above average meaning that aggressive new short-sellers were entering the market and driving prices to a new low for the move ($16.080). The July contract gained of 3,320 contracts.

As this report is being compiled on June 5, the July contract is trading 10.8 cents lower and has made a daily low of 15.925, which is the lowest print since $15.895 made on May 1.

Dollar index: On June 4, the June and September dollar indices generated intermediate term sell signals. They remain on short-term buy signals.

The June dollar index lost 16 points on volume of 69,481 contracts. Total open interest declined by 234 contracts, which relative to volume is approximately 85% below average. The June contract accounted for loss of 1,195 open interest. As this report is being compiled on June 5, the June contract is trading 85.2 points higher and has made a daily high at 96.955, which takes out the June 3 high of 96.575.

Euro: On June 4, the June and September euro generated short and intermediate term buy signals. This reverses the short and intermediate term sell signals of May 26 and May 27 respectively.

The June euro lost 6 points on volume of 389,845 contracts.Volume declined from June 3 when the June contract rallied 83  pips on volume of 432,944 contracts and total open interest declined by 5,503 contracts. On June 4, total open interest declined again, this time by 4,976 contracts, which relative to volume is approximately 45% below average. The June contract, which is approaching expiration lost 9,882 of open interest.

Now that the euro is on short and intermediate term buy signals, we are seeing the first day of a pullback on June 5, and would expect more corrective action before the euro begins to move higher again. Conceivably, the new buy signals may be false, but we will not know this until mid-week. However, the market is trading rather firmly, especially considering the magnitude of the move higher, yesterday’s minor loss and the relatively shallow decline on June 5. The euro is not acting as if the buy signal will be reversed immediately.

10 Year Treasury Note: On April 29, OIA announced the June 10 year note generated a short term sell signal and an intermediate term sell signal on May 5

The 10 year treasury note advanced 14.5 points on volume of 1,913,833 contracts. Total open interest declined by a strong 66,403 contracts, which relative to volume is approximately 20% above average, meaning that liquidation was heavy on the advance. Although we expected to see an open interest decline in the June contract due to its imminent expiration, the September contract had an open interest decline of 41,041 contracts along with the June contract losing 25,362.

The open interest action on June 4 confirms the downtrend in the September note. As this report is being compiled after the release of the US employment report by the Department of Labor, the September contract is trading 24 points lower and has made a new low for the move of 124-220, takes out the previous low print of 125-210 made on December 24, 2014 by the March 2015 contract.