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Soybeans:

July soybeans advanced 8.50 cents on volume of 191,672 contracts. Total open interest increased by a hefty 7,155 contracts, which relative to volume is approximately 50% above average, meaning that new aggressive buyers were entering the market in large numbers and driving prices higher (9.86 3/4). The May contract lost 1,450 of open interest, which makes the more impressive (bullish).

May 5 was the second day in a row in which soybean prices advanced along with open interest. On May 4, July soybeans gained 11.50 on volume of 151,579 contracts and total open interest increased by 8720. Also, the July-August 2015 soybean spread widened to 7.75 cents premium to July, which is constructive for prices. As this report is being compiled May 6, July soybeans are trading unchanged on the day after making a daily high of 9.90 1/2. July soybeans will generate a short-term buy signal if the low of the day is above OIA’s key pivot point for May 6 of 9.81 7/8.

Soybean oil: On May 5, July soybean oil generated an intermediate term buy signal after generating a short-term buy signal on April 16.

July soybean oil advanced 42 points on volume of 142,295 contracts. Total open interest declined by 2,461 contracts, which relative to volume is approximately 25% below average. The May contract lost 357 of open interest, July -4086. Considering the magnitude of the move in yesterday’s trading, the total open interest declined is a disappointment. However, the July contract generated an intermediate term buy signal, because the low of the day was above OIA’s key pivot point for May 5 of 32.03.This follows the short term buy signal generated on April 16.

Corn:

July corn advanced 1.50 cents on volume of 295,703 contract. Total open interest increased by massive 22,601 contracts, which relative to volume is approximately 210% above average meaning that huge numbers of new short-sellers and buyers were entering the market in large numbers and buyers were able to edge prices higher despite July corn making a new low for the move at 3.55 3/4. The May contract lost 2,747 of open interest. As this report is being compiled on May 6, July corn is trading 3.00 cents higher on the day. July corn remains on the short and intermediate term sell signal.

Live cattle:

June live cattle advanced 72.5 points on volume of 48,844 contracts. Total open interest increased by a massive 3,236 contracts, which relative to volume is approximately 160% above average meaning aggressive new buyers were entering the market in large numbers and driving prices higher (1.52050). The June contract lost 855 of open interest, which makes the total open interest increase more impressive (bullish). Despite the very favorable open interest action on price advances and declines, the fact remains June live cattle has been unable to reverse the short term sell signal of April 13. For a short-term buy signal to be generated, the low of the day must be above OIA’s key pivot point for May 6 of 1.51020.

Lean hogs:

June lean hogs advanced 92.5 points on volume of 48,406 contracts. Volume in lean hogs was just 438 contracts less than the total traded in live cattle. On May 5, total open interest declined by 427 contracts, which relative to volume is approximately 55% below average. The front months of May, June August and October 2015 all lost open interest, which is a negative factor.

Although open interest action has been negative lately, the relative strength performance of lean hogs versus live cattle has been outstanding. As this report is being compiled on May 6,June lean hogs are trading 1.15 cents higher and have made a high of 84.375 while June live cattle is trading 80 points lower. On April 24, OIA announced that June and July lean hogs generated short-term buy signals and intermediate term buy signals on April 29.

WTI crude oil:

June WTI crude oil advanced $1.47 on heavy volume of 841,175 contracts. Volume was the strongest since April 29 when June WTI advanced 1.52 on volume of 866,853 contracts and total open interest increased by 19,276. On May 5, total open interest increased by 12,066, which relative to volume is approximately 40% below average. However, the June contract lost 19,604 of open interest, which makes the total open interest increase more impressive (bullish).

As this report is being compiled on May 6, June WTI is trading 93 cents higher after making a spike high of 62.58 after the release of the EIA report which showed a 3.9 million barrel stock draw from the previous week.  Of particular note, the volume traded in the 10 minute period after the release of the report was 30,578 contracts and the range traded was 61.96-62.58, closing at 62.03 on the 10 minute chart. This represented over 10% of total volume traded for the June contract.

In short, clients should be keeping an eye on today’s high. If the June contract is able to take it out, we may see another substantial move higher. On April 7, OIA announced that June WTI generated a short-term buy signal and an intermediate term buy signal on April 14.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.9 million barrels from the previous week. At 487.0 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 0.4 million barrels last week, and are above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 1.5 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories rose 1.8 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 6.6 million barrels last week.

Brent crude oil:

June Brent crude oil advanced $1.07 on volume of 729,728 contracts. Total open interest increased by 14,243 contracts, which relative to volume is approximately 20% below average, however, the June contract lost 12,805 open interest, which makes the total open interest increase more impressive (bullish). Yesterday, was one of the most positive days for Brent crude oil in terms of price and open interest for the past couple of weeks. As this report is being compiled on May 6, June Brent crude is trading 54 cents higher after making a new high for the move at 69.63. June Brent crude oil remains on a short and intermediate term buy signal.

Natural gas:

June natural gas lost 4.1 cents on light volume of 195,588 contract. Total open interest declined by 7,970, which relative to volume is approximately 55% above average meaning that liquidation was fairly heavy on a modest decline. The June contract lost 9755 open interest.

As this report is being compiled on May 6, June natural gas is trading 3.6 cents higher, and has taken out yesterday’s high of 2.821, but not the May 4 high of 2.824. On May 1, June natural gas generated a short-term buy signal, but remains on an intermediate term sell signal. Yesterday was the first counter trend  pullback, and natural gas may see a further pullback tomorrow after the release of the natural gas storage report. Remain on the sidelines until we see a further correction.

Euro:

The June euro advanced 56 pips on volume of 277,695 contract. Total open interest increased by 5,398 contracts, which relative to volume is approximately 20% below average, however an open interest increase on a price advanced is bullish, especially since leverage funds are massively short the euro. As this report is being compiled on May 6, the June euro is trading 1.34 cents higher and has made a daily high of 1.1374, which takes out the previous high of 1.1297 made on May 1. We have been warning about a continued advance in the euro ever since it generated a short term buy signal on April 29 and an intermediate term buy signal on May 1.

From the May 1 report:

“The euro has advanced strongly over the past week, therefore corrective moves are to be expected. However, we do not think the rally is over yet. Conceivably, we could see a move up to the 1.15 area, especially because managed money remains heavily net short and this will provide additional fuel for a continued move higher.”

Dollar index: On May 6, the June dollar index will generate an intermediate term sell signal after generating a short term sell signal on April 27.

The June dollar index lost 43.5 points on volume of 49,376 contracts. Total open interest increased by 755 contracts, which relative to volume is approximately 40% below average, however this is one of the first open interest increases we’ve seen on a price decline during the course of the recent bear market in the dollar index. As this report is being compiled on May 6, the June dollar index is trading 89.7 points lower and has made a new low for the move of 93.960.

10 Year Treasury Note: On May 5, the June 10 year treasury note generated an intermediate term sell signal after generating a short-term sell signal on April 29.

The June 10 year treasury note lost 11 points on volume of 1,526,941 contracts. Total open interest increased by 22,502 contracts, which relative to volume is approximately 40% below average, but an open interest increase on a price decline is bearish. As this report is being compiled on May 6, the 10 year note is trading 10.5 points lower.