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Corn:

July corn advanced 4.50 cents on heavy volume of 745,541 contracts. Volume increased substantially from April 18 when corn advanced 2.50 cents on volume of 584,749 and total open interest increased by 14,604. Additionally, volume was higher than April 15 when corn gained 4.50 cents on volume of 667,733 contracts and total open interest increased by 8,866.

On April 19, total open interest declined by 17,350 contracts, which relative to volume is approximately 10% below average, but yesterday’s total open interest decline indicates that short sellers were powering the market higher, which comes as no surprise to OIA clients. We have been pointing out the potential impact of the massive short position held by managed money. The May contract lost 43,829 of open interest.

As this report is being compiled on April 20, the July contract is trading higher again, this time by 4.00 cents and has made a new daily high of 3. 94 3/4, which is the highest print since  3.95 3/4 made on November 9, 2015. Surprisingly, since generating short and intermediate term buy signals on April 14, corn has not had its usual counter trend pullback, which is unusual considering the fundamentals.

The wheat market has been rocketing higher during the past couple of days and this has been supportive to corn. According to the recent COT report, there are huge numbers of speculative short-sellers remaining in the market, and based upon the current trading level last seen in early November 2015, we have good reason to believe the majority of the short-sellers are carrying losses. As we have said before, do not attempt to pick a top in this market because it likely is going higher, but it most definitely needs some corrective activity before doing so.

Soybeans:

July soybeans closed sharply higher by 31.75 cents on huge volume of 615,075 contracts. Volume exceeded that of April 13 when soybeans advanced 19.50 on volume of 533,410 contracts and total open interest increased by 18,700 contracts. On April 19, total open interest increased by 5,775 contracts, which relative to volume is approximately 50% below average. However, the May contract lost 29,981 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. Yesterday’s action was clearly positive, but the low total open interest increase indicates a degree of caution among potential new buyers.

As this report is being compiled on April 20, July soybeans are trading 10.25 cents higher and have made a new high for the move of 10.05 3/4, which is the highest print since 10.09 made the week of July 20, 2015. Setbacks have been few and far between and we continue to caution clients not to pick a top in the soybean market and the other grain markets.

As of the latest COT report, managed money held over 65,000 contracts short, and these participants are getting blown out of the market. On March 7, OIA announced that July soybeans generated a short-term buy signal and an intermediate term buy signal on March 11. We have no recommendation except to say do not chase the market higher to buy it and do not short it.

Chicago wheat: On April 19, July Chicago wheat generated short and intermediate term buy signals.

July Chicago wheat advanced 13.25 cents on heavy volume of 214,873 contracts. Total open interest declined by a massive 11,469 contracts, which relative to volume is approximately 105% above average meaning liquidation was extremely heavy on yesterday’s strong advance. The May contract lost 16,925 of open interest. As this report is being compiled on April 20, the July contract is rocketing higher, trading up 12.00 cents and has made a new high for the move of 5.07, which is the highest print since 5.10 1/4 made on December 18, 2015.

The recent COT report found managed money short at the highest level in at least a year. In the report, which was tabulated on April 12, managed money liquidated 10,491 contracts of their long positions and added 35,072 to their short positions, which computed to a short ratio of 3.26:1, which was up sharply from the previous week of 2.14:1 and the ratio two weeks ago of  2.17:1.

In summary, there are huge numbers of managed money short-sellers who are undoubtedly feeling a substantial amount of pain as wheat continues to rocket higher. Now that wheat is on short and intermediate term buy signals, the market should have a pullback lasting 1-3 days before resuming the uptrend. We have no recommendation.

Coffee: On April 20, July New York coffee will generate a short-term buy signal, which reverses the April 5 short-term sell signal. July coffee remains on an intermediate term buy signal.

Cocoa: On April 19, July New York cocoa generated short and intermediate term buy signals.

WTI crude oil:

June WTI crude oil advanced $1.27 on volume of 1,150,591 contracts. Total open interest declined by 19,370 contracts, which relative to volume is approximately 35% below average, which indicates that short sellers covering positions were powering the market higher on April 19. The May contract accounted for loss of 31,425 of open interest. As this report is being compiled on April 20, the June contract is rocketing to a new contract high of 44.07, up $1.42 on very heavy volume. This is the highest print since $45.12 made the week of November 7, 2015.

On April 12, June WTI crude oil generated a short-term buy signal and this reversed the April 4 short-term sell signal. The market then had three days of corrective activity which is typical after a buy signal. After making a major low of 39.00 Sunday evening, WTI has traded steadily higher. Ever since the failure of OPEC to come to terms with a freeze, many in the financial press have been stating that crude would resume its downtrend. They have been proven wrong and OIA’s buy signals have been right. We have no recommendation.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.1 million barrels from the previous week. At 538.6 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories decreased by 0.1 million barrels last week, but are well above the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 3.6 million barrels last week but are well above the upper limit of the average range for this time of year. Propane/propylene inventories rose 1.2 million barrels last week and are above the upper limit of the average range. Total commercial petroleum inventories decreased by 0.4 million barrels last week.

Natural gas: May and June natural gas will generate intermediate term buy signals on April 20. Both contracts remain on short term buy signals. 

June natural gas advanced 14.8 cents on heavy volume of 506,640 contracts. Total open interest declined by 4,681 contracts, which relative to volume is approximately 50% below average. The May contract accounted for loss of 15,850 of open interest. As this report is being compiled on April 20, the June contract is trading unchanged and has made a new high for the move of $2.240, which is the highest print since 2.273 made on February 11, 2016. According to the COT report released last Friday, managed money is short natural gas by ratio of 1.38:1, which is up slightly from the previous week of 1.35:1, but down from the ratio two weeks ago of 1.44:1. In summary, distressed show short-sellers will likely continue to power the market higher. We have no recommendation.

Gold:

June gold advanced $18.20 on strong volume of 224,366 contracts. Total open interest exploded higher, up 13,553 contracts, which relative to volume is approximately 140% above average meaning aggressive new buyers were entering the gold market in large numbers and driving prices higher (1258.50). As this report is being compiled on April 20, the June contract is trading $2.30 higher on the day and is made a daily high of 1259.80. The market looks firm, and our only concern is the lopsided long position of managed money. We have no recommendation.

Silver:

May silver advanced 69.7 cents on very heavy volume of 144,869 contracts. Surprisingly, total open interest increased only 946 contracts, which relative to volume is approximately 70% below average. However, the May contract which enters first noticed day during the next couple of weeks lost 8,997.

Yesterday, the May contract made a daily high of $17.110 and as this report is being compiled on April 20, the May contract has made another new high of $17.255, which is the highest print since 17.180 made the week of May 25, 2015. Like gold, our concern with silver is the lopsided long position of managed money. We have no recommendation.

British pound:

The June British pound advanced 1.18 cents on heavy volume of 102,322 contracts. Total open interest increased by 1,793 contracts, which relative to volume is approximately 25% below average. The open interest increase on yesterday’s strong advance is the third one in a row, which began on April 15.

In summary, advancing prices are being supported by new buying and short-sellers are not covering positions on the rally of the past three days. We continue to think the pound will blow out short-sellers by continuing to move higher and once this has been accomplished, the market will resume its downtrend.

Canadian dollar:

The June Canadian dollar advanced by a strong 93 pips on volume of 83,909 contracts. Total open interest increased by a substantial 2,973 contracts, which relative to volume is approximately 25% above average. Yesterday the June contract made a new high for the move of 79.17 and this has been taken out in today’s trading (79.41.). We have no recommendation.

Australian dollar:

The June Australian dollar advanced 73 pips on volume of 90,241 contracts. Total open interest increased by a massive 4,462, which relative to volume is approximately 100% above average meaning aggressive new buyers were entering the market and driving prices to a new high for the move of 78.08. On April 20, this has been taken out fractionally (78.11). We have no recommendation.