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Soybeans:

May soybeans lost 1.25 cents on volume of 204,184 contracts. Total open interest increased by 1515 contracts, which relative to volume is approximately 60% below average. The March contract lost 3,924 of open interest, May -1,403, which makes the more impressive (bearish). As this report is being compiled on March 4, May soybeans are trading 15.25 cents lower and are trading at the lows of the day.

In order for May soybeans to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for March 4 of 9.89 1/2. As we pointed out in previous reports, we felt the rally was on borrowed time and that a sell signal would be generated to reverse the short-term buy signal of February 20. We have no recommendation.

Soybean meal:

May soybean meal lost 70 cents on volume of 87,840 contracts. Total open interest declined by a massive 8,745 contracts, which relative to volume is approximately 300% above average, meaning that liquidation was extremely heavy on the modest decline.

Liquidation was in evidence across the board with March losing 2,216 of open interest, May -5,633, July 2015 -1,013, and August 2015 -169. As this report is being compiled on March 4, May soybean meal is trading $5.30 lower and appears to be heading for a short-term sell signal, which will reverse the short-term buy signal of February 19. In order for a short-term sell signal to be generated, the high of the day must be below OIA’s key pivot point for March 4 of $326.50. We have no recommendation.

Corn:

May corn gained 3.00 cents on volume of 235,157 contracts. Total open interest declined by just 156 contracts. The March contract lost 3,820 of open interest, May -6,856. As this report is being compiled on March 4, May corn is trading 2.00 cents lower. May corn remains on a short and intermediate term sell signal. We have no recommendation.

WTI crude oil:

April WTI crude oil gained 93 cents on volume of 773,195 contracts. Total open interest declined by 5,965 contracts, which relative to volume is approximately 60% below average. The April contract lost 8,283 of open interest. As this report is being compiled on March 4 after the release of the EIA report showing a massive build in inventory, April WTI is trading unchanged on the day after making a low of 49.60 on March 4. This is above yesterday’s low of 49.45, the March 2 low of 48.71, February 27 low of 48.46 and the low for the move of 47.80 made on February 26.

Though the market may not be making higher highs, the fact that it is making a higher lows indicates the WTI market has discounted the massive stock increases of the past couple of weeks. On February 13, WTI generated a short-term buy signal, and has not generated a short-term sell signal despite repeated pullbacks.We continue to advise a stand aside posture.

Brent crude oil:

April Brent crude oil gained $1.48 on volume of 801,840 contracts. Total open interest declined by 5,706 contracts, which relative to volume is approximately 65% below average.The April contract account for loss of 10,482 of open interest. As this report is being compiled on March 4, April Brent crude oil is trading 89 cents lower and has made a daily low of 59.47, which is below the March 3 print of 59.84, but above the March 2 print of 59.34. On February 3, April Brent generated a short-term buy signal, but remains on an intermediate-term sell signal. Stand aside.

Silver: May silver will generate an intermediate term sell signal on March 4 after generating a short-term sell signal on February 18.

May silver lost 15.5 cents on volume of 44,341 contracts. Total open interest increased by 1,278 contracts, which relative to volume is average. The March contract accounted for loss of 247 of open interest. As this report is being compiled on March 4, May silver is trading 13.6 cents lower and has made a new low for the move of 16.055, which takes out yesterday’s low of 16.07. Stand aside.

Cocoa:

May cocoa advanced $16.00 on very light volume of 19,313 contracts. Volume with the weakest since January 20 when 18,157 contracts were traded. On March 3, total open interest increased by 2,833 contracts, which relative to volume is approximately 450% above average, meaning that aggressive new buyers were entering the market and pushing prices to a new high (3038).

Additionally, May cocoa made a new closing high of 3034. The very weak volume in yesterday’s trading may be the first major indication that prices are topping temporarily. In short, there were numbers of potential market participants sitting on the sidelines. As this report is being compiled on March 4, May cocoa is trading $38.00 lower. We continue to advise a stand aside posture.

Coffee:

Make coffee lost 8.60 cents on heavy volume of 44,401 contracts. Volume was the strongest since February 18 when May coffee lost 1.90 cents on volume of 48,082 contracts and total open interest increased by 293 contracts. On March 3, Total open interest increased by a massive 2,816 contracts, which relative to volume is approximately 140% above average meaning that aggressive new short-sellers were entering the market and driving prices to a new low for the move of 1.2880. The March contract lost 20 of open interest, May -153, which makes the total open interest increase more impressive (bearish).

The move lower coffee prices has taken many participants by surprise (including us). However, what we are seeing is the market discounting mechanism, which is factoring in very bearish scenarios going forward. A lesson in the market discounting fundamentals is applicable in WTI crude oil. As we pointed out in today’s report, there have been massive stock builds in WTI, yet prices are not going down for any extended period of time.

In fact they have been moving sideways to higher. This has been occurring despite the massive build in crude oil inventories, which according to the EIA are at the highest level in over eighty years. We are not saying that today’s rally in coffee is an indication that coffee prices have hit bottom. However the market is clearly discounting a healthy crop, and we think draw downs in stocks will begin to impact coffee prices down the road.