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Corn:

December corn lost 2.00 cents on volume of 207,571 contracts. Total open interest increased by a sizable 5,887, which relative to volume is average. There were open interest increases in the December 2015 through May 2017 contracts. We view yesterday’s action as bearish, and think it is likely that corn will generate a short-term sell signal.

As this report is being compiled on October 13, the December contract is trading 2.25 higher, but has made a new low for the move of 3.79. Corn is the weakest member of the grain complex on Tuesday with soybeans trading sharply higher along with soybean meal and soybean oil. Even wheat is trading 7.00 cents higher on the day, but none of this is helping corn, which is more confirmation of weakness. For December corn to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for October 13 of 3.79 3/4. The rally will resume if the December contract makes a daily low above OIA’s pivot point of 3.87 1/4. Stand aside.

Soybeans:

November soybeans advanced 1.75 cents on volume of 219,514 contracts. Total open interest increased by 4,466 contracts, which relative to volume is approximately 20% below average, but an open interest increase on yesterday’s fractional advance is positive. The November contract lost 10,322 of open interest, and there were sufficient open interest increases in the January 2016 through July 2017 contracts (all had open interest increases) to offset the decline in November and increase total open interest.

As this report is being compiled on October 13, the November contract is trading 18.00 cents higher and has made a new high for the move of 9.06, which takes out the previous high for the move of 9.0 2 1/4 made on September 30. Despite the sharp move higher on October 13, November soybeans will not generate a short-term buy signal nor will the January contract. For this to occur, the low of the day in the November contract must be above OIA’s key pivot point of 8.87 1/8 and for the January contract, 8.92 3/8. Open interest should increase substantially in today’s trading, and the soybean meal contract will likely generate a short term buy signal on the same day as soybeans. Soybean oil is already on a short-term buy signal.

From the October 11 Weekend Wrap on soybeans:

“We were impressed with the performance of soybeans after the release of the USDA report on Friday. Preliminary stats from the exchange (which will change in the final report) show that total open interest increased by 14,916 contracts in soybeans and +13,506 in soybean meal while the November contract gained 4.50 cents and the December soybean meal contract advanced $3.10. December soybean oil lost 2 points, and total open interest increased by 4,969 contracts.”

“We think the odds are increasing that prices will advance rather than fall to new contract lows. However, soybeans must make a daily low above our key pivot point, which for Friday was 8.86 (November) to generate a short-term buy signal. Soybeans must generate a short-term buy signal if the advance is to continue.”

Sugar:

March sugar lost 10 points on volume of 115,915 contracts. Total open interest declined by strong 7,883, which relative to volume is approximately 160% above average meaning liquidation was extremely heavy on the modest decline. As this report is being compiled on October 13, the March contract is trading 39 points lower and has made a new low for the move of 13.82.

We have cautioned clients not to chase the rally and stand aside until the market corrects, and we think it has further to go. At this juncture, we do not see any compelling reason to be involved in the market and prefer to watch safely from the sidelines. On September 28, March sugar generated a short-term buy signal an intermediate term buy signal on October 1. As we pointed out in previous reports, short-sellers have been powering the market higher rather than new buying, and it will be interesting to see how much support the market has as it moves lower.

Coffee:

December coffee advanced 2.90 cents on volume of 31,835 contracts. Total open interest declined again, this time by 1,205 contracts, which relative to volume is approximately 25% above average meaning liquidation was powering the market higher rather than new buying.

For the past three days beginning on October 8, coffee has advanced each day for a cumulative increase of 8.45 cents while total open interest has declined each day for cumulative total of 4,777 contracts. This is very negative open interest action relative to the price advance and this has been the main story for coffee ever since it generated a short-term buy signal on October 5 and an intermediate term buy signal on October 9.

As this report is being compiled on October 13, the December contract is trading close to unchanged and has made a daily high of 1.3710, which is slightly below yesterday’s print of 1.3760, the high for the move. We recommend a stand aside posture.

WTI crude oil:

November WTI crude oil lost $2.53 on volume of 846,991 contracts. Total open interest declined by 18,507 contracts, which relative to volume is approximately 20% below average. The November contract lost 44,484 of open interest. Clients should note that volume traded on October 12 was lighter than previous days even though the decline was substantial on October 12.

For example, on October 8, the November contract advanced $1.62 on volume of 1,100,926 contracts and total open interest increased by 9,303 contracts. Generally speaking, when volume contracts on a major decline, this can be considered positive, but we question whether WTI has the strength to continue its advance (except for an increase of tension in the middle east).

For example, WTI has been unable to generate an intermediate term buy signal even though the short-term buy signal occurred several weeks ago on September 3. Additionally, the open interest action on October 8-9 was tepid at best even though the November contract rose $1.82 in the 2 day period.

As this report is being compiled on October 13, the December contract is trading 46 cents higher and has made a daily high of 48.90, which is considerably below yesterday’s print of 50.13. The December contract will generate a short-term sell signal if the daily high is below OIA’s key pivot point for October 13 of $45.86. We have no recommendation.

Platinum: On October 12, January platinum generated a short-term buy signal, but remains on an intermediate term sell signal.

Copper: On October 12, December copper generated a short-term buy signal, but remains on an intermediate term sell signal.

December copper advanced 15 points on volume of 44,646 contracts. Total open interest declined by 2,864 contracts, which relative to volume is approximately 150% above average meaning that liquidation was substantial on the modest advance. As this report is being compiled on October 13, the December contract is trading 1.50 cents lower. We recommend a stand aside posture.

Euro: The December euro generated a short-term buy signal, which reverses the September 22 short-term sell signal. The December euro remains on an intermediate term buy signal.

The December euro gained 11 pips on light volume of 77,691 contracts. Total open interest declined by 417 contracts, which relative to volume is approximately 70% below average. As this report is being compiled on October 13, the December contract is trading 8 pips higher and has made a new high for the move of 1.1422, which takes out yesterday’s print of 1.1408. We have no recommendation.

Swiss franc: The December Swiss franc generated a short-term buy signal, but remains on an intermediate term sell signal.

Australian dollar:

The December Australian dollar advanced 42 pips on light volume of 62,598 contracts. Total open interest declined by 2,444 contracts, which relative to volume is approximately 45% above average meaning liquidation was substantial on the advance. Although the Australian dollar made a new high for the move yesterday at 73.58, on October 13 it is trading sharply lower, down 1.02 cents. The December Australian dollar remains on a short-term buy signal, but an intermediate term sell signal.

Canadian dollar:

The December Canadian dollar lost 12 pips on very light volume of 38,610 contracts. However, total open interest in declined by a massive 2,236 contracts, which relative to volume is approximately 135% above average meaning liquidation was extremely heavy on the modest decline. This follows a pattern of open interest declines going back to October 1.

For the past eight days beginning on October 1, the December Canadian dollar has rallied a total 2.14 cents and total open interest has declined each day except for October 7 (+530) bringing the cumulative total open interest decline for the eight day period to 18,494 contracts. We have no recommendation at this juncture.