Soybeans:

July soybeans advanced 5.75 cents on volume of 211,923 contracts. Total open interest declined by a massive 14,579 contracts, which relative to volume is approximately 160% above average. The May contract lost 14,226 of open interest. Although soybeans advanced on April 28, open interest from July 2014 through January 2015 actually declined by 805 contracts. In short, not only was there liquidation in the May contract, which would be expected since 1st notice day is tomorrow, but both longs and shorts were liquidating in the forward contracts as prices moved higher. As this report is being compiled on April 29, July soybeans are trading 18.75 cents higher on light volume and have made a new high for the move at $15 19 3/4, which is just shy of the contract high of 15.20. Soybeans along with corn and wheat are slowly grinding higher on low volume. Although we think soybeans could move significantly higher in the late May through mid July period, we remain cautious and are concerned about Chinese cancellation of soybeans. Soybeans remain on a short and intermediate term buy signal.

Soybean meal:

July soybean meal advanced $3.40 on volume of 83,133 contracts. Total open interest declined by a massive 9,744 contracts, which relative to volume is approximately 360% above average meaning that liquidation was massive on the advance. The May contract accounted for loss of 10,054 of open interest. Additionally, the July 2014 through January 2015 contracts only gained 296 of open interest, which is not exactly a vote of confidence by market participants. As this report is being compiled on April 29, July soybeans have made a new contract high at $493.20. Although we have a far more favorable outlook for soybean meal than soybeans, we remain cautious on soybean meal as well. We think more fireworks on the upside are ahead, but this will not be seen until later on in the season. July soybean meal remains on a short and intermediate term buy signal.

Soybean oil:

July soybean oil lost 32 points on volume of 88,385 contracts. Total open interest declined by 3,751 contracts, which relative to volume is approximately 55% above average meaning that liquidation was substantial on the decline. This is healthy open interest action relative to the price decline. The May contract lost 7,411 of open interest. As this report is being compiled on April 29, July soybean oil is trading 21 points higher. July soybean oil remains on a short and intermediate term buy signal. We have no recommendation at this juncture.

Corn:

July corn advanced 1.00 cent on fairly heavy volume of 349,470 contracts. Volume was the highest since April 22 when 433,504 contracts were traded and July corn advanced 8.25 cents while total open interest declined by 8,297 contracts. On April 28, total open interest declined by 2,339 contracts, which relative to volume is approximately 160% above average, meaning that liquidation was heavy on the minor advance. The May contract lost 41,478 of open interest. However, the July 2014 through March 2016 contracts all gained open interest. As this report is being compiled on April 29, July corn is trading 6.50 cents higher and is made a new high for the move at $5.22. July corn remains on a short and intermediate term buy signal. We have no recommendation at this juncture. 

Chicago wheat:

July Chicago wheat advanced 0.25 cents on volume of 101,655 contracts. Total open interest declined by 3,719 contracts, which relative to volume is approximately 40% above average meaning that liquidation was substantial on the fractional gain. The May contract lost 11,041 of open interest. However, open interest increased in the July 2014 through July 2016 contracts. As this report is being compiled on April 29, July Chicago wheat is trading 4.75 cents higher and has made a daily low of $7.04, which is above OIA’s key pivot point of 7.01 5/8, and confirms that Chicago wheat is resuming its uptrend. As we have said before, we much prefer Kansas City wheat because of the adverse weather conditions in the hard red winter wheat areas. July Chicago wheat remains on a short and intermediate term buy signal

Kansas City wheat: On April 28, July Kansas City wheat generated a short-term buy signal and remains on an intermediate term buy signal.

July Kansas City wheat advanced 7.00 cents on volume of 26,804 contracts. Total open interest declined by 1,026 contracts, which relative to volume is approximately 50% above average meaning that liquidation was significant on the advance. The May contract lost 4,374 of open interest. As this report is being compiled on April 29, July Kansas City wheat is trading 12.50 cents higher and has made a new contract high of $8.03 1/4. After generating a short-term buy signal, the market has a tendency to pullback from 1-3 days, and this is the opportunity to establish bullish positions. The market is overbought, but weather conditions in key wheat growing areas may continue to keep prices buoyant. Despite this, we advise against chasing the market, especially since it is within the realm of possibility the situation in Ukraine could change for the better.

Cattle: On April 29, August cattle generated a short-term buy signal and remains on an intermediate term buy signal.

August cattle gained 52.5 points on total volume of 49,197 contracts. Total open interest declined by 1,387 contracts, which relative to volume is average. The April contract lost 2,777 of open interest. On April 28, August cattle made a new contract high at 1.36575, and as this report is being compiled on April 29, yesterday’s high remains intact. The total open interest decline on yesterday’s advanced to new contract highs is bearish open interest action and is disappointing to anyone bullish the market. According to OIA’s protocols, after the generation of a short-term buy signal, the market has a tendency to pullback from 1-3 days, and this is the opportunity to initiate bullish positions. Based upon this protocol and the negative open interest action in yesterday’s trade, we strongly advise clients to wait for the pullback.

 Cotton:

July cotton lost 1.02 cents on light volume of 10,102 contracts. Total open interest declined only 28 contracts. The May contract lost only 57 of open interest, but July lost 710 of open interest, and this was offset by the December contract, which gained 729 of open interest. As this report is being compiled on April 29, July cotton has broken out to the upside and is currently trading 1.81 cents higher. Although in yesterday’s report, we stated we thought it was inevitable that cotton was going to generate a short-term sell signal and that in order to do so the high of the day must be below 91.36, we are seeing action on April 29 that indicates the sell signal may be a ways off. However, for July cotton to continue this uptrend the low the day must be above 93.24. This should occur tomorrow.

WTI crude oil:

June WTI crude oil advanced 24 cents on light volume of 447,235 contracts. Total open interest increased by 7,991 contracts, which relative to volume is approximately 25% less than average. The June contract lost 4,888 of open interest. As this report is being compiled on April 29, June WTI is trading 33 cents higher after making a daily high of $102.20. For June WTI to resume its uptrend, the low the day must be above $101.27, and it must be able to break above OIA’s resistance point of $102.22, which is 2 cents above today’s high of 102.20. June WTI remains on a short and intermediate term buy signal, however we see no reason to be involved in the market at this juncture.

Natural gas:

June natural gas advanced 14.1 cents on light volume of 196,543 contracts. Volume increased from April 25 when 163,330 contracts were traded and June natural gas declined 6.5 cents while total open interest declined by 5,949 contracts. On April 28, total open interest declined by 5446 contracts, which relative to volume is average. The May contract lost 7,204 of open interest For the past 3 days beginning on April 24, total open interest has declined by 14,300 contracts while June natural gas has advanced 5.2 cents This is bearish open interest action relative to the price advance. As this report is being compiled on April 29, June natural gas is trading 3.9 cents higher and has made a new high for the move at $4.848. On April 22, we advised liquidating part of bullish positions and writing out of the money calls. The reasoning behind the recommendation was the abysmal open interest action on price advances and this continues. Maintain the partial bullish position and out of the money call against it.

Australian dollar:

The June Australian dollar lost 15 pips on light volume of 66,182 contracts. Total open interest increased by 287 contracts, which relative to volume is approximately 80% less than average. However, since April 23 when the June Aussie dollar lost 75 pips, we have seen a pattern of increasing open interest on price declines, which means longs are refusing to liquidate. As this report is being compiled on April 29, the June Aussie is trading 17 pips higher and has made a new low for the move at 91.98. In order for the June Aussie to resume its uptrend, its daily low must be above 92.64. If this does not occur, the June Australian dollar will trade sideways to lower, which will likely result in a short-term sell signal. For a sell signal to be generated, the daily high in the June contract must be below 91.99.

Copper:

July copper closed unchanged on volume of 72,605 contracts. Total open interest declined by 3,312 contracts, which relative to volume is approximately 75% above average meaning that liquidation was heavy on a narrow range day when July closed unchanged. The May contract accounted for loss of 10,003 of open interest, and tomorrow is 1st notice day for the May contract. As this report is being compiled on April 29, July copper is trading 1.50 cents lower on the day. On April 24, July copper generated a short-term buy signal, and as we recommended at the time, clients should wait for a pullback of 1 to 3 days before considering bullish positions. April 29 is the first day of the pullback, and it would be healthy to see at least one more day of declines. The 20 day moving average is $3.0400 and the 50 day, $3.0650. In short, another 1-2 cent pullback puts copper solidly in its value zone. As we’ve said before, copper can be volatile and the options market is illiquid. These factors should be considered when contemplating bullish positions. 

S&P 500 E mini:

The June S&P 500 E mini gained 6.00 points on volume of 2,069,056 contracts. Total open interest increased by 10,366 contracts, which relative to volume is approximately 75% below average. As this report is being compiled on April 29, the June E mini is trading 7.25 points higher and has made a daily high of 1875.25, which is several points shy of 1882.50 made on April 24. On April 23, the June S&P 500 E mini generated a short-term buy signal, and since then we had one day when the E mini was unchanged (April 24) and a pullback of 13.00 points on April 25. As we said in yesterday’s report, the pullback on April 28 in the early going might be the extent of it before prices resume their uptrend. We continue to recommend long put protection, because it appears that the market may be making an intermediate-long term topping formation.