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Cocoa: July New York cocoa will generate a short term buy signal on April 19. It remains on an intermediate term buy signal.

Chicago wheat: July Chicago wheat will generate short and intermediate term buy signals on April 19. On April 19, the July contract has made a daily high of 4.96, which is the highest print since 4.95 3/4 made on January 27, 2016.

Corn:

May corn advanced 2.50 cents on volume of 584,749 contracts. Volume shrank considerably from April 15 when the May contract gained 4.50 on volume of 667,733 contracts and total open interest increased by 8,866. On April 18, total open interest skyrocketed by 14,604 contracts, which relative to volume is average. The May contract lost 5,995 of open interest, which means there were sufficient open interest increases in the forward months to offset the decline in May and increase total open interest to an average number. As this report is being compiled on April 19, the May contract is trading nearly unchanged after making a new high for the move of 3.86, which is the highest print since 3.87 1/2 made on October 27, 2015.

As we pointed out in yesterday’s report, managed money remains heavily net short corn and this will continue to be a supportive factor, especially because new buying has been moving prices higher on April 15 and 18. This indicates that short sellers are not throwing in the towel and this indicates that higher prices are ahead. On April 14, OIA announced that May and July corn generated short and intermediate term buy signals. We have no recommendation except do not short corn.

Soybeans:

May soybeans lost 1.75 cents on volume of 379,218 contracts. Total open interest increased by a massive 14,715 contracts, which relative to volume is approximately 30% above average, meaning a battle ensued between buyers and sellers and sellers were able to edge the market slightly lower. The May contract lost 13,610 of open interest. As this report is being compiled on April 19, the May contract is rocketing higher up 20.00 cents and has made a new high for the move of 9.82 1/2, which is the highest print since 9.96 1/2 made the week of August 10, 2015.

We strongly advise against bearish positions, especially since key moving averages for soybeans are in a bullish set up: the 20 day moving average stands at 9.32 3/8, 50 day 9.04 1/8, 100 day 8.95 1/2, 200 day 9.06 1/4. Within the next week, the 50 day moving average will cross above the 200 day moving average, which in our view tilts soybeans toward an intermediate term bullish bias. Do not attempt to pick a top in this market. On March 7, OIA announced that May and July soybeans generated short-term buy signals and intermediate term by signals on March 11.

Soybean meal:

May soybean meal lost $2.90 on volume of 142,573 contracts. Total open interest declined by 1,792 contracts, which relative to volume is approximately 45% below average. The May contract lost 11,128 of open interest. As this report is being compiled on April 19, the May contract is trading sharply higher, up $8.90 and has made a new high for the move of 304.60, which is the highest print since 305.20 made on November 3, 2015.

As we mentioned in yesterday’s report, managed money remains short soybean meal according to the latest COT report released last Friday. Unlike soybeans, soybean meal is not in a bullish moving average set up. We recommend a stand aside posture because soybean meal remains on short and intermediate term buy signals.

WTI crude oil:

June WTI crude oil lost 52 cents on volume of 1,255,006 contracts. Total open interest declined by 16,921 contracts, which relative to volume is approximately 40% below average. The May contract lost 29,066 of open interest. Yesterday, during the Sunday evening session, the June contract made a low of $39.00 and as we said yesterday, this area will provide substantial support. As this report is being compiled on April 19, the June contract is trading sharply higher, up $1.25 on heavy volume and has made a new high for the move of $42.88, which is the highest print on the continuation chart since 43.30 made on November 27, 2015. June WTI remains on short and intermediate term buy signals. We have no recommendation.

Euro:

The June euro advanced 27 pips on light volume of 102,640 contracts. Total open interest increased by 2,996 contracts, which relative to volume is approximately 5% above average. As this report is being compiled on April 19, the June contract is trading 64 pips above yesterday’s close and has made a daily high of 1.1403, which is the highest print since 1.1411 made on April 13. The euro is in a bullish moving average set up with the 50 day moving average trading substantially above the 200 day moving average. Do not short the euro and in our view should be traded from the long side only. We have no recommendation.

British pound:

The June British pound advanced 73 pips on volume of 81,234 contracts. Total open interest exploded higher, up by 3,097 contracts, which relative to volume is approximately 30% above average meaning aggressive new buyers were entering the market in substantial numbers and driving prices higher (1.4294).

As this report is being compiled on April 19, the June contract is trading sharply higher, up 1.18 cents on volume that exceeds that of April 18 and the June contract has made a new high for the move of 1.4422, which is the highest print since 1.4428 made on March 31. The June contract will generate a short-term buy signal if the daily low is above OIA’s key pivot point for April 19 of 1.4306 and this is likely to occur in tomorrow’s trading.

Although we are bearish the pound, there is a heavy short position held by speculators due to Brexit fears. We have opined the market would move counter intuitively to the upside to blow out the short-sellers, then resume the downtrend. The question is how far can the rally continue. One important metric, the COT report confirms that the ratio of leverage fund short-sellers currently stands at 1.71:1. This is down slightly from the previous week of 1.74:1 and the ratio two weeks ago of 1.97:1.

Once leverage funds become net long, bearish positions will  far less risky than today and will be a terrific opportunity. Today (Tuesday) is the tabulation date for Friday’s report and it will be interesting to see whether the moves of the past two days have shaken loose short-sellers. For now, stand aside.

Canadian dollar:

The June Canadian dollar advanced 19 pips on volume of 81,055 contracts. Total open interest increased by 1,679 contracts, which relative to volume is approximately 20% below average. As this report is being compiled on April 19, the June contract is trading sharply higher, up 84 pips and has made a new contract high of 79.17, which is the highest print since 79.52 made the week of July 6, 2015.

As mentioned in the previous note, today is the tabulation date for the COT report and it will be interesting to see whether a substantial number of short-sellers have been blown out of the market in order for the Canadian dollar to put in a top. The Canadian dollar remains on short and intermediate term buy signals as does CAD/AUD.

Australian dollar:

The June Australian dollar advanced 26 pips on volume of 96,762 contracts. Total open interest increased by 1,997 contracts, which relative to volume is approximately 20% below average. Yesterday’s open interest increase indicates that new buyers continue to flood into the Australian dollar and drive it to new contract highs. As this report is being compiled on April 19, the June contract has made another contract high of 78.01, which is the highest print since 78.14 made the week of June 15, 2015. We have no recommendation.