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Soybeans:

November soybeans lost 4.00 cents on volume of 135,721 contracts. Total open interest increased by 785 contracts, which relative to volume is approximately 65% less than average. The September contract lost 1,680 of open interest. As this report is being compiled on August 18, November soybeans are trading 3.25 higher, and have not taken out Friday’s high of 10.69. So November soybeans made their contract low of 10.38 3/4 on August 14, and the market has been unable to muster much strength since then. It appears that soybeans needs a weather event or some other catalyst to move prices significantly higher. Soybeans remain in their critical growing period, and any potential threat to the crop will send prices higher. Stand aside.

Soybean meal:

December soybean meal advanced $2.40 on volume of 87,366 contracts. Total open interest increased by 2,746 contracts, which relative to volume is approximately 25% above average. The September contract accounted for loss of 439 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on August 18, December soybean meal is trading 90 cents higher on the day. In order for December meal to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point of $353.00. Until this occurs, stand aside.

Corn:

December corn advanced 3.50 cents on volume of 267,994 contracts. Volume increased from August 14 when December corn advanced 3.75 on volume of 221,922 contracts and total open interest declined by 8,448 contracts. On August 15, total open interest declined by 6,926 contracts, which relative to volume is average.The September contract accounted for loss of 10,738 of open interest. On August 15, December corn made a high of 3.79 3/4, and this high has been taken out on August 18 (3.81). However, the market has reversed and is now trading 3.50 cents lower on the day. During the evening and part of  day session on August 18, December corn traded above OIA’s key pivot point of 3.75 7/8. If corn had maintained a daily low above this pivot point for the rest of the day, a short-term buy signal would’ve been generated. Stand aside.

Chicago wheat:

December Chicago wheat advanced 10.75 cents on heavy volume of 133,847 contracts. Volume was the strongest since August 13 when December Chicago wheat lost 5.75 on volume of 145,816 contracts and total open interest increased by 4,546 contracts. On August 15, total open interest increased by 1,342 contracts, which relative to volume is approximately 50% below average. However, the September contract accounted for loss of 7,643 of open interest, which makes the total open interest increase more impressive (bullish).As this report is being compiled on August 18, December Chicago wheat is trading 8.00 cents lower, however, it has not taken out Friday’s low of 5.48 1/2.December Chicago wheat remains on a short and intermediate term sell signal. Stand aside.

Live cattle:

October live cattle gained 40 points on volume of 41,423 contracts. Total open interest declined by a massive 4,366 contracts, which relative to volume is approximately 300% above average meaning that liquidation was extremely heavy on the modest advance. Liquidation was across the board with August losing 460 of open interest, October -2,549, December -532, February 2015 -566, April 2015 -422. As we have pointed out in previous reports, there are large numbers of speculators long at much higher levels who are looking to trim losses on any rally. This has the effect of keeping a lid on prices.October cattle remains on a short-term sell signal, but an intermediate term buy signal. Stand aside.

WTI crude oil:

October WTI crude oil advanced $1.24 on heavy volume of 699,855 contracts. Volume declined substantially from August 14 when October WTI lost 2.66 on volume of 825,127 contracts and total open interest increased by 12,559 contracts. On August 15, total open interest declined by a massive 36,969 contracts, which relative to volume is approximately 100% above average meaning that liquidation was extremely heavy on the advance. As this report is being compiled, October WTI is trading lower again, this time by $1.64 and has made a new low for the move at 93.46, which is the lowest print since 93.72 made on March 17, 2014.

The decline of WTI prices along with Brent has been nothing short of spectacular, and yet as of the August 12 tabulation of the COT report, managed money remains long by ratio of 5.44:1. Although this is the lowest ratio since early January 2014, the fact remains the market is continuing to pressure longs to liquidate positions as prices move lower than anyone heretofore thought.The massive decline of open interest on Friday’s advance is an example of longs looking to trim losses on any rally. This is keeping a lid technical rallies. Remarkably, the spread inversion continues to widen on August 18. For example, September WTI is trading 1.39 lower while the October contract -1.76. As mentioned before, this was one of the reasons we advised covering the short call position recommended in the July 21 report. October WTI remains on a short and intermediate term sell signal. Stand aside.

Brent crude oil:

October Brent crude oil advanced $1.46 on volume of 558,568 contracts. Volume fell dramatically from August 14 when October Brent lost $2.99 on volume of 740,078 contracts and total open interest increased by 1,794 contracts. On August 15, total open interest declined by 4,918 contracts, which relative to volume is approximately 60% less than average. The October contract accounted for loss of 4,310 of open interest. As this report is being compiled on August 18, October Brent is leading the petroleum complex down, trading sharply lower -$2.40 on the day. The October contract has made a low of 101.11, which is the lowest print since the week of July 1, 2013 ($101.63).The slide in Brent crude prices has been sharper than WTI, and likely reflects the weakening state of the European economy. Interestingly, all the concern about the cutoff of energy supplies from Ukraine has done nothing to boost Brent prices. Brent crude remains on a short and intermediate term sell signal.

Natural gas:

October natural gas lost 12.3 cents on light volume of 247,346 contracts. Volume was the lowest since August 6 when October natural gas advanced 3.7 cents on volume of 190,717 contracts and total open interest declined by 6,128 contracts. Also, volume was dramatically lower than August 13 when October natural gas lost 13.9 cents on volume of 416,413 contracts and total open interest increased by 6.121 contracts. On August 15, total open interest increased just 92 contracts. Conceivably, low volume on a  Friday’s substantial decline coupled with essentially unchanged open interest on August 15 may signal that potential short sellers and longs are reluctant to initiate new positions, and that a good portion of liquidation has already occurred.As this report is being compiled on August 18, October natural gas is trading 3.4 cents higher on the day after making a daily low of 3.76, which is the lowest print since $3.752 made on July 29. October natural gas remains on a short and intermediate term sell signal. Stand aside.

Gold:

December gold lost $9.50 on heavy volume of 203,490 contracts.Volume was the strongest since July 29 when December gold lost $5.30 on volume of 354,549 contracts.On August 15, total open interest declined by 3,116 contracts, which relative to volume is approximately 40% below average. In the latest COT report, managed money was long by a stratospheric 6.31:1, which was the highest ratio since the COT tabulation date of July 22 (6.61:1). The recent rally to the high of 1324.30 on August 8 from the recent low of 1281.30 on July 31, likely explains the bullish tilt of managed money. However as readers of this report know, OIA was warning clients to stand aside until December gold generated a short-term buy signal.This never occurred.As this report is being compiled on August 18, December gold is trading 6.40 lower and has made a daily low of 1296.50, which is above Friday low of 1293.00. Continue to stand aside.

Silver:

September silver lost 38.1 cents on volume of 64,963 contracts.Total open interest increased by a hefty 2,403 contracts, which relative to volume is approximately 40% above average meaning that aggressive new short sellers were entering the silver market heavily and driving prices to a new low for the move (19.505), which has been taken out on August 18 (19.470).This is the lowest print since 19.490 made on June 17. Open interest in silver has been extremely bearish, and silver remains the weakest of the 4 precious metals. September silver remains on a short and intermediate term sell signal. Stand aside.

10 year Treasury Notes:

The September 10 year Treasury Note gained 11 points on volume of 1,650,111 contracts.Volume was the strongest since August 8 when the September note gained 0.15 on volume of 1,856,785 contracts and total open interest declined by 3,820 contracts. On August 15, total open interest increased by 26,468 contracts, which relative to volume is approximately 35% less than average. On August 15 the September note made a high of 127-01, which is the highest print on the Treasury Note continuation chart since 127-02 was made on November 26, 2013. As this report is being compiled on August 18, the September note is trading 10 points lower on the day. The September note remains on a short and intermediate term buy signal. Stand aside.

Coffee:

September coffee advanced 4.65 cents on volume of 21,432 contracts. Volume was the lightest since July 30 when coffee advanced 1.80 cents on volume of 14,065 contracts and total open interest declined by 257 contracts. On August 15, total open interest increased by 414 contracts, which relative to volume is approximately 20% below average. However, the September contract lost 1,954 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled, coffee is trading fractionally higher on the day, and looks to close near unchanged.We are disappointed by Friday’s action, and the low volume associated with the advance.We think it is fine to initiate bullish positions but strongly advise using options to mitigate risk. Risk can be controlled by determining which strike price(s) make the most sense for your fund. A bull call, or bull put spread is another way to controlling risk, but it will limit profits as well. Coffee is entering its period of seasonal strength, and though prices may have the occasional sharp setback, we think the path of least resistance is higher.