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Tomorrow, we will issue a truncated report and publish it earlier than usual due to electrical work being performed on the company’s building. This necessitates the power being turned off for most of the day.

Corn:

December corn lost 3.75 cents on volume of 186,962 contracts. Volume fell from October 16 when the December contract gained 1.25 cents on volume of 209,157 contracts and total open interest increased by 4,527. On October 19, total open interest increased by a massive 10,750 contracts, which relative to volume is approximately 125% above average meaning aggressive new short-sellers were entering the market in very large numbers and driving prices lower (3.72 1/2), which matches the low on October 16. There were open interest increases across the board: from December 2015 through December 2017.

Yesterday’s action was extremely bearish because indicates that new short-sellers were willing to enter positions at the low end of the trading range, not far from contract lows. Although, we still expect a counter trend rally due to the short-term sell signal of October 15, once this occurs, we expect prices to drift lower. We have no recommendation.

Soybeans:

November soybeans lost 7.25 cents on volume of 295,998 contracts. Volume increased from October 16 when the November contract lost 7.00 cents on volume of 256,645 contracts and total open interest declined by 5,379. On October 19, total open interest declined again, this time by 8,858 contracts, which relative to volume is approximately 5% above average. The November contract accounted for loss of 22,102 of open interest.

One positive aspect regarding soybeans during the past two days is that open interest has declined, not increased, however soybeans needs a catalyst to send prices higher. Yesterday, soybean oil and soybean meal prices declined and both experienced open interest increases of a substantial amount. This is negative for soybeans. A short-term sell signal will be generated in the November contract if the daily high is below OIA’s key pivot point for October 20 of 8.77 7/8. We have no recommendation.

Soybean oil:

December soybean oil lost 46 points on volume of 65,439 contracts. Total open interest increased by substantial 3,775 contracts, which relative to volume is approximately 120% above average meaning aggressive new short-sellers were entering the market and driving prices lower (28.10). There were open interest increases in the December 2015 through December 2016 contracts.

As this report is being compiled on October 20, the December contract is trading 18 points higher and has made a new low for the move of 28.02. December soybean oil will generate a short-term sell signal, which would reverse the short-term buy signal if the daily high is below OIA’s key pivot point for October 20 of 27.59. We have no recommendation.

Chicago wheat: On October 19, December Chicago wheat generated a short-term sell signal, and remains on an intermediate term sell signal.

December Chicago wheat lost 6.50 cents on volume of 108,186 contracts. Total open interest increased by 1,219 contracts, which relative to volume is approximately 45% below average, however an open interest increase on yesterday’s price decline is bearish. As this report is being compiled on October 20, the December contract is trading nearly unchanged on the day. We have no recommendation.

Live cattle: On October 19, December live cattle generated a short-term buy signal, but remains on an intermediate term sell signal.

December live cattle advanced 2.225 cents on volume of 61,015 contracts. Volume increased from October 16 when the December contract gained 2.875 cents on volume of 53,513 contracts and total open interest increased by 1,156. On October 19, total open interest declined by a massive 3,425 contracts, which relative to volume is approximately 120% above average meaning liquidation was extremely heavy on the strong advance. The October through February 2016 contracts lost a total of 5,037 of open interest.

As this report is being compiled on October 20, the December contract is trading 52.5 points higher and has made a new high for the move of 1.43250. Yesterday’s open interest decline on the strong price advance is what OIA expected and we pointed this out in the October 18 weekend report: short sellers would help power the market higher. However, this makes cattle vulnerable to a very sharp setback and we continue to recommend a sideline stance until the market has corrected for at least two days.

From the October 18 weekend report on live cattle:

“From a seasonal point of view, live cattle prices tend to strengthen in the fourth quarter and if a short-term buy signal is generated, there could be an interesting trade on the long side. Another bonus: managed money currently is nearly as short as they are long, which means short sellers would provide additional fuel for a continued move higher.”

Coffee:

December coffee lost 1.95 cents on volume of 27,894 contracts. Total open interest increased by 676 contracts, which relative to volume is average, but this continues the very negative open interest action that we have seen in coffee for the past couple of weeks. As this report is being compiled on October 20, the December contract is trading near unchanged on the day and has made a daily low of 1.2325, which is slightly below yesterday’s print of 1.2350. December coffee is getting close to generating short and intermediate term sell signals, and we recommend a stand aside posture.

Cocoa:

December cocoa is getting close to generating short and intermediate term buy signals. The fundamentals for cocoa are positive and the longer term moving averages are in a bullish set up: the 50 day moving average is above the 150 day average and the 200 day moving average. Stand aside for now.

WTI crude oil:

December WTI crude oil lost $1.44 on volume of 761,848 contracts. Total open interest declined by 9,871 contracts, which relative to volume is approximately 45% less than average. The November contract lost 36,023 of open interest. As this report is being compiled on October 20, the December contract is trading 27 cents lower after making a daily high of 46.93, which is below yesterday’s print of 47.91 and a low of 45.91, which is below yesterday’s print of 46.22 and is the lowest price since 45.79 made on October 15, the low for the move.

Both gasoline and heating oil are on short and intermediate term sell signals and as we have said before, with product prices in the basement, WTI prices will struggle to advance. The December Brent contract is very close to generating a short-term sell signal, which would reverse the short-term buy signal of October 7.

In yesterday’s trading, the December Brent contract lost $1.85 on volume of 522,196 contracts, however open interest increased by a strong 15,200 contracts, which relative to volume is approximately 5% above average.The open interest action in Brent was very bearish whereas the open interest decline in WTI was friendly.

For the December Brent contract to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for October 20 of 49.01. For the December WTI contract to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for October 20 of 45.91. In order for the December contract to resume its uptrend, it must make a daily low is below OIA’s pivot point of $47.82. We have no recommendation.

Gold:

December gold lost $10.30 on volume of 113,389 contracts. Total open interest increased by 2,454 contracts, which relative to volume is approximately 50% below average, however an open interest increase on yesterday’s price decline is negative. It indicates that short sellers were in control and driving prices lower ($1168.30).

As this report is being compiled on October 20, the December contract is trading $4.10 higher and has made a daily low of 1167.20. Though December gold remains on short and intermediate term buy signals, we remain cautious on its near-term prospects. At this juncture, we have no recommendation.

Platinum: On October 19, January platinum generated an intermediate term buy signal after generating a short-term buy signal on October 12.

Dollar index:

The December dollar index advanced 36.5 points on light volume of 19,373 contracts. However, total open interest increased by a massive 1,612, which relative to volume is approximately 230% above average meaning aggressive new buyers were entering the market in large numbers and driving prices higher (95.045). Yesterday’s price and open interest action is the most positive that we have seen in many weeks.

As this report is being compiled on October 20, the December contract is trading 11.8 points lower and has made a daily high of 94.985, below yesterday’s high. The moving average set up longer-term is bearish with the 50 day moving average trading below the 200 day moving average. We have no recommendation.

Euro:

The December euro lost 50 pips on light volume of 134,482 contracts. Total open interest declined by 1,453 contracts, which relative to volume is approximately 50% below average, and yesterday’s open interest decline along with prices is friendly and is consistent bullish action.

As this report is being compiled on October 20, the euro is trading 23 pips higher and has made a daily high of 1.1397, which is above yesterday’s print of 1.1388. The longer-term moving averages are in a bullish set up with the 50 day moving average trading above the 200 day. We see the trend as irregularly higher, but we are bullish only in the near term. Ultimately, we see the euro moving substantially lower.

Canadian dollar:

The December Canadian dollar lost 68 pips on volume of 46,426 contracts. Total open interest increased by 538 contracts, which relative to volume is approximately 45% below average, but an open interest increase on yesterday’s decline is negative. This follows the total open interest increase of 2,014 on volume of 46,380 contracts on October 16 when the December Canadian dollar lost 40 pips.

As this report is being compiled on October 20, the December Canadian dollar is trading 28 pips higher on the day. The December Canadian dollar remains on a short term buy signal, but an intermediate term sell signal. We have no recommendation.