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Soybean oil:

July soybean oil lost 68 points on volume of 147,956 contracts. Volume was slightly below that of June 5 when the July contract advanced 25 points and made a new high for the move of 35.29 on volume of 149,200 contracts and total open interest increased by 5,048. On June 8, total open interest declined by 2,304 contracts, which relative to volume is approximately 40% below average, but this is positive open interest action relative to the price decline. The July contract lost 10,936 of open interest.

As this report is being compiled on June 9, the July contract is trading unchanged on the day and has made a daily low of 34.00, which is a fraction below yesterday’s print of 34.03. Although soybean oil has had a terrific run, in order for it to continue its advance, soybeans need to move higher. For July soybeans to generate a short-term buy signal, the low of the day must the above OIA’s key pivot point for June 9 of 9.49 1/2. On April 16, July soybean oil generated a short term buy signal and intermediate term buy signal on May 5.

Chicago wheat: Unless the market reverses substantially in today’s trade, the July Chicago wheat contract will generate an intermediate term buy signal. It must trade above OIA’s key pivot point for June 9 of 5.17 1/2. On May 15, July Chicago wheat generated a short-term buy signal.

July Chicago wheat advanced 11.00 cents on heavy volume of 186,683 contracts. Volume declined substantially from the trade on June 5 when the July contract lost 6.75 cents on huge volume of 264,195 contracts and total open interest declined by 4,097. Volume traded on June 5 with the highest of 2015. On June 8, total open interest increased by 3,574 contracts, which relative to volume is approximately 20% below average, but an open interest increase on yesterday’s advance is positive.

This is especially the case because the July contract lost 7069 open interest, which means there was sufficient open interest increases in the forward months to offset the decline in the July contract. Also, yesterday’s increase of open interest indicates that short-sellers are not liquidating as prices move higher. This bodes well for the advance to continue. According to the most recent COT report, managed money is short Chicago wheat by ratio of 2.16:1, which means they will provide fuel for the upside move.

Live cattle:

August live cattle advanced 1.025 cents on volume of 45,479 contracts. Total open interest declined by 1,737 contracts, which relative to volume is approximately 25% above average meaning that liquidation was substantial on the advance. This is bearish. The June contract accounted for loss of 1,805 open interest, October 2015 -338, which means there was insufficient open interest increases in the forward months to offset the decline in those two months.

In summary, liquidation was the order of the day as prices moved higher and price and open interest stats for yesterday’s trading are the most bearish seen in many weeks. As this report is being compiled on June 9, the August contract is trading 1.00 cent higher, and for the rally to resume in earnest it must make a daily low above OIA’s key pivot point for June 9 1.52000. Thus far in today’s trade, the low price has been 1.51050. The decline will accelerate if the daily high is below OIA’s key pivot point for June 9 of 1.50430

A partial extract from the June 5 report:

Total open interest declined by a massive 9,662 contracts, which relative to volume is approximately an astounding 450% above average, which means liquidation was off the charts heavy. Liquidation was in the front months with the June contract losing 8,589 of open interest, August -1,118, October 2015 -984. The open interest action on June 5 has all the earmarks of tired longs throwing in the towel.”

WTI crude oil:

July WTI crude oil lost 99 cents on volume of 671,897 contracts. Total open interest declined just 3,746, which is minuscule and dramatically below average. However, the July contract lost 48,112 open interest, which means there were sufficient open interest increases in the forward months to reduce total open interest negligible number. In short, there were substantial open interest increases on yesterday’s price decline indicating that new short-sellers were entering the market.

The story on June 9 is vastly different with the July contract trading $2.07 higher with a new high print of 60.38, which is the highest price since 61.43 made on June 3. After generating a short-term sell signal on May 20, the market has held up remarkably well. It has not come close to generating an intermediate term sell signal, and for a new short-term buy signal to be generated, the daily low must be above OIA’s key pivot point for June 9 of 60.76. The open interest stats for today’s trading will be available tomorrow’s report. This will give us a better idea whether the advance is sustainable.

Brent crude oil:

July Brent crude oil lost 62 cents on volume of 698,826 contracts. Total open interest declined by 7,023 contracts, which relative to volume is approximately 50% below average. The July contract lost 32,342 of open interest, which means there was sufficient open interest increases in the forward months to reduce total open interest substantially below average. As this report is being compiled on June 9, the August contract is trading 2.37 higher, or +3.72%. On May 20, July Brent crude oil generated a short-term sell signal, but never generated in intermediate-term sell signal. It will be important to see open interest increase in today’s trading.

Natural gas: This is our first report on natural gas since it generated short and intermediate term sell signals on May 29.

July natural gas advanced 11.5 cents on heavy volume of 400,479 contracts.Volume was the strongest since May 21 when 439,016 contracts were traded and the July 2015 contract closed at 2.994.On June 8, total open interest increased by 2,441, which relative to volume is approximately 70% below average. However, the July contract lost 20,923 of open interest, which means there was sufficient open interest increases in the forward months to offset this decline and bring total open interest to a positive number.

As this report is being compiled on June 9, the July contract is trading sharply higher up 12.7 cents or +4.71% on heavy volume. The total open interest increase in yesterday’s trading indicates that short sellers were not covering positions, which is only adding fuel to the fire on June 9. As of the latest COT report released last Friday, managed money was massively short natural gas by a ratio of 1.72:1, which is just shy of the record short ratio of 1.75:1 recorded from the May 12 COT report. The July contract made its contract low on April 27 (2.540). For July natural gas to generate short and intermediate term buy signals, the low of the day must be above OIA’s key pivot point of 2.867 and 2.861 respectively.

Dollar index:

The June dollar index lost 1.038 points on substantial volume of 73,936 contracts. Volume declined from June 5 when the June contract advanced 86.8 points on volume of 86,837 contracts and open interest increased just 107. On June 8, total open interest increased by by a sizable 1,811 contracts, which relative to volume is average. However, there was a loss of 2,589 of open interest in the June contract which means there were sufficient open interest increases in the forward months to offset this decline and still bring total open interest to a an average number.

The open interest action in yesterday’s trading is bearish and confirms the downtrend. As this report is being compiled on June 9, the June contract is trading 15.3 points lower and has made a new low for the move of 94.860, which takes out yesterday’s print of 95.080.On June 4, the June and September dollar index generated an intermediate term sell signal and is on its way to a short term sell signal.

Euro:

The June euro advanced 1.58 cents on volume of 367,049 contracts. Volume was slightly above that of June 5 when the June contract lost 1.26 cents on volume of 364,989 contracts and total open interest increased by 3,738. On June 8, total open interest increased by an astounding 18,145 contracts, which relative to volume is approximately 100% above average. The fact that June lost 18,136 of open interest makes the total open interest increase much more impressive. In short, aggressive new buyers were entering the market in large numbers and driving prices higher (1.1309).

This is problematic for the large number of speculative short sellers in the euro who will be forced to cover as prices continue to advance. As this report is being compiled on June 9, the June contract is trading unchanged on the day after making another new high for the move of 1.1347, which is the highest print since the June 4 high of 1.1382. We are confident this will be taken out shortly and the May 15 high of 1.1472 will be tested. On June 4, OIA announced that the June and September euro generated short and intermediate term buy signals.

Coffee: We are commencing coverage on New York coffee due to the likelihood that a short-term buy signal will be generated shortly. We suspended coverage after it generated a short term sell signal on May 1.

July coffee advanced 1.45 cents on heavy volume of 48,406 contracts.Volume was the strongest since May 26 when 51,914 contracts were traded and the July contract closed at 1.2405.On June 8, total open interest declined just 175 contracts, which relative to volume is approximately 85% below average. The July contract lost 4,902 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 this to be positive open interest action relative to the price advance.

On the other hand, from May 26 through June 5 total open interest declined by 5,659 contracts, which means short-sellers were liquidating and moving prices higher, not new buyers. For the July contract to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for June 9 of 1.3552. The low for the day on June 9 is $1.3355, and July coffee has closed at 1.3735, up 80 ticks.

S&P 500 E mini: On June 8, the June and September S&P 500 E mini generated short-term sell signals, but remain on intermediate term buy signals.

The June S&P 500 E mini lost 14.00 points on volume of 1,359,484 contracts. Total open interest increased by 42,549 contracts, which relative to volume is approximately 10% above average meaning that new short-sellers were entering the market and driving prices to a new low for the move (2076.25).

As this report is being compiled on June 9, the June contract is trading 4.00 points above yesterday’s close after making a new low for the move of 2068.75. Usually, after the generation of the sell signals markets have counter trend rallies that can last from 1-3 days and this is the opportunity to initiate bearish positions. Please review the June 7 weekend report for our strategies.