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Soybeans:

November soybeans lost 12.75 cents on volume of 149,282 contracts. Volume shrank dramatically from August 12 when November beans lost 13.75 on volume of 229,887 contracts and total open interest increased by 2,150 contracts. On August 13, total open interest increased again, this time by 6,982 contracts, which relative to volume is approximately 75% above average meaning that new short sellers were entering the market in heavy numbers and driving prices lower. The August contract lost 609 of open interest and the September 2014 through January 2016 contracts all gained open interest. As this report is being compiled on August 14, November soybeans are trading 9.00 cents higher, but have made a new contract low at 10.38 3/4, which takes out the previous contract low of 10.43 made on August 12 when the USDA released its crop production and supply-demand estimates. Stand aside.

The USDA reported sales of soybeans for the most recent reporting week totaling 61.38 thousand metric tons bringing total commitments to date for the 2013-2014 season of 1.696.8 billion bushels versus USDA projections for the season of 1.640 billion bushels.

Corn:

December corn advanced  0.75 cent on volume of 301,810 contracts. Volume shrank dramatically from August 12 when December corn advanced 0.75 cent on volume of 561,340 contracts and total open interest increased by 15,872. On August 13, total open interest declined by 7,420 contracts, which relative to volume is average.The September contract accounted for loss of 26,738 of open interest. As this report is being compiled on August 14, December corn is trading 1.75 cents higher and has made a daily high of 3.74 1/2, which is the highest print since August 6 (3.74 3/4). Stand aside.

The USDA reported 117.1 thousand metric tons of canceled sales, which brings total commitments to date for the 2013-2014 season of 1.914 billion bushels versus USDA projections for the season of 1.920 billion bushels.

Chicago wheat: On August 13, December Chicago wheat generated a short-term sell signal, which reversed the short-term buy signal of August 7. December Chicago wheat remains on an intermediate term sell signal.

December Chicago wheat lost 5.75 cents on volume of 145,816 contracts. Volume declined substantially from August 12 when December Chicago wheat lost 11.50 on very heavy volume of 201,470 contracts and total open interest declined by 835 contracts. On August 13, total open interest increased by 4,546 contracts, which relative to volume is approximately 25% above average. The September contract accounted for loss of 9,951 of open interest, which makes the total open interest increase more impressive (bearish). The December 2014 through March 2016 contracts all gained open interest. As this report is being compiled on August 14, December Chicago wheat is trading 3.75 cents higher and has made a low of 5.44 1/4, which is 2 cents above the contract low of 5.42 1/4 made on July 29. Stand aside.

The USDA reported sales of 338.7 thousand metric tons for the 2014-2015 season bringing total commitments to date of 391.7 million bushels versus USDA projections for the entire season of 925 million bushels.

Live cattle:

October live cattle lost 1.125 cents on heavy volume of 70,440 contracts. Volume was slightly above that of August 12 when 69,755 contracts were traded and October live cattle lost 2.775 cents while total open interest declined by 583 contracts. On August 13, total open interest declined by 755 contracts, which relative to volume is approximately 50% below average. The August contract lost 1,797 of open interest, October -1,905. On August 7, October cattle generated a short-term sell signal, and remarkably remains on an intermediate term buy signal. Live cattle is massively oversold and due for a bounce. Stand aside.

On August 13, October cattle made a new low for the move at 1.44925, which is the lowest print since June 6 (1.44350).After making its contract high at 1.6050 on July 28, October cattle has fallen approximately 16 cents from the high. Our concern is that the October 2014-December 2014 spread has moved into contango after being inverted as of August 6. The October 2014-December 2014 spread closed at 2.20 cents premium to December on August 13, which is the lowest close since the close of June 12 (2.60 premium to December). The high for the spread occurred on July 7 when October sold for a 1.475 cents premium to December.As this report is being compiled on August 14, the October-December spread continues to widen. This is bearish spread action, and indicates that pressure may be coming to the cash market soon.

WTI crude oil:

October WTI crude oil advanced 26 cents on total volume of 595,679 contracts. Total open interest increased by a massive 24,702 contracts, which relative to volume is approximately 55% above average, which means a real battle ensued between longs and shorts, and longs were able to move the market fractionally higher. The September contract lost 10,201 of open interest, which makes the total open interest increased much more impressive (bearish).The massive open interest increase on August 13 has been resolved on August 14 as October WTI is trading $1.93 lower while October Brent crude is trading $2.42 lower on the day. The collapse of Brent and WTI prices on August 14 is much more than we had anticipated.

In yesterday’s report, we advised taking profits on the short call position recommended on July 21 and did so for 2 specific reasons. (1) The increase of open interest in yesterday’s trade indicated that market participants were beginning to get bearish and our conclusion was the market was more likely to move higher than lower as a result. We were wrong about that.Though our recommendation to liquidate the short call position was obviously premature, healthy profits were taken out of the trade. (2) Despite the move lower, the inversion of the front months continue, and on August 13, the September 2014-December 2014 spread closed at $1.67 premium to September. This is potentially constructive because if a serious bear market is developing in WTI, the spread should move into contango like cattle. At this juncture, we recommend a sideline stance.

Natural gas:

October natural gas lost 13.9 cents on very heavy volume of 416,413 contracts.Volume was the highest since July 17 when 416,876 contracts were traded and natural gas lost 16.5 cents while total open interest declined by 6,716 contracts.On August 13, total open interest increased by 6,121 contracts, which relative to volume is approximately 35% less than average however, the open interest increase on the decline is definitely bearish. Making this even more bearish was the loss of 19,498 of open interest in the September contract.

However, as this report is being compiled on August 14, October natural gas is trading 8.9 cents higher even though there was a 78 Bcf increase in stocks from the previous week according to the Energy Information Administration report released on Thursday. We tend to think that yesterday’s action was a shakeout, and that a short-term buy signal will be generated during the next several days. In order for this to occur, the low for the day in the October contract must be above $4.011. Until this takes place, remain on the sidelines.

The Energy Information Administration announced that working gas in storage was 2,467 Bcf as of Friday, August 8, 2014, according to EIA estimates. This represents a net increase of 78 Bcf from the previous week. Stocks were 530 Bcf less than last year at this time and 575 Bcf below the 5-year average of 3,042 Bcf. In the East Region, stocks were 270 Bcf below the 5-year average following net injections of 58 Bcf. Stocks in the Producing Region were 239 Bcf below the 5-year average of 1,031 Bcf after a net injection of 9 Bcf. Stocks in the West Region were 66 Bcf below the 5-year average after a net addition of 11 Bcf. At 2,467 Bcf, total working gas is below the 5-year historical range.

Copper: September copper will generate an intermediate term sell signal on August 14 after generating a short-term sell signal on August 6.

September copper lost 4.25 cents on very heavy volume of 91,284 contracts.Volume was the strongest since June 12 when 100,448 contracts were traded and September copper closed at $3.0155. On August 13, total open interest increased by 1,579 contracts, which relative to volume is approximately 25% less than average. The September contract lost 5,914 of open interest, which makes the total open interest increase much more impressive (bearish). As this report is being compiled on August 14, September copper has closed at 3.0910, down 2.10 cents from yesterday’s close. Stand aside.

Gold:

December gold advanced $3.90 on light volume of 105,303 contracts. Total open interest increased by 2,090 contracts, which relative to volume is approximately 20% below average. As this report is being compiled on August 14, December gold has made a daily high of 1321.80, which is the highest print since August 8 (1324.30).For December gold to generate a short-term buy signal, the low for the day must be above OIA’s key pivot point for August 14 of $1316.00. Until this occurs, remain on the sidelines.

Silver:

September silver lost 6 cents on heavy volume of 65,112 contracts. Volume was the strongest since August 8 when September silver lost 4.9 cents on volume of 67,270 contracts and total open interest declined by 512 contracts. On August 13, total open interest increased by a massive 3,709 contracts, which relative to volume is approximately 120% above average meaning that new short sellers were aggressively and heavily entering the market and driving prices to a new low for the move ($19.705). This is the lowest print since 19.710 made on June 18.Although September silver generated a short-term sell signal on July 28, it has been unable to generate in intermediate term sell signal. Stand aside.

British pound:

September British pound lost 1.25 cents on very heavy volume of 162,642 contracts.Volume was the strongest since June 13 when 199,017 contracts were traded and the September pound closed at 1.6955.  On August 13, total open interest increased by a massive 10,461 contracts, which relative to volume is approximately 150% above average meaning that huge numbers of new short sellers were entering the market and driving prices to new lows for the move (1.6681).As this report is being compiled on August 14, the September pound has made another new low at 1.6653, which takes out the previous low print of 1.6665 made on April 15. On July 25, the September pound generated a short-term sell signal and on August 7 generated an intermediate term sell signal. Stand aside.

Cotton:

December cotton advanced 1.35 cents on volume of 17,438 contracts. Total open interest increased by 1,904 contracts, which relative to volume is approximately 320% above average meaning that new longs were heavily entering the market and driving prices to a new high for the move (65.27), which is the highest print since 65.25 made on July 30.December cotton remains on a short and intermediate term sell signal. Stand aside.

Coffee:

September coffee advanced 65 points on volume of 39,857 contracts. Total open interest increased by 1,146 contracts, which relative to volume is approximately 5% above average meaning that new longs were entering the market and driving prices fractionally higher. The September contract lost 5,801 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on August 14, September coffee has closed at 1.8410, down 1.15 cents. We are most definitely interested in the long side of coffee, but are looking for a reduction in the net long position of manage money. September coffee remains on a short and intermediate term buy signal.