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Soybeans:

July soybeans lost 7.50 cents on light volume of 136,336 contracts. Total open interest declined by 3,948 contracts, which relative to volume is average.The May contract lost 1,024 of open interest, July -4933. As this report is being compiled on May 8, July soybeans are trading 2.50 higher on the day. July soybeans remain on a short and intermediate term sell signal.

Although, the market has had little in the way of news to boost prices, remarkably, soybeans have resisted breaking through the October 1, 2014 contract lows. As we have pointed out in prior reports, the July-August 2015 spread is trading positively, and it is certainly possible that soybeans may generate a short-term buy signal in the not-too-distant future. We recommend a stand aside posture for now.

Soybean oil:

July soybean oil lost 43 points on light volume of 73,191 contracts. Total open interest increased by 879 contracts, which relative to volume is approximately 45% below average. The May contract lost 142 of open interest, July -2669, which makes the total open interest increase more impressive (bearish). As this report is being compiled on May 8, July soybean oil is trading 33 points higher and has made a daily high of 32.91 which is below yesterday’s high of 33.03.

We are concerned about yesterday’s open interest action and unless soybeans generate a short-term buy signal, the move higher in soybean oil may be restrained. On April 16, July soybean oil generated a short-term buy signal and an intermediate term buy signal on May 5. We have no recommendation.

Corn:

July corn lost 5.25 cents on volume of 283,198 contracts.Total open interest increased by 7,716 contracts, which relative to volume is average, but an open interest increase on a price decline is bearish. The May contract lost 1,819 open interest. As this report is being compiled on May 8, July corn is trading 1.25 higher on the day. July corn remains on the short and intermediate term sell signal.

Live cattle:

June live cattle lost 85 points on volume of 53,807 contracts. Total open interest declined by 1021 contracts, which relative to volume is approximately 25% below average. However, an open interest decline accompanying lower prices is positive. The June contract lost 6,216 of open interest, which means there were sufficient open interest increases in the forward months to reduce total open interest below average. This is somewhat negative.

As this report is being compiled on May 8, June live cattle is trading sharply higher, up 1.975 cents and has made a daily high of 1.51575, which is the highest print since 1.51775 made on May 6. On April 13, June live cattle generated a short-term sell signal and for this to reverse, the low of the day must be above OIA’s key pivot point for May 8 of 1.51030. 

Lean hogs:

June lean hogs lost 55 points on volume of 50,325 contracts. Total open interest declined by 2,117 contracts, which relative to volume is approximately 65% above average. The June contract lost 5,040 of open interest. As this report is being compiled on May 8, the June contract is trading 20 points higher and has not taken out yesterday’s high of 84.450.The price action continues to be positive, however the open interest action is very negative. On April 24, 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 lost $1.99 on volume of 873,494 contracts. Volume declined from May 6 when June WTI advanced 53 cents and made its high for the move of 62.58 on volume of 907,639 contracts and total open interest increased by 25,535. As this report is being compiled on May 8, the June contract is trading 49 cents higher and has made a daily high a 59.90, which is below yesterday’s high of 61.31. In the reports of May 6 and 7, we suggested that clients closely watch the 62.58 level as this high was made on a massive spike in volume, which may signal a top or temporary top.

From the May 6 report:

“From time to time we mention that massive volume spikes as prices approach a new high or low can be a sign of capitulation and a possible major high or low. The high of 62.58 should be on every speculators watch list.On April 7, OIA announced that June WTI generated a short-term buy signal and an intermediate term buy signal on April 14.”

Brent crude oil:

June Brent crude oil lost $2.23 on heavy volume of 932,778 contracts. Total open interest declined by 28,904, which relative to volume is approximately 10% above average. The June contract lost 43,750 of open interest. As this report is being compiled on May 8, the June contract is trading 2 cents higher while June WTI is trading 50 cents above yesterday’s close. June Brent crude oil remains on a short and intermediate term buy signal.

Natural gas:

June natural gas lost 4.2 cents on fairly heavy volume of 353,412 contracts. Volume was the strongest since April 30 when June natural gas advanced 14.5 cents on volume of 476,596 contracts and total open interest increased by 3,724. On May 7, total open interest declined by 1673 contracts, which relative to volume is approximately 75% below average. The June contract lost 6676 of open interest.

As this report is being compiled on May 8, June natural gas prices are making new highs for the move and the current high print of 2.878 is the highest since March 24 (2.876). On May 1, OIA announced that June natural gas generated a short-term buy signal, and though it has not generated an intermediate term buy signal, this will occur if the low of the day is above OIA’s key pivot point for May 8 of 2.828.

Euro:

The June euro lost 83 pips on volume of 302,986 contracts. Total open interest declined by 2,168 contracts, which relative to volume is approximately 60% below average. As this report is being compiled on May 8, the June euro is trading 48 pips lower and has made a daily low of 1.1184, which is 3  pips above the May 6 low of 1.1181. On April 29, the June euro generated a short-term buy signal and an intermediate term buy signal on May 1. The market has had a major rally, and a pullback is to be expected. We tend to think that yesterday’s high of 1.1398 will be taken out sometime next week.

British Pound: On April 17, OIA announced that the June British pound generated a short-term buy signal and an intermediate term buy signal on April 28

The June British pound advanced 15 pips on volume of 92,464 contracts. Total open interest increased by 639 contracts, which relative to volume is approximately 65% below average. As this report is being compiled on May 8 after the elections in the United Kingdom, the June pound is trading a whopping 1.91 cents higher and has made a new high for the move of 1.5519, which is the highest print since 1.5494 made on April 29, 2015.

Currently, the June pound is trading approximately 6.50% above its contract low of 1.4560 made on April 13. However, it will begin to encounter formidable resistance at the February 26, 2015 high of 1.5541 and 1.5612 made the week of December 29, 2014.  As of the COT report released last Friday, leverage funds were short the pound, and we need to see this class of speculator blow out of the market before the move exhausts itself.

Dollar index:

The June dollar index advanced 57.4 points on volume of 45,708 contracts. Total open interest declined by massive 4,626 contracts, which relative to volume is approximately 300% above average meaning liquidation was off the charts heavy on the advance. This is clearly bearish open interest action and conforms with OIA’s short term sell signal of April 27 and the intermediate term sell signal on May 6. A test of the May 6 low of 93.960 is inevitable.