Soybeans:

July soybeans advanced 5.25 cents on volume of 196,715 contracts. Volume declined from the 217,518 contracts traded on April 23 when July soybeans lost 6.00 cents and total open interest declined by 6,624 contracts. On April 24, total open interest declined again, this time by 7,756 contracts, which relative to volume is approximately 55% above average meaning that liquidation was fairly heavy on the advance. This is bearish open interest action relative to the small gain. The May contract lost 11,103 of open interest. As this report is being compiled on April 25, July soybeans are trading 20.00 cents higher and have made a daily high of 14.92, which is the highest print since 14.97 made on April 22. On April 24, July soybeans made a low of 14.60 1/2, which matched the April 23 low. At this juncture, it appears that soybeans have run out of sellers, but we do not expect the rally to get far. Ultimately, we think there is more downside and would avoid the long side for now. July soybeans remain on a short and intermediate term buy signal.

Soybean meal:

July soybean meal advanced $1.70 on volume of 66,677 contracts. Volume fell sharply from April 23 when 82,811 contracts were traded and July soybean meal lost 1.30 while total open interest declined 230 contracts. On April 24, total open interest increased by 1,882 contracts, which relative to volume is approximately 5% above average. The May contract lost 3,990 of open interest, which makes the total open interest increased more impressive (bullish). As this report is being compiled on April 25, July soybean meal is trading $9.50 higher and has made a daily high of 481.10, which is the highest print since April 21 (481.50). Like soybeans, soybean meal ran out of sellers at the low end of its trading range, however, we think soybean meal has more downside before it becomes a candidate for new bullish positions. We think the fundamentals of soybean meal are terrific and exports continue at a blistering pace.

Soybean oil:

July soybean oil gained 80 points on low volume of 70,707 contracts. Volume fell from the 82,544 contracts traded on April 23 when July soybean oil fell 20 points and total open interest increased by 3,652 contracts. On April 24, total open interest declined by a massive 7,214 contracts, which relative to volume is approximately 305% above average meaning that liquidation was off the charts heavy. The May contract accounted for loss of 7,698 of open interest. On the 24th, July soybean oil made a low of 42.47, which is slightly above the April 15 low of 42.29. We want to see soybean oil closer to the April 11 low of 42.01 before recommending bullish positions. As this report is being compiled on April 25, July soybean oil is trading 6 points higher and has made a daily low of 42.76, which is considerably above the April 24 low of 42.47. For now, we recommend a stand aside posture.

Corn:

July corn lost 2.25 cents on healthy volume of 327,997 contracts. Volume increased slightly from the 316,285 contracts traded on April 23 when July corn advanced 7.50 cents and total open interest declined by 6,624 contracts. On April 24, total open interest declined again, this time by 6,761 contracts, which relative to volume is approximately 20% below average. The May contract lost 20,540 of open interest. As this report is being compiled on April 25, July corn is trading 7.75 cents higher and has made a daily high of 5.16 3/4. Undoubtedly, the concern about increasing tensions in Ukraine and the ramifications of an all out war are boosting corn prices this morning. Additionally, weather in the Midwest is not conducive to planting, which is exacerbating fears of late planting and a possible switch to soybeans. Corn remains on a short and intermediate term buy signal. We have no recommendation at this juncture.

Chicago wheat:

July Chicago wheat advanced 13.75 cents on healthy volume of 136,636 contracts. Volume was considerably higher than April 23 when 83,476 contracts were traded and July wheat advanced 3.25 cents while total open interest increased by 5,092 contracts. Additionally, volume was the highest since April 16 when 156,506 contracts were traded and July wheat lost 14.50 while total open interest increased by 170 contracts. On April 24, total open interest increased by 3,862 contracts, which relative to volume is average. As we said in previous reports, before advising clients to get long wheat we want to see July Kansas City wheat generate a short-term buy signal and wheat should begin to outperform corn. On April 25, July Chicago wheat is trading 12.00 cents higher or +1.72% versus corn which is trading + 1.48% above yesterday’s close. In short, Chicago wheat has outperformed corn on April 24 and 25. Additionally, it appears that Kansas City wheat is going to generate a short-term buy signal. From April 15 through April 25, price and open interest has been acting in a bullish congruent manner, which leads us to conclude that prices are headed higher, perhaps much higher.

Kansas City wheat:

July Kansas City wheat advanced 15.00 cents on volume of 20,073 contracts. Total open interest increased by a massive 1,283 contracts, which relative to volume is approximately 150% above average, meaning that new longs were aggressively entering the market and driving prices higher ($7.72). The May contract lost 1,650 of open interest, which makes the total open interest increase much more impressive (bullish). The 24th was the first open interest increase on a price advance since April 15 when July KC wheat advanced 23.50 and total open interest increased by 756 contracts. It would appear the liquidation cycle in KC wheat is over and that balance has changed from one of supply to demand. As this report is being compiled on April 25, July KC wheat is trading 13.75 cents higher and has made a new high for the move the $7.80, which is the highest print since April 16 ($7.80 1/4). We strongly recommend against initiating new bullish positions on April 25, because one never knows what can occur over the weekend, positive or negative.

Cotton:

July cotton advanced 56 points on very light volume of 14,838 contracts. Volume was the lowest since March 20 when 13,972  contracts were traded. On April 24, open interest increased by a massive 2,098 contracts, which relative to volume is approximately 370% above average meaning that huge numbers of longs and shorts were entering the market, but prices moved only fractionally higher. Though cotton remains on a short and intermediate term buy signal, we are not enthusiastic bulls. We think July cotton made its top on March 26 when  it made a high of 96.76 on huge volume of 56,095 contracts (the highest volume since February 13, 58,512 ) and then collapsed in a key reversal day to close 2.18 cents lower on the day. At best, July cotton could conceivably trade near the March 26 high, but we think this is going to be a struggle if it occurs at all. Stand aside.

WTI crude oil:

June WTI crude oil advanced 50 cents on low volume of 431,085 contracts. Volume was lower than April 21 when 424,034 contracts were traded and WTI crude oil advanced 28 cents while total open interest declined by 14,025 contracts. On April 24, total open interest increased by a massive 15,660 contracts, which relative to volume is approximately 40% above average meaning that new longs were aggressively entering the market and driving prices fractionally higher. The May contract lost 31 of open interest. As this report is being compiled on April 25, June WTI is trading $1.27 lower and has made a daily low of 100.48. We have been unimpressed with WTI for quite some time even though it managed to rally for the past couple weeks. We see no compelling reason to be long, certainly not based upon fundamentals. June WTI remains on a short and intermediate term buy signal.

Natural gas:

June natural gas lost 2.4 cents on volume of 223,761 contracts. Total open interest declined by 2,905 contracts, which relative to volume is approximately 45% below average. The May contract lost 9,781 of open interest. As this report is being compiled on April 25, June natural gas is trading 4.4 cents lower and has made a daily low of $4.644. On April 22 (see below) we recommended writing out of the money calls and to liquidate part of bullish positions. This strategy has worked out well, therefore clients should have a minor loss of profits during the past 2 days. Conceivably, June natural gas could pullback to its 20 day moving average of $4.581, or the 50 day average of 4.550. The catalyst for a significant move higher would be an increase in temperatures, but at this juncture, it does not appear to be on the horizon. Clients should have appropriate sell stops in place, or at the least a mental stop based upon risk tolerance. June natural gas remains on a short and intermediate term buy signal.

From the April 22 report:

“Tomorrow is the natural gas storage report, and this is going to have a major impact on prices. At this juncture, we suggest the partial liquidation of bullish positions, and for the remaining position write out of the money calls to shield against further declines. Sell stops should be based upon sound money management and risk appetite.”

Australian dollar:

The June Australian dollar lost 24 pips on very light volume of 59,282 contracts. Volume fell dramatically from April 23 when 88,686 contracts were traded and the June Aussie dollar lost 75 pips while total open interest increased by 565 contracts. On April 24, total open interest increased by a hefty 1,501 contracts, which relative to volume is average. For the past 2 days (April 23 and 24) the June Aussie dollar lost 99 pips (nearly 1.00 cent) and total open interest has increased on both days for total of 2,066 contracts. This is incredibly bad news if you are long the Australian dollar. The reason is: longs are not liquidating and short sellers are in control and driving prices lower. As prices continue their descent, speculative longs will be forced to sell at ever lower prices. If long the Australian dollar, we recommend longs be liquidated immediately. As we stated in yesterday’s report, for the Australian dollar to resume its advance, and a possible test of the April 10 high of 94.19, the daily low in the June Aussie dollar must be above 92.63. Until this occurs, the Australian dollar will trade sideways to lower.

Copper: On April 24, July copper generated a short-term buy signal, but remains on an intermediate term sell signal.

July copper advanced 4.85 cents on volume of 89,436 contracts. Total open interest declined by 5,573 contracts, which relative to volume is approximately 150% above average meaning that liquidation was extremely heavy on the advance. The May contract lost 9,451 of open interest. The COT report will be released this afternoon and it will be interesting whether managed money has decreased their short positions. As this report is being compiled on April 25, July copper is trading unchanged on the day, but has made a new high for the move at $3.1015, which takes out yesterday’s high of 3.0950. Do not enter bullish positions at this juncture, rather wait for the pullback, which should last 1-3 days.

Gold:

June gold advanced $6.00 on heavy volume of 198,137 contracts. Volume was the heaviest since April 15 when 199,031 contracts were traded and June gold lost $27.20 while total open interest increased by 100 contracts. On April 24, total open interest increased by 2,862 contracts, which relative to volume is approximately 40% below average, but it is positive that open interest increased on the price advance. A good chunk of volume traded occurred between the hour of 8: 30 a.m.-9:00 a.m. CDT when a total of 41,268 contracts were traded and June gold went from a low of 1275.32 to high of 1299.00. It is key that volume increased dramatically on the rally and most likely found large numbers of shorts on the wrong side of the trade who covered positions as prices rocketed higher. Gold remains on a short-term sell signal, but an intermediate term buy signal. We have no recommendation.

S&P 500 E mini:

The June S&P 500 E mini closed unchanged on volume of 1,580,098 contracts. Total open interest increased by 17,929 contracts, which relative to volume is approximately 45% less than average. On April 23, the June E mini generated a short-term buy signal, which reversed the short-term sell signal generated on April 11. After the generation of a buy signal, the market has a tendency to pullback from 1-3 days, and as this report is being compiled on April 25, the E mini is trading 18.50 points lower. This is an unusually sharp pullback, and we will be watching the E mini to see if it again reverses signals. Clients should maintain long put protection if they hold long equity positions.