Soybeans:

July soybeans advanced 21.25 cents on volume of 198,866 contracts. Volume declined from the 241,654 contracts traded on April 15 when soybeans advanced 25.00 cents and total open interest increased by 7,829 contracts. Additionally, volume was the lightest since April 10 when 179,901 contracts were traded and soybeans declined 13.00 cents while total open interest declined by 938 contracts. On April 16, total open interest increased by 2,684 contracts, which relative to volume is approximately 45% less than average. The May contract lost 11,088 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on April 17, July soybeans are trading 6.50 cents lower after making a new high for the move at $15.21 and the May contract making a new high of 15.31 3/4. Volume and open interest action relative to the price advance on April 16 was far less bullish than what we have seen in recent sessions. This may indicate that market participants are losing their appetite for soybeans at current prices. We have advocated a sideline stance due to the seasonal tendency of soybeans declining in the current period, then rallying from late may through mid July. July soybeans remain on a short and intermediate term buy signal. Stand aside.

The USDA reported that 19.23 thousand metric tons were sold, which brings total commitments to 1.6391 billion bushels versus USDA projections for the season of 1.580 billion bushels. The current sale was one of the lowest of the season, which began on September 1, 2013

 Soybean meal:

July soybean meal advanced $5.40 on volume of 98,032 contracts. Volume declined from the 99,285 contracts traded on April 15 when soybean meal advanced $8.30 and total open interest increased by 4,445 contracts. On April 16, total open interest increased by 2,277 contracts, which relative to volume is approximately 10% below average. The May contract lost 8,890 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on April 17, July soybean meal is trading $2.30 lower after making a new high for the move at 485.00. The May contract made a new high at 495.90. Like soybeans, we have advocated a sideline stance due to the seasonal tendency for soybean meal to decline and then rally from late May through mid July.

The USDA reported that sales of soybean meal totaled 36.62 thousand metric tons bringing total commitments to 8727.4 thousand metric tons versus the USDA projections of 9979 thousand metric tons. The current sale was the lowest since February 27 and the second lowest of the season, which began on October 1, 2013

Soybean oil:

July soybean meal advanced 88 points on volume of 111,687 contracts. Total open interest declined by 896 contracts, which relative to volume is approximately 60% less than average. The May contract lost 7,676 of open interest. As this report is being compiled on April 17, July soybean oil is trading 14 points lower. On April 15, soybean oil generated a short-term buy signal, which reversed the short-term sell signal of March 20. As is usually the case after the generation of a buy signal, the market has a tendency to pullback from 1-3 days, and we are waiting for this pullback before recommending bullish positions. On the continuation chart, the 50 day moving average crossed above the 200 day moving average, which is a positive development for soybean oil. OIA is far more comfortable being long soybean oil after the pullback rather than being long soybeans or soybean meal. The long to short ratio for soybean meal is 1.22:1 versus soybeans of 6.44:1 and soybean meal, 4.30:1.

The USDA reported sales of soybean oil totaling 5.46 thousand metric tons, bringing total commitments to 577.7 thousand metric tons versus the USDA projection for the season of 703.1 thousand metric tons.

Corn:

July corn lost 6.25 cents on volume of 302,425 contracts. Volume was the lowest since April 14 when 260,885 contracts were traded and corn advanced 4.50 cents while total open interest increased by 3,921 contracts. On April 16, total open interest declined by 4,085 contracts, which relative to volume is approximately 45% less than average. The May contract accounted for loss of 19,585 of open interest. As this report is being compiled on April 17, July corn is trading 3.25 cents lower and has made a daily low of 4.98 3/4. We have advocated a sideline stance because we think corn is massively overbought and due for correction. Basically, it has been trading in a sideways to higher pattern for the past couple of weeks.

The USDA reported sales of 601.9 thousand metric tons, which brings total commitments to 1.675 billion bushels versus USDA projections for the season of 1.750 billion bushels.

Chicago wheat:

July Chicago wheat declined 14.50 cents on heavy volume of 156,564 contracts. Volume increased somewhat from the 154,155 contracts traded on April 15 when wheat advanced 23.00 cents and total open interest declined by 4,666 contracts. On April 16, total open interest increased by a mere 170 contracts. The May contract accounted for loss of 8,450 of open interest. With the exception of the September 2014 contract, open interest increased in the July 2014 through September 2015 contracts, which offset the decline in the May contract. This is bearish open interest action. However, as we write this report on April 17, July Chicago wheat is trading 6.75 cents higher, but has not made a daily low above OIA’s key pivot point for the July contract of $7.01.

Until this occurs, wheat will struggle to move higher. There is one huge caveat: much of the move in wheat can be attributed to rising tensions in Ukraine and the black sea region, which could severely crimp exports from the area. This is a double-edged sword because if there is a lessening of tension, the impact could be severely adverse to wheat prices. The Russian economy has taken a large hit from the crisis and the leadership of Russia cannot afford to see their economy slips deeper into an economic mire. July Chicago wheat remains on a short and intermediate term buy signal

 Kansas City wheat:

July Kansas City wheat lost 10.75 cents on fairly light volume of 23,303 contracts. Volume was the lowest since April 3 when 21,043 contracts were traded and July KC wheat closed at 7.47 3/4. On April 16, total open interest increased by a massive 2,174 contracts, which relative to volume is approximately 250% above average meaning that new short sellers were heavily entering the market and driving prices lower. The May contract lost 5,092 of open interest, which makes the total open interest increase much more impressive (bearish). The July 2014 through July 2015 contracts all gained open interest. As this report is being compiled on April 17, July KC wheat is trading 6.25 cents higher and has made a daily high of 7.78 1/2. Like Chicago wheat, we advise against bullish positions because the rally in wheat is due to geopolitical tensions. If tension decreases so do wheat prices. July Kansas City wheat remains on a short-term sell signal, but an intermediate term buy signal.

The USDA reported that sales of wheat in all categories totaled 438 thousand metric tons bringing total commitments to 1.129  billion bushels versus USDA projections for the season, which ends on May 31 of 1.175  billion bushels.

 Sugar:

July sugar advanced 22 points on relatively heavy volume of 170,810 contracts. Total open interest increased by a massive 15,533 contracts, which relative to volume is approximately 250% above average meaning that huge numbers of new longs were entering the market and driving prices to the high of 17.95. The May contract lost 8,442 of open interest. Yesterday, clients should have liquidated bearish positions based upon the move above the exit point of 17.93. Unfortunately, this was a major fake out because on April 17 July sugar is trading 40 points lower and has made a new low for the move at 17.18, which takes out the April 14 low of 17.24 and is the lowest print since March 25 of 17.13. Although, clients may have liquidated by a false move, all the longs that entered bullish positions on yesterday’s advance has been taken to the woodshed on April 17. 

 Cotton:

July cotton gained 1.28 cents on low volume of 23,613 contracts. Volume was the lowest since April 4 when 23,615 contracts were traded and July cotton closed at 92.67. On April 16, total open interest declined by 106 contracts, which relative to volume is approximately 80% below average. The May contract accounted for loss of 4,354 of open interest , which makes the total decline of open interest somewhat more impressive (bullish). As this report is being compiled on April 17, July cotton is trading 2 points higher on the day after making a high of 92.89, which is the highest print since 92.91 made on April 14. For July cotton to reverse the short-term sell signal generated on April 10, the low for the day must be above OIA’s key pivot point of 92.15. Until this occurs, cotton will struggle to move higher and likely trade in a sideways to lower pattern. 

WTI crude oil:

May WTI crude oil closed 1 cent higher on huge volume of 748,831 contracts. Volume was the highest since 789,212 contracts were traded on April 9 when May WTI advanced $1.04 and total open interest increased by 16,174 contracts. On April 16, total open interest declined by 15,604 contracts, which relative to volume is approximately 20% below average. The May contract lost 40,229 of open interest. Yesterday’s report sums up our thinking on crude oil.

From the April 15 report:

“May WTI crude oil has made a new high for the move at $104.99, which is the highest print since March 3 when the April contract made a high of $105.22. After making today’s high between 5:15 a.m. -5: 30 a.m. ADT, the market has sold off and hasn’t gotten close to testing the high made in the early morning before the pit session opened. As a result, the May contract is currently trading 33 cents lower on the day and has made a low of 103.12. We have been advising a stand aside posture because we do not like the fundamentals of the market and managed money is massively long. Additionally, the dismal performance of Brent crude oil with respect to price and open interest is another negative factor. The massive increase in crude oil stocks in the latest EIA report does not support higher prices. Continue to stand aside.”

Natural gas:

May natural gas lost 3.7 cents on light volume of 156,734 contracts. Volume was the lightest since April 4 when 149,974 contracts were traded and natural gas lost 3.1 cents while total open interest increased by 8,392 contracts. On April 16, total open interest declined by 3,980 contracts, which relative to volume is average. The May contract lost 14,938 of open interest. After generating a short-term buy signal on April 10, natural gas underwent its usual correction, which in this case lasted 4 days instead of 3. During the course of the pullback, total open interest declined by 22,600 contracts while natural gas prices declined by 13.2 cents. This was very healthy open interest action relative to the price decline. In the April 14 report, we recommended that clients initiate bullish positions and also stated that natural gas prices should not fall much below 4.475. As this report is being compiled, May natural gas is trading 19.4 cents higher and made a daily low of 4.484, which is above 4.475 support. Maintain bullish positions

The Energy Information Administration announced that working gas in storage was 850 Bcf as of Friday, April 11, 2014, according to EIA estimates. This represents a net increase of 24 Bcf from the previous week. Stocks were 850 Bcf less than last year at this time and 1,010 Bcf below the 5-year average of 1,860 Bcf. In the East Region, stocks were 460 Bcf below the 5-year average following net injections of 6 Bcf. Stocks in the Producing Region were 418 Bcf below the 5-year average of 789 Bcf after a net injection of 10 Bcf. Stocks in the West Region were 132 Bcf below the 5-year average after a net addition of 8 Bcf. At 850 Bcf, total working gas is below the 5-year historical range.

Euro:

The June euro advanced 11 pips on light volume of 126,694 contracts.Total open interest declined by 2,418 contracts, which relative to volume is approximately 20% below average. As this report is being compiled on April 17, the euro is trading 4 pips lower after making a daily high of 1.3864, which is the highest print since 1.3862 made on April 14. The euro remains on a short and intermediate term buy signal. We have no recommendation.

Gold: The bullish positions that we recommended in the April 14 report should be liquidated today because we think it is imminent that gold will generate a short-term sell signal, This will reverse the short-term buy signal generated on April 14. Gold remains on an intermediate term buy signal .

June gold advanced $3.20 on low volume of 126,793 contracts. Total open interest increased by 213 contracts, which is minuscule and dramatically below average. As this report is being compiled on April 17, June gold is trading $5.30 lower on the day.

Platinum: On April 16, July platinum generated a short-term sell signal and will likely generate an intermediate term sell signal on April 17.

S&P 500 E mini:

The June S&P 500 E mini advanced 13.25 points on volume of 1,646,534 contracts. Total open interest declined by a substantial 37,231 contracts, which relative to volume is only 10% below average, which means the decline of open interest was fairly heavy. Rarely, does open interest increase or decrease by an average amount relative to volume. During the past 3 days when the countertrend rally began on April 14 through April 16, the June E mini has advanced 41.00 points while total open interest declined 30,800 contracts. This is unquestionably bearish open interest action relative to the price advance. Even during April 14 and 15 when open interest increased, it was dramatically below average indicating a lack of enthusiasm by market participants. As this report is being compiled, the E mini is rallying for the 4th day since generating a short-term sell signal on April 11.

 For the E mini to generate a short-term buy signal, which would reverse the short-term sell signal of April 11, the June E mini must make a daily low above 1863.50. Today’s rally is anemic and volume in the June S&P E mini is just slightly over 1 million contracts. If we see a rally on April 18 without a reversal tomorrow, it is likely the E mini is headed for a test of 1892.50 made on April 4.

From the April 15 report:

 “Today, clients should consider liquidating out of the money calls and/or initiate new long puts with the following caveat: If the June E mini continues to rally beyond 1863.50, new all-time highs may be in the offing. Alternatively, clients may decide to wait until tomorrow before making a decision about purchasing long out of the money calls and the initiation of new long puts.  The logic behind OIA’s recommendations is that today’s rally should be the extent of the countertrend move. A continued move higher could mean that the market is going to test the April 4 high of 1892.50.”