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Corn:

December corn advanced 4.75 cents on volume of 317,435 contracts. Volume was the strongest since October 21 when the December contract gained 4.00 cents on volume of 409,025 contracts and total open interest declined by 9,217. On October 26, total open interest increased by 3,800 contracts, which relative to volume is approximately 45% below average, but the December and March contract lost a total of 2,312 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in the two delivery months and increase total open interest. Additionally, October 26 was the second day in a row in which corn prices advanced and total open interest increased. On October 23 the December contract gained 1.50 cents and total open interest increased by 4,210.

As this report is being compiled on October 27, the December contract is trading 3.75 cents lower after making a new high for the move of 3.87 1/2, which takes out yesterday’s print of 3.85 3/4 and is the highest price since 3.86 3/4 made on October 14. For the December contract to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for October 27 of 3.87 1/2. December corn remains on short and intermediate term sell signals. We have no recommendation.

Soybeans:

January soybeans lost 11.50 cents on heavy volume of 371,587 contracts. Volume was the strongest since October 13 when soybeans advanced 26.50 cents on volume of 431,836 contracts and total open interest increased by 17,277. On October 26, total open interest declined by a massive 16,316 contracts, which relative to volume is approximately 75% above average meaning liquidation was extremely heavy on yesterday’s decline. The November contract accounted for loss of 33,636 of open interest, which means there were sufficient open interest increases in the forward months to offset half of the decline in the November contract. This indicates that open interest was increasing in the back months on yesterday’s price decline.

As this report is being compiled on October 27, the January contract is trading 5.50 cents higher after making a daily low of 8.80 1/4, which is below yesterday’s print of 8.82 1/2. For January soybeans to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for October 27 of 8.86 7/8.  The market looks weak and with soybean meal on a short-term sell signal and soybean oil near a short-term sell signal, we think it is only a matter of time before soybeans relent and head lower. We have no recommendation.

Soybean meal: On October 26, December and January soybean meal generated short-term sell signals and remain on intermediate term sell signals.

December soybean meal lost $2.90 on volume of 132,382 contracts. Total open interest declined by a massive 10,520 contracts, which relative to volume is approximately 225% above average meaning liquidation was extremely heavy on the very modest decline. The December contract accounted for loss of 14,177 of open interest. As this report is being compiled on October 27, the December contract is having its usual counter trend rally, trading + $3.80, or +1.26% versus soybean meal trading +0.68%. We have no recommendation.

Soybean oil: December soybean oil will generate a short-term sell signal, if the daily high is below OIA’s key pivot point for October 27 of 27.71. The high on October 27 has been 28.19.

Chicago wheat:

December Chicago wheat advanced by a strong 18.50 cents on heavy volume of 161,251 contracts. However, total open interest increased just 53 contracts. The December contract accounted for loss of 1,951 of open interest, and although there were sufficient open interest increases in the forward months to offset the decline in December, total open interest was disappointing to say the least.

Yesterday, the December contract made a high of 5.12 and this has been taken out on October 27 with another new print of 5.18, but prices have pulled back and are trading near unchanged on the day. For the December contract to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point for October 27 of 5.11 3/8. We have no recommendation.

Live cattle:

December live cattle lost 1.40 cents on surprisingly light volume of 36,128 contracts. Total open interest increased by 1,289 contracts, which relative to volume is approximately 25% above average meaning aggressive new short-sellers were entering the market and driving prices lower. The October contract lost 485 of open interest, December -890, which means there were sufficient open interest increases in the forward months to offset the decline in October and December and increase total open interest.

For the past two days, December live cattle has lost 1.75 cents while total open interest has increased by 2,014 contracts. This is clearly bearish, and as this report is being compiled on October 27, the December contract is trading lower again, this time by 1.20 cents and has made a new low for the move of 1.40325, which is the lowest print since 1.40400 made on October 19.

Although price and open interest action has been acting a bearish fashion of late, we are not convinced that the move higher is over yet. We have been cautioning clients to maintain a sideline stance, and want to see more evidence that prices have bottomed. Weak hog prices are casting a negative tone upon the livestock markets after being the bulwark of strength. Maintain the sideline stance.

Lean hogs: On October 26, December lean hogs generated a short-term sell signal, but remains on an intermediate term buy signal.

December lean hogs lost 75 points on volume of 29,230 contracts. Total open interest increased by 217 contracts, which relative to volume is approximately 60% below average, however the December contract lost 1,538 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. Yesterday’s action was bearish.

As this report is being compiled on October 27, the December contract is trading sharply lower, down 1.225, or -1.95% and trading on the lows of the day. We expect December lean hogs to generate an intermediate term sell signal, and this could come as early as tomorrow. For this to occur, the high of the day must be below OIA’s key pivot point for October 27 of 62.485. We have no recommendation.

From the October 25 Weekend Wrap on lean hogs:

“December lean hogs will likely generate a short-term sell signal on October 26. As a point of reference, the high of the day must be below OIA’s key pivot point for October 23 of 64.950. This number will likely change somewhat on Monday, but it lets clients know the area where the December contract needs to trade in order to generate a short-term sell signal. The December contract closed at 63.600 on Friday. As usual, managed money is massively long at the top.”

WTI crude oil:

December WTI crude oil lost 62 cents on surprisingly light volume of 524,957 contracts. Total open interest increased by 5,090 contracts, which relative to volume is approximately 50% below average. The December contract gained 6,928 of open interest. October 26 was the fourth day in a row that total open interest increased and from October 21 through October 26, total open interest has increased by 61,651 contracts while the December contract lost $2.31.

This pattern clearly shows that short sellers are in control of the board, and as this report is being compiled on October 27, the December contract is trading lower again, this time by $1.12 and has made a new low for the move of 42.58, which is the lowest print since 40.57 made on August 27. Looking at the chart, there is no support until the contract low of 39.22 made on August 24. On October 21, OIA announced that December and January WTI crude oil generated short-term sell signals. December and January contracts remain on intermediate term sell signals. We have no recommendation.

Dollar index: On October 26, the December dollar index generated an intermediate term buy signal after generating a short-term buy signal on October 23.

The December dollar index lost 28.8 points on volume of 24,427 contracts. Total open interest declined by a massive 1,763 contracts, which relative to volume is approximately 185% above average meaning liquidation was extremely heavy on the moderate decline. As this report is being compiled on October 27, the December contract is trading near to unchanged. Tomorrow the Federal Reserve minutes will be released, and this could significantly impact the dollar index, especially if the minutes show that the Fed is moving towards an interest rate increase in December. We have no recommendation.

Euro:

The December euro gained 41 pips on volume of 177,164 contracts. Total open interest increased by 2,909 contracts, which relative to volume is approximately 35% less than average. As this report is being compiled on October 27 the December contract is trading 9 pips lower on the day. We have no recommendation.

Canadian dollar: The December Canadian dollar will generate a short-term sell signal on October 27 provided the daily high remains below OIA’s key pivot point for October 27 of  76.08.

The December Canadian dollar gained 13 pips on light volume of 37,039 contracts. However, total open interest declined by a massive 2,124 contracts, which relative to volume is approximately 125% above average meaning liquidation was extremely heavy on the modest advance. As this report is being compiled on October 27, the December contract is trading 57 pips lower and has made a new low for the move of 75.33, which is a little bit more than 1 cent from the contract low of 74.28 made September 29.