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Soybeans:

November soybeans gained 5.75 cents on light volume of 116,400 contracts. Total open interest declined by 5,683 contracts, which relative to volume is approximately 85% above average, meaning that there was heavy liquidation on the advance. The September contract lost 1556 of open interest, November -4932. As this report is being compiled on August 19, November soybeans are trading 11.75 cents lower and have made a low of 10.43 1/2, which is above the contract low of 10.38 3/4 made on August 14. It appears likely that a test of the contract low is in the offing, and unless weather turns negative, the market will continue to drift lower. November soybeans remain on a short and intermediate term sell signal. Stand aside.

Soybean meal:

December soybean meal advanced $1.60 on volume of 66,958 contracts. Total open interest declined by 2,573 contracts, which relative to volume is approximately 50% above average meaning that liquidation was heavy on the modest advance. The September contract accounted for loss of 3,361 of open interest. The 50 day moving average crossed below the 200 day moving average for the December contract.December soybean meal made a high of $355.70, which was the highest print since 355.00 made on July 30.

On January 10, 2014 December soybean meal made its contract low at 337.10.There have been 4 occasions when there was an attempt to test the contract low: First, on July 11 (340.00 ), July 23 (340.30) , August 6 (340.20) , August 12 (338.90). Despite, the very bearish outlook for the soybean complex, December soybean meal has been unable to break below the contract low of January 10. From July 11 through August 18, December soybean meal has been trading sideways.

In the August 17 Weekend Wrap, we stated that in order for December soybean meal to generate a short-term buy signal, the low the day with have to be above OIA’s key pivot point of 353.00.In yesterday’s trading , the low the day was 350.20, and as this report is being compiled on August 19, December soybean meal is trading 3.90 lower and has made a daily low of 350.10, which is significantly below OIA’s new key pivot point for August 19 of 353.20. If December soybean meal is unable to generate a short-term buy signal, the market will trade sideways to lower.

Corn:

December corn lost 5.50 cents on volume of 246,244 contracts. Volume declined from August 15 when December corn advanced 3.50 on volume of 267,994 contracts and total open interest declined by 6,926 contracts. On August 18, total open interest declined by a massive 11,995 contracts, which relative to volume is approximately 95% above average meaning that liquidation was extremely heavy on the price decline. The September contract lost 18,730 of open interest and there were open interest increases in the December 2014 through July 2016 contracts. However the open interest increases were not able to offset the decline in the September contract.

Yesterday, it appeared that corn might be on the verge of generating a short-term buy signal, but the market could not hold its low during the day session of 3.76 and as a consequence did not generate the signal. As this report is being compiled on August 19, December corn is trading unchanged on the day after making a daily low of 3.67. In order for December corn to generate a short-term buy signal, the daily low must be above OIA’s key pivot point of 3.75 7/8. If it is unable to do this, corn is likely to attempt a test of the contract low of 3.58 made on August 12. Stand aside.

Chicago wheat:

December Chicago wheat lost 9.25 cents on volume of 72,349 contracts. Volume shrunk dramatically from August 15 when December Chicago wheat advanced 10.75 on volume of 133,847 contracts and total open interest increased by 1,342 contracts. On August 18, total open interest declined by 3,091 contracts, which relative to volume is approximately 65% above average meaning that liquidation was heavy on the decline. The September contract accounted for loss of 6,015 of open interest. As this report is being compiled on August 19, December Chicago wheat is trading 6.50 higher after having made a daily low of 5.46 3/4, which is the lowest print since 5.44 1/4 made on August 14.December Chicago wheat made its contract low at 5.42 1/4 on July 30. December Chicago wheat remains on a short and intermediate term sell signal. Stand aside.

Live cattle:

October live cattle advanced 80 points on light volume of 33,386 contracts. Total open interest increased by 503 contracts, which relative to volume is approximately 40% below average. The August contract lost 391 of open interest, October -12. As this report is being compiled on August 19, October cattle is trading 1.625 cents lower and is trading at the lows of the day.As we pointed out in the weekend report, there is a large overhang of speculative longs who hold positions at higher levels and are looking to recoup losses. This is going to keep a lid on rallies, and cattle will likely continue in a downward trajectory until more liquidation occurs. October cattle generated a short-term sell signal on August 7, but has not yet generated an intermediate term sell signal, however, this appears likely. Stand aside.

From the August 17 Weekend Wrap:

“The extremely high ratio of managed money longs in cattle is troubling, especially since prices have declined precipitously and made a low of 1.44925 on August 13, nearly a 16 cent decline from contract highs made approximately 3 weeks ago. It is apparent that managed money is digging in and refusing to liquidate, which we think will tend to keep a lid on rallies. Longs with losses will attempt to recoup them on rallies while those with profits will be looking increase profits.”

WTI crude oil:

October WTI crude oil lost $1.57 on surprisingly light volume of 522,099 contracts. Volume was the lowest since August 11 when October WTI advanced 37 cents on volume of 511,561 and total open interest declined by 4,233 contracts. On August 18, total open interest declined by 7,505 contracts, which relative to volume is approximately 40% less than average.The September contract accounted for loss of 27,644 of open interest. As this report is being compiled on August 19, October WTI is trading lower again, this time by 64 cents and has made a daily low of 92.62, which is a new low for the move and the lowest print for the October contract since February 7 (93.16). Additionally, with October being the lead month,, today’s low on the continuation chart is the lowest since January 15, 2014 when the February 2014 contract reached 92.43.October WTI remains on a short and intermediate term sell signal.Stand aside.

Brent crude oil:

October Brent crude oil lost $1.93 on light volume of 544,646 contracts. Total open interest declined by 5,509 contracts, which relative to volume is approximately 50% below average. The October contract accounted for loss of 6,646 of open interest.Yesterday the market made a low of 101.11, which is the lowest print since the week of June 24, 2013. As this report is being compiled on August 19, October Brent has made a daily low of 101.07, which is only 4 cents below yesterday’s low and is trading unchanged on the day while WTI is trading 85 cents lower. October Brent remains on a short and intermediate term sell signal. Stand aside.

Natural gas:

October natural gas advanced 2.1 cents on light volume of 224,138 contracts. Total open interest declined by 5,166 contracts, which relative to volume is approximately 10% below average. The September contract accounted for loss of 11,412 of open interest. As this report is being compiled on August 19, October natural gas is trading 10.1 cents higher and has made a daily high of 3.940, which is the highest print since 3.971 made on August 14. Seventeen days ago on July 28, October natural gas made its low for the move at 3.740 and yesterday’s low of 3.760 is the closest attempt to test July 28 print. It appears that demand enters the market at the aforementioned lows, and we suspect that the July 28 low will be the season low. For October natural gas to generate a short-term buy signal (which we think is inevitable), the daily low must be above OIA’s key pivot point of 4.001. Stand aside for now.

Copper:

September copper gained 60 points on volume of 51,535 contracts. Total open interest increased by 1,309 contracts, which relative to volume is average. The market rallied to the high of 3.1265,which was close to the 5 day moving average of 3.1270 cited in the August 17 report. Copper was overdue for a rally, and it had a one-day advance before turning lower again on August 19, down 1.25 cents. September copper remains on a short and intermediate term sell signal. Stand aside.

From the August 17 Weekend Wrap:

“On the other hand, the 50 day moving average for the September copper contract is about to cross below the 200 day moving average. Copper is significantly oversold, and due for a bounce, possibly to the 5 day moving average of 3.1270 and less likely, the year to date moving average of 3.1471.”

Gold:

December gold lost $6.10 on very light volume of 80,830 contracts. Total open interest declined by 1,182 contracts, which relative to volume is approximately 40% below average. As this report is being compiled on August 19, December gold is trading $2.30 lower, but has not taken out the August 15 low of 1293.00. On July 24, December gold generated a short-term sell signal and an intermediate term sell signal on August 4. Stand aside.

Platinum:  On August 18, October platinum generated an intermediate term sell signal after generating a short-term sell signal on August 1.

October platinum lost $11.00 on light volume of 7,751 contracts. Total open interest declined by a substantial 521 contracts, which relative to volume is approximately 170% above average, meaning that liquidation was extremely heavy on the decline.Yesterday, October platinum made a new low for the move at 1445.20, and this has been taken out on August 19 with a new low print of 1437.50, which is the lowest since 1427.00 made on June 17. Stand aside.

Silver:

September silver advanced 11.00 cents on light volume of 32,617 contracts. Total open interest declined by 601 contracts, which relative to volume is approximately 20% below average. The September contract accounted for loss of 2,188 of open interest. As this report is being compiled on August 19, September silver is trading 21 cents lower and has made a new low for the move at 19.365, which is the lowest print since June 12 (19.200). September and December silver generated a short-term sell signal on July 28 and an intermediate term sell signal on August 14. Stand aside.

Euro:

The September euro lost 37 pips on light volume of 109,236 contracts. Total open interest increased by a massive 4,589 contracts, which relative to volume is approximately 55% above average. As this report is being compiled on August 19, the September euro is trading 41 pips lower on low volume and has made a new low for the move at 1.3314, which takes out the previous low of 1.335 made on August 6. In the August 17 report, we recommended lightening up on euro short positions, because we think the market could rally sharply at any time.The euro is overloaded with shorts in 3 different categories according to the latest Commitments of Traders report. Low volume 2 days in a row on lower prices is possibly indicating a reluctance by market participants to press the short side.The September euro remains on a short and intermediate term sell signal.

Coffee:

December coffee lost 5 points on relatively heavy volume of 30,548 contracts. Total open interest declined by a massive 1,999 contracts, which relative to volume is approximately 160% above average. The September contract accounted for loss of 4,868 of open interest. Yesterday’s open interest action relative on an essentially unchanged price is negative and combined with the unimpressive open interest increase on August 15 when coffee advanced 4.65 cents on light volume of 21,432 contracts may explain today’s action: December coffee has closed at 1.8615, down 6.95 cents. In yesterday’s report, we suggested that clients should look to position themselves on the long side of the market. We still think this makes sense however, we have strongly recommended using options, which will help mitigate risk compared to trading futures, especially if bull call spreads or bull put spreads or used. Expect to see more volatile trading on the up and downside until the market is ready to make a major move higher.Many people should not trade coffee due to its extreme volatility, and if you are not comfortable with high amounts of it, stand aside. The first sign of trouble would be a close below 1.7615 in the December contract.