Soybeans:

May soybeans declined 22.25 cents on heavy volume of 233,338 contracts. Volume was the highest since March 31 when 238,934 contracts were traded and May soybeans advanced 27.50 cents while total open interest increased by 6,841 contracts. On April 2, total open interest declined by only 720 contracts. The May contract lost 7,967 of open interest and there were sufficient open interest increases in the forward months to bring down the total number significantly below average. As this report is being compiled on April 3, May soybeans are trading 6.75 cents higher and have made a daily high of 14.80 3/4.

Yesterday’s action looks like a key reversal day, and we think there is a high likelihood that the upside move in soybeans is fading. The fact that open interest declined fractionally indicates that longs are not going to be easily shaken out of their positions. This could potentially drive prices excessively lower if longs refuse to liquidate as prices decline. Keep in mind ,for soybean prices to move above 14.96, new buyers have to be willing to step in and aggressively bid prices higher. We don’t think this is in the cards. However, after a healthy wash out, OIA thinks there will be another rally as the current crop year nears its end. Soybeans remain on a short and intermediate term buy signal. At this juncture, we have no recommendation.

Soybean meal:

May soybean meal declined by $6.20 on volume of 71,874 contracts. Total open interest declined by 470 contracts, which relative to volume is approximately 60 percent below average. The May contract lost 3,924 of open interest. Our view of soybean meal is the same as soybeans in that we think prices have topped and will be heading lower. May soybean meal remains on a short and intermediate term buy signal. We have no recommendation.

Corn:

May corn lost 11.75 cents on volume of 353,803 contracts. Volume was the lowest since March 28 when 252,497 contracts were traded and May corn closed unchanged while total open interest increased by 3,859 contracts. Additionally, volume was considerably lower than the 394,875 contracts traded on April 1 when May corn advanced 5.50 cents and total open interest increased by an unbelievable 20,920 contracts. On April 2, open interest increased again, this time by 8,537 contracts, which relative to volume is average, however an open interest increase on a price decline is bearish. The May contract lost 12,290 of open interest, which makes the total open interest increased more impressive (bearish). There were open interest increases in the July 2014 through March 2016 contracts.

To underscore the abysmal performance of corn during the past 2 weeks consider the following: From March 17 through April 2, May corn advanced 16.75 cents, however open interest increased by a massive 48,952 contracts. In other words, while the advance had been mild, the open interest increase has been disproportionately large. This indicates that large increases of open interest are not moving prices much during a two-week period. Like soybeans, and soybean meal, we think the rally in corn is on borrowed time and with the huge long position of manage money, a wash out appears to be on the horizon. Corn remains on a short and intermediate term buy signal. We have no recommendation.

Chicago wheat-Kansas City wheat: The bullish positions in Chicago and Kansas City wheat have been liquidated per the April 1 report along with the long put position recommended on March 19. Clients should be on the sidelines. We will commence reporting on wheat when we see a trading opportunity and/or a sell signal(s) is generated.

Sugar: On April 2, May sugar generated a short-term sell signal, but remains on an intermediate term buy signal.

May sugar lost 21 points on volume of 124,712 contracts. Total open interest declined by 3,790 contracts, which relative to volume is approximately 25% above average meaning that liquidation was reasonably heavy on the modest decline. The May contract lost 10,342 of open interest and there were sufficient open interest increases in the forward months to bring down the total number to slightly above average. Usually, after the generation of a sell signal, the market has a tendency to rally from 1-3 days and as this report is being compiled on April 3, May sugar has advanced 21 points. We want to see more of a rally before recommending bearish positions.

Cocoa: On April 2, May Cocoa generated a short-term sell signal, but remains on an intermediate term buy signal. Wait for a rally before initiating bearish positions.

Cotton: Bear Alert

May cotton lost 56 points on volume of 25,442 contracts. Total open interest declined by only 187 contracts, which relative to volume is approximately 65% below average. The May contract lost 4,186 of open interest, and there were sufficient increases in the forward months that brought down the total number below average. We have been tracking cotton ever since it topped out at 97.35 on March 26. It appears cotton is close to generating a short-term sell signal and in the upcoming Weekend Wrap, we will discuss cotton in detail. Although cotton has not generated a short-term sell signal , we strongly advise against  being long this market.

Live cattle:

April live cattle lost 15 points on light volume of 37,151 contracts. Total open interest declined by 274 contracts, which relative to volume is approximately 60% below average. The April contract lost 3,268 of open interest. As this report is being compiled on April 3, April cattle is trading 40 points higher on light volume. We have been  anticipating the possibility of a sharp move higher before 1st notice day, but this has not occurred yet. Check with your broker to determine when April positions must be liquidated. Also tighten sell stops in the event the market reverses.

WTI crude oil:

May WTI crude oil lost 12 cents on volume of 478,708 contracts. Total open interest increased by 5,427 contracts, which relative to volume is approximately 45% less than average. The May contract lost 2,153 of open interest. As this report is being compiled on April 3, May WTI is trading 24 cents higher on the day. May WTI remains on a short and intermediate term buy signal, but we see no reason to be involved in the market at this juncture. The market would generate a short-term sell signal if the daily high is below 99.91.

Natural gas:

 May natural gas advanced 8.8 cents on light volume of 225,326 contracts. Volume fell slightly from the 229,945 contracts traded on April 1 when May natural gas lost 9.5 cents and total open interest declined by 21,228 contracts. On April 2, total open interest declined massively, this time by 15,953 contracts, which relative to volume is approximately 185% above average, meaning that there was massive liquidation as prices advanced. This is bearish. The May contract lost 14,701 of open interest. It appears speculators who were long at higher levels were liquidating as the market rallied. As this report is being compiled on April 3, May natural gas has advanced 8.6 cents on light volume. Conceivably, May natural gas may advance to the $4.519 area, but we think this will be the extent of the rally at the time.

The Energy Information Administration announced that working gas in storage was 822 Bcf as of Friday, March 28, 2014, according to EIA estimates. This represents a net decline of 74 Bcf from the previous week. Stocks were 878 Bcf less than last year at this time and 992 Bcf below the 5-year average of 1,814 Bcf. In the East Region, stocks were 448 Bcf below the 5-year average following net withdrawals of 46 Bcf. Stocks in the Producing Region were 410 Bcf below the 5-year average of 762 Bcf after a net withdrawal of 24 Bcf. Stocks in the West Region were 134 Bcf below the 5-year average after a net drawdown of 4 Bcf. At 822 Bcf, total working gas is below the 5-year historical range.

Euro:

The June euro lost 28 pips on light volume of 123,070 contracts. Total open interest declined by 1,613 contracts, which relative to volume is approximately 45% less than average. Ever since March 25, we have been telling clients that unless the euro was able to make a daily low above  OIA’s two pivot points the euro would be unable to resume its advance. Additionally, we advised clients to stand aside despite the euro being on a short and intermediate term buy signal. As this report is being compiled on April 3, the June euro is trading 50 pips lower and has made a new low for the move at 1.3696, which is its lowest price since February 28 when the low print was 1.3695. It is likely the June euro will generate a short-term sell signal on April 3, but not an intermediate term sell signal.

British pound:

The June British pound lost 4 pips on very light volume of 53,863 contracts. Total open interest increased by a very strong 2,499 contracts, which relative to volume is approximately 75% above average meaning that longs and shorts engaged in a battle, and neither side was able to move the market much beyond a fractional change. As this report is being compiled on April 3, the June pound is trading 38 pips lower and has made a low of 1.6560, which is the lowest print since 1.6546 made on March 27. The June pound remains on a short-term sell signal and an intermediate term buy signal.

Canadian dollar:

 The June Canadian dollar advanced 7 pips on light volume of 38,758 contracts. Total open interest increased by a massive 1,737 contracts, which relative to volume is approximately 75% above average meaning that longs and shorts engaged in a battle and longs were able to move the Canadian dollar fractionally higher. As this report is being compiled on April 3, the June Canadian dollar is trading 10 pips lower and has made a daily high of 90.70, which is one pip shy of the high made on April 2 (90.71). On April 1, the June Canadian dollar generated a short-term buy signal and usually after the generation of a buy signal, the market has a tendency to pullback from 1-3 days. This is the opportunity to initiate bullish positions. However, we much prefer being long the Canadian- sterling cross (CADGBP). However, there has not been a pullback and the market is advancing on Thursday. After initiating bullish positions, use .5415, as an exit point for bullish positions.

Swiss franc: On April 2, the June Swiss franc generated a short-term sell signal, but remains on an intermediate term buy signal.

Australian dollar:

The June Australian dollar gained 20 pips on light volume of 50,601 contracts. Total open interest increased by 1,824 contracts, which relative to volume is approximately 40% above average. As this report is being compiled on April 3, the Aussie dollar is trading 23 pips lower and has made a new low for the move at 91.60, which is the lowest print since 91.04 made on March 26. Stand aside.

Dollar index: The June dollar index will generate a short-term buy signal on April 3.

Gold: We are suspending further reports on gold until we see a trading opportunity and/or gold generates a short-term buy signal, or an intermediate term sell signal.

S&P 500 E mini:

The June S&P 500 E mini gained 5.25 points on very light volume of 1,184,754 contracts. Total open interest increased by a minor amount for the 4th day in a row, this time by 3,959 contracts. Based upon the price advance over the past 4 days and the increase of open interest during this time, the rally is unimpressive. Maintain out of the money calls as recommended in the March 31 report and long puts for those clients who hold long equity positions.