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Soybeans: On March 6, May soybeans generated a short-term sell signal, which reversed the short-term buy signal of February 20. May soybeans remain on an intermediate term sell signal.

May soybeans lost 0.50 cents on light volume of 169,029 contracts. Total open interest increased by 7,781 contracts, which relative to volume is approximately 75% above average meaning that new short-sellers were aggressively entering the market and driving prices to new low for the move (9.76 3/4). The March contract lost 1,291 of open interest, July -185, August -214, which makes the total open interest increase more impressive (bearish).

As this report is being compiled on March 9, May soybeans are trading 11.50 cents higher.The rally is to be expected after the generation of the sell signal, and typically, a counter trend rally occurs lasting from 1-3 days and this is the opportunity to initiate bearish positions. We want to remind clients that tomorrow is the WASDE report, which most definitely will influence tomorrow’s trading. Conceivably, we could see another day of rally activity, but for the short-term sell signal to reverse, the high of the day must be below OIA’s key pivot point for March 9 of 10.06 1/2. We have no recommendation.

Soybean meal:

May soybean meal gained 2.50 on volume of 70,120 contracts. Total open interest increased by 2,122 contracts, which relative to volume is approximately 20% above average. The March contract lost 545 open interest, May -283, which makes the total open interest increase more impressive (bullish.As this report is being compiled on March 9, May soybean meal is trading $8.80 higher, or +2.65% versus soybeans trading +1.40%. On February 19, May soybean meal generated a short-term buy signal, but remains on an intermediate term sell signal.We have no recommendation.

Soybean oil:

May soybean oil lost 29 points on volume of 79,032 contracts. Total open interest increased by 767 contracts, which relative to volume is approximately 50% below average. However the March contract lost 553 of open interest, May -1361, which makes the total open interest  increase more impressive (bearish). As this report is being compiled on March 9, May soybean oil is trading 21 points lower and has made a daily high of 31.44, which is one point below OIA’s key pivot point up 31.45 for the generation of a short-term sell signal. This would reverse the short term buy signal of March 2. Stand aside.

Corn:

May corn lost 4.50 cents on volume of 245,285 contracts. Total open interest increased by massive 20,437 contracts, which relative to volume is approximately 230% above average meaning that aggressive new short-sellers were entering the market in large numbers and driving prices to a low of 3.83 1/4.The March contract lost 2,185 open interest. As this report is being compiled on March 9, May corn is trading 4.00 cents higher. We have no recommendation.

Live cattle:

June live cattle gained 1.075 cents on total volume of 62,292 contracts. Total open interest increased by 2,317 contracts, which relative to volume is approximately 45% above average meaning that aggressive new buyers were entering the market in large numbers and driving prices to a new high for the move 1.47350. The April contract lost 3,920 of open interest, which makes the total open interest increase more impressive (bullish).

As this report is being compiled on March 9, June live cattle is trading 40 points lower and has not taken out Friday’s high.We recommend the initiation of bearish positions during today’s setback. On  March 5, June live cattle generated a short-term buy signal, and March 9 is the first day of the typical correction usually seen after buy signal. Conceivably, cattle could trade lower for one more day, but this would just be an opportunity to add to long positions.

WTI crude oil:

April WTI crude oil lost $1.15 on volume of 843,005 contracts.Total open interest declined by 14,799 contracts, which relative to volume is approximately 25% below average. The April contract accounted for loss of 37,101 of open interest. As this report is being compiled on March 9, April WTI is trading 71 cents higher on the day and has made a daily high of 50.79, which is below Friday’s print of 51.22.

Remarkably, WTI has been unable to generate a short-term sell signal despite all the bearish news and the massive stock builds over the past several weeks. April WTI made its contract low on January 29, and has had every reason to test this low.This is not to say it will not happen, but in our view decreases the likelihood of dire projections made by certain analysts in the financial press that $30, $20, or even $10 crude oil is in the future. In order for April WTI to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for March 9 of 49.52. The rally will continue if WTI makes a low above OIA’s key pivot point for March 9 of 52.27, but we doubt this will happen. Stand aside.

Brent crude oil:

April Brent crude oil lost 75 cents on volume of 724,826 contracts.Total open interest increased by 11,407 contracts, which relative to volume is approximately 40% below average.However, the April contract lost 23,094 of open interest, which makes the total open interest increase by impressive (bearish).The pattern of bearish open interest action goes back to March 2 (see below). As this report is being compiled on March 9, May Brent crude oil is trading 91 cents lower. Stand aside.

From the March 5 report:

“For the past two days, April Brent has lost 54 cents while total open interest has increased by 34,991 contracts. This is bearish open interest action relative to the two day price decline.”

“Additionally on March 3, April Brent advanced $1.48, but open interest declined by 5,706 contracts. On March 2, the April contract lost $3.04 and open interest increased by 12,414 contracts. In short, total open interest has been acting in a very bearish fashion relative to price advances/declines for the past four sessions. For Brent to continue its advance, it must make a daily low above OIA’s key pivot point for March 6 of $61.03. A short-term sell signal will be generated if the daily high is below OIA’s key pivot point for March 6 of 58.30. Stand aside.”

10 Year Treasury Note: The June 10 year note will generate an intermediate term sell signal on March 9. On February 10, the March note generated a short term sell signal.

The June 10 year treasury note lost one full point on volume of 1,766,741 contracts. Total open interest increased 31,694 contracts, which relative to volume is approximately 25% below average, however, the open interest increase on a price decline of the magnitude seen on Friday is clearly bearish.We have no recommendation.

British Pound: On March 6, the March British pound generated a short-term sell signal, which reversed the February 13 short-term buy signal. The March pound remains on an intermediate term sell signal.

The March British pound lost 1.90 cents on volume of 132,020 contracts. Total open interest increased by a massive 14,686 contracts, which relative to volume is approximately 340% above average mean that huge numbers of new short-sellers were entering the market and driving prices lower (1.5026).Stand aside.

Cocoa:

May cocoa lost $51.00 on volume of 29,147 contracts. Total open interest declined by 2,291 contracts, which relative to volume is approximately 215% above average meaning that liquidation was extremely heavy on the decline. Remarkably the open interest decline on March 6 was the first since February 13 when cocoa advanced $12.00 on volume of 21,060 contracts and total open interest declined by 1,071 contracts.As this report is being compiled on March 9, May cocoa is trading $5.00 lower on the day.

The large decline in open interest on March 6 is positive as is the low net long position of managed money per the most recent COT report. We think it is likely that cocoa could decline to its 50 day moving average of 2896, which is near one of OIA’s key pivot points for the generation of a short-term sell signal. For May cocoa to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for March 9 of 2890. Stand aside.

Coffee:

May coffee gained 4.85 cents on volume of 26,107 contract. Total open interest increased by a massive 1,246 contracts, which relative to volume is approximately 75% above average meaning that new buyers were aggressively bidding prices higher and May coffee made a daily high of 1.4010.This is the second time since March 3 when May coffee made low of 1.2880 that open interest has increased on a price advance.

This is very bullish for two reasons: 1) It shows that new buyers are moving prices higher on rallies. 2) Short sellers are refusing to liquidate as prices move higher. This is bullish because when prices begin to move higher in earnest, short sellers are stubbornly going to hold onto untenable positions. This will provide fuel to the rally and power prices much higher than usual.