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Corn:

December corn lost 0.50 cents on volume of 401,163 contracts. Volume increased from November 19 when the December contract gained 2.00 cents on volume of 373,579 contracts and total open interest declined by 4,412. On November 20, total open interest declined by a massive 36,998 contracts, which relative to volume is approximately 275% above average meaning liquidation was extremely heavy on the modest decline. The reason for the liquidation was the 55,249 contract loss in December, which is approaching first notice day.

As this report is being compiled on November 23, the December contract is trading 1.25 cents higher and has made a low of 3.60, which is the lowest print since 3.58 1/2 made on November 18. December corn remains on short and intermediate term sell signals. We have no recommendation.

Soybeans:

January soybeans lost 2.50 cents on volume of 199,658 contracts. Volume increased from November 19 when the January contract lost 2.25 cents on volume of 166,233 contracts and total open interest declined by 956. On November 20, total open interest increased by 5,588, which relative to volume is average, but the increase at the low of the trading range indicates that bold new short-sellers were entering the market and driving prices close to the contract low of 8.50. The January contract lost 2,468 of open interest, which makes the total open interest increase substantially more bearish because there were sufficient open interest increases in the forward months to offset the decline in January and increase total open interest by an average amount.

As this report is being compiled on November 23, the January contract is trading 1.50 lower after making a new contract low of 8.44 1/4, which is the lowest print since 8.43 made during March 2009. The next area of support is 7.76 1/4, which is the low made during December 2008 at the height of the financial crisis. Soybeans, soybean meal and soybean oil remain on short and intermediate term sell signals. We have no recommendation.

Cocoa:

March cocoa lost $9.00 on volume of 25,482 contracts. Total open interest increased by 480 contracts, which relative to volume is approximately 25% below average, but an open interest increase on Friday’s modest decline is negative. The July 2016 and December 2016 contracts lost a total of 104 of open interest. In previous reports, we have shared our concern about the massive build up an open interest and that this has not been moving prices substantially higher.

For example, from November 16 through November 20, total open interest has increased by 9,490 contracts, but the March contract has advanced just $10.00. This indicates the likelihood of heavy trade selling at the upper end of the trading range, which is going to keep a lid on prices until the buy side can take control and move prices higher.

On Friday, the March contract made a new contract high of $3,420, and then sold off to close lower, a negative development. As this report is being compiled on November 23, the March contract is trading $49.00 lower and has made a daily low of 3,301, which is the lowest print since 3.300 made on November 12. March cocoa remains on short and intermediate term buy signals. Stand aside.

From the November 19 report on cocoa:

“Although, cocoa may continue its advance, we are concerned about the heavy selling that is counteracting the buy side. As this report is being compiled on November 20, the March contract has made a new contract high of $3,420, but is currently trading $1.00 lower. March cocoa remains on short and intermediate term buy signals. As we pointed out before, we do not like the open interest action relative to price action and recommend a stand aside posture at this juncture.”

Sugar:

March sugar advanced 35 points on volume of 130,602 contracts. Total open interest increased by a massive 17,051 contracts, which relative to volume is approximately 410% above average meaning huge numbers of new buyers were entering the market and driving prices higher (15.45), which is the highest print since 15.53 made on November 3.

As this report is being compiled on November 23, the March contract is trading 11 points higher and again has made a high of 15.45. It appears sugar wants to move to a higher level, and the inverse spread action is a bullish set up. As we have pointed out in prior reports, our concern about sugar is that the deflationary wave engulfing the entire commodity complex may keep a lid on sugar prices. We have no strong position about the market and therefore will not make a recommendation.

WTI crude oil:

January WTI crude oil advanced 18 cents on volume of 764,305 contracts. Total open interest increased by 10,172 contracts, which relative to volume is approximately 45% below average. However, the December contract lost 17,574 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in December and increase total open interest.

As this report is being compiled on November 23, the January contract is trading 29 cents higher and has made a daily high of $42.75, which is the highest print since 42.76 made on November 20. In the evening session of November 22, the January contract made a low of 40.41, which is only 44 cents above the contract low of 39.97 made on August 24.

The turnaround in the market on the 23rd has been attributed to statements coming out of Saudi Arabia indicating their patience with lower prices may becoming to an end. It is well known that the kingdom is rapidly depleting its currency reserves and fighting an expensive war in Yemen. If the Saudis decide that they have had enough of low prices, the market may be nearer to its lows than we have been thinking lately. January WTI remains on short and intermediate term sell signals. We have no recommendation.

Dollar index:

The December dollar index advanced by a strong 56 points on surprisingly low volume of 32,883 contracts. Volume on Friday was a disappointment compared to November 19 when the December contract lost 68.1 points on volume of 42,006 contracts and total open interest increased by 459. Volume increased on the decline and shrank on the rally.

On November 20, total open interest declined by a sizable 954 contracts, which relative to volume is approximately 5% above average. In summary, for the past two days when the dollar index made major moves to the up-and-down side, total open interest acted in a bearish fashion.

According to the latest COT report, there are nearly an equal number of bears as bulls. Despite this, on November 23, the dollar index is trading 27.6 points higher and has made a new high for the move of 100.065, which is the highest print since 101.190 made the week of April 13, 2015. The December dollar index remains on short and intermediate term buy signals. We have no recommendation.

Euro:

The December euro lost 80 pips on volume of 222,236 contracts. Total open interest increased by a sizable 8,488 contracts, which relative to volume is approximately 25% above average meaning aggressive new short-sellers were entering the market and driving prices lower (1.0643). As this report is being compiled on November 23, the euro is trading down on the day and has made a new low for the move of 1.0596, which is the lowest print since 1.0570 made the week of April 13, 2015. The December euro remains on short and intermediate term sell signals.We have no recommendation.

S&P 500 E-mini:

The December S&P 500 E-mini gained 9.50 points on low volume of 1,277,919 contracts. Volume fell slightly from November 19 when the December contract lost 0.50 points on volume of 1,289,565 contracts and total open interest increased just 3,220. On November 20, total open interest declined by 37,774 contracts, which relative to volume is approximately 5% above average. The action on Friday was very negative based upon the low volume and sizable decline of open interest on the advance.

We think the market looks tired, and though we do not rule out a continued move higher for seasonal reasons, we think it will struggle to take out the November 3 high of 2110.25. OIA will be monitoring the market for a place to initiate short call positions in the December S&P 500 E-mini contract. The December contract remains on short and intermediate term buy signals.