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Corn:

December corn lost 7.75 cents on huge volume of 816,276 contracts. Volume was the strongest since June 30, 2015 when 845,770 contracts were traded and the December 2015 contract closed at 4.31 1/2. On November 10, total open interest increased by a sizable 29,032 contracts, which relative to volume is approximately 20% above average. The December contract lost 25,693, which means there were sufficient open interest increases in the forward months to offset the decline in December and increase total open interest substantially.

There were open interest increases in the March 2016 through December 2017 contracts. Yesterday, the December contract made a new contract low at 3.56, and as this report is being compiled on November 11, the December contract is trading 3.25 cents higher, but it has not taken out yesterday’s contract low.

Looking at the weekly continuation chart, there is substantial support at the 3.46 level, and during the week of June 15, 2014, the July 2014 contract made a contract low of 3.46 3/4 and during the week of August 10, 2014, September 2014 corn made a contract low of 3.46 1/2. This was tested a couple of weeks later when the September contract made a low of 3.46 3/4 (week of August 31, 2014). In summary, there is support at the 3.46 level spanning a period of two months. 

At this juncture, it appears that the trend following black box crowd will be piling into the market, but we advise clients to maintain a stand aside posture. The reality is the market has likely discounted much of the bearish situation going forward, and although it is difficult to determine whether the support at 3.46 will hold, we think the downside may be somewhat limited. This will be determined whether the corn market responds to the anticipated increase in shortselling by speculators.

We will be looking at corn from the standpoint of whether it is able to fend off attacks from speculative short-sellers and is able to stabilize at this lower level.

Chicago wheat: December Chicago wheat will generate a short-term sell signal on November 11 and remains on an intermediate term sell signal.

December Chicago wheat lost 11.00 cents on volume of 243,810 contracts. Total open interest increased by 4,673 contracts, which relative to volume is approximately 20% below average, however an open interest increase on yesterday’s price decline is bearish. As this report is being compiled on November 11, the December contract is trading unchanged on the day. We have no recommendation.

Soybeans:

January soybeans lost 10.75 cents on volume of 256,930 contracts. Volume was the strongest since October 29 when soybeans lost 2.50 cents on volume of 305,937 contracts and total open interest declined by 6,571. On November 10, total open interest increased by 10,715 contracts, which relative to volume is approximately 55% above average meaning new short-sellers were entering the market in substantial numbers and driving prices to a new contract low 8.50, which is the lowest print since 7.76 1/4 made by the January 2009 contract during the month of December 2008. The November contract lost 1,316 of open interest and there was more than enough open interest increases in the forward months to offset the decline in November and substantially increase total open interest.

As this report is being compiled on November 11, the January contract is trading 1.75 cents higher, up and has not taken out yesterday’s contract low. With soybeans trading at multi-year lows, it is difficult to determine the bearish scenario going forward, but even at this juncture, the January contract is approximately 83 cents above the December 2008 low. In the weeks ahead, we will be looking at the degree to which managed money assumes a net short position. If we see managed money substantially increasing their net short position and the market doesn’t respond to these new short-sellers, soybeans could conceivably be carving out a bottom, but at this juncture it is premature to make this determination. We have no recommendation.

Soybean meal:

December soybean meal lost $2.80 on volume of 139,626 contracts. Total open interest increased by 4,153 contracts, which relative to volume is approximately 10% above average, and an open interest increase on yesterday’s price decline is bearish. Additionally, the December contract lost 6,106 of open interest, which makes the total open interest increase more impressive because there were sufficient open interest increases in the forward months to offset the decline in December and increase total open interest.

Yesterday, the December contract made a new contract low of $290.20, and as this report is being compiled on November 11 the December contract is trading 50 cents higher on the day. The next area of support is the December 2011 low of $274.80 made by the December 2011 contract. We have no recommendation.

Soybean oil: The December and January soybean oil contracts will generate short-term sell signals on November 11 and remain on intermediate term sell signals.

December soybean oil lost 50 points on heavy volume of 194,331 contracts. Total open interest increased by a massive 12,356 contracts, which relative to volume is approximately 140% above average meaning that large numbers aggressive new short-sellers were entering the market and driving prices lower. As this report is being compiled on November 11, the December contract is trading 9 points lower, but has not taken out yesterday’s low of 27.05. We have no recommendation.

Cocoa:

December cocoa advanced $63.00 on heavy volume of 65,124 contracts. Total open interest increased by 1,678, which relative to volume is average. The December contract lost 7,698 of open interest, which means it were sufficient open interest increases in the forward months to offset the decline in December and increase total open interest by an average number. Yesterday’s performance was bullish, and as this report is being compiled on November 11, the March contract has closed at $3,313, up $45.00. December and March cocoa remain on short and intermediate term buy signals. We have no recommendation.

Sugar #11:

March sugar advanced 72 points on volume of 147,903 contracts. Total open interest increased by a massive 20,341 contracts, which relative to volume is approximately 340%, an off the charts increase meaning huge numbers of new buyers were entering the sugar market and driving prices higher (14.87), which is still substantially below the high for the move of 15.53 made on November 3. March sugar remains on short and intermediate term sell signals. We have no recommendation.

WTI crude oil:

December WTI crude oil advanced 34 cents on volume of 789,372 contracts. Total open interest increased by 12,916 contracts, which relative to volume is approximately 35% below average. The December contract accounted for loss of 35,079, which means there were sufficient open interest increases in the forward months to offset the decline in December and increase total open interest.

Although yesterday’s open interest increase was positive, the market has reversed on November 11 and is trading sharply lower, down $1.36, or -3.05% and has made a daily low of $42.70, which is approximately $3.50 above the contract low for the December contract of $39.22 made on August 24. As we pointed out in prior reports, there is a seasonal tendency for the petroleum complex to decline into the January early to mid February period, and at this point it’s difficult to determine whether new contract lows are in the offing for WTI. We have no recommendation.

Dollar index:

The December dollar index advanced 31.4 points on volume of 24,265 contracts. Total open interest increased by 853 contracts, which relative to volume is approximately 25% above average, meaning that new buyers were entering the market and driving prices to a new high for the move of 99.600, which is the highest print since April 21, 2015. As this report is being compiled on November 11, the December contract is trading 30.5 points lower on the day. We have no recommendation.

Euro:

The December euro lost 51 pips on volume of 195,091 contracts. Total open interest increased by 3,785 contracts, which relative to volume is approximately 20% below average, but an open interest increase on yesterday’s price decline to a new low for the move of 1.0679 is bearish. As this report is being compiled on November 11, the December contract is trading nearly unchanged after making a daily high of 1.0778, which is the highest print since 1.0795 made on November 9. We have no recommendation.