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Corn:

March corn lost 3.50 cents on volume of 409,247 contracts. Volume declined from November 23 when corn advanced 4.00 cents on volume of 420,841 contracts and total open interest declined by 22,230. On November 24, total open interest declined by 21,489 contracts, which relative to volume is approximately 110% above average, and this was due to the 56,621 contract loss in the December contract as it approaches first notice day on November 30. As this report is being compiled on November 25, the March contract is trading 1.50 cents higher on the day. March corn remains on short and intermediate term sell signals. We have no recommendation.

Soybeans:

January soybeans lost 0.50 cents on volume of 158,357 contracts. Total open interest declined by 5,787 contracts, which relative to volume is approximately 20% above average. The January 2016 through July 2016 contracts lost a total of 6,334 of open interest. As this report is being compiled on November 25, January soybeans are rallying substantially, up 12.25 cents or +1.39% while soybean meal is advancing 0.74% and soybean meal +1.41%. Soybeans, soybean meal and soybean oil remain on short and intermediate term sell signals. We have no recommendation.

Sugar:

March sugar lost 41 points on heavy volume of 179,851 contracts. Total open interest increased by 1,373 contracts, which relative to volume is approximately 60% below average, and the open interest increase on yesterday’s decline as negative. Additionally, the March contract lost 3,661 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in the March contract and increase total open interest.

The reversal came on the heels of a new high for the move of 15.78, and as this report is being compiled on November 25, the March contract is trading 8 points lower and has made a daily low of 14.66. In summary, the volatility for the past two days has been substantial and as clients know, we have been reluctant to recommend long positions due to the commodity deflationary cycle though sugar remains on short and intermediate term buy signals.

Cocoa:

March cocoa advanced $32.00 on light volume of 21,207 contracts. Volume declined from November 23 when the March contract lost 62.00 on volume of 23,638 contracts and total open interest increased by 1,190. On November 24, total open interest increased again, this time by 2,960, which relative to volume is approximately 435% above average meaning that aggressive new buyers were entering the market in large numbers and driving prices higher (3,349).

Remarkably, total open interest has increased every day since November 12 and from November 16 through November 24, total open interest has increased by 13,640 contracts while the March contract has declined $20.00. This is bearish open interest action relative to the seven day cumulative decline.

As this report is being compiled on November 25, the March contract is trading $6.00 above yesterday’s close and has made a new low for the move of 3,289, which takes out the previous low of 3301 made on November 23. Although it appears likely that cocoa will go on to make new contract highs, we think it will be a labored affair with lots of volatility and therefore anyone trading this market must have a high risk tolerance. There is heavy trade selling at the upper end of the trading range, and in order for cocoa to advance substantially buyers must reassert control the board. We have no recommendation.

WTI crude oil:

January WTI crude oil advanced $1.12 on volume of 698,530 contracts. Total open interest increased by 5,385 contracts, which relative to volume is approximately 55% below average. The December contract accounted for loss of 600 of open interest. Considering the magnitude of the advance in yesterday’s trading the total open interest increase was unimpressive.

As this report is being compiled on November 25, the January contract is trading 11 cents lower on the day and has made a daily low of 41.72, which is above yesterday’s print of 41.86 and a daily high of 43.16, which is below yesterday’s print of 43.46. January WTI remains on short and intermediate term sell signals. We have no recommendation.

The Energy Information Administration announced  that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.0 million barrels from the previous week. At 488.2 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 2.5 million barrels last week, and are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories increased by 1.0 million barrels last week and are in the upper half of the average range for this time of year. Propane/propylene inventories rose 1.7 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 2.1 million barrels last week.

Dollar index:

The December dollar index lost 26.5 points on volume of 26,054 contracts. Total open interest declined by 46 contracts. The December contract accounted for a loss of 441 of open interest and there were sufficient open interest increases in the forward months to offset most of the decline in December. As this report is being compiled on November 25, the December contract is trading 19.5 points higher and has made a new high for the move of 100.230, which takes out the previous print of 100.065. The dollar index remains on short and intermediate term buy signals. We have no recommendation.

Australian dollar: The December and March Australian dollar will generate short and intermediate term by signals on November 25.

Additionally, the Australian dollar has been outperforming most major currencies in 7, 30, 60, and 90 day time frames. We will have more on this in Friday’s report.

S&P 500 E-mini:

The December S&P 500 E-mini gained 0.50 points on volume of 1,529,470 contracts. Total open interest increased by 2,104. As this report is being compiled on November 25, the December contract is trading 4.00 points higher and has made a daily high of 2092.50, which is slightly above yesterday’s print of 2091.50, but below that of November 23 (2093.00) and 2094.50 made on November 20.

In summary, the market has stalled during the past couple of days, and does not seem to have the momentum currently to test the November 3 print of 2110.25. The employment report will be released a week from this Friday, and if the numbers prove to be within the expected range, the likelihood increases substantially that the Federal Reserve will raise rates in their meeting in mid-December. We view the raising of interest rates as bearish for equities.

We are monitoring activity to determine the most opportune time to initiate short call positions. If reports from retailers in the immediate post-Thanksgiving holiday period show greater than average sales, the catalyst for a final thrust higher could be in place, which could take the December contract to test the November 3 high.