For Bloomberg access: {OIAR <GO>}

Soybeans:

November soybeans lost 14.75 cents on heavier than normal volume of 171,526 contracts. Volume was the strongest since 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 20, total open interest increased only 955 contracts, which relative to volume is approximately 70% below average. The September contract accounted for loss of 4,583 of open interest. Yesterday, November beans made a new contract low at 10.36 1/2, and this has been taken out on August 20 with another contract low at 10.35. The Pro Farmer crop tour is confirming a bumper crop and every day of good weather is a bad day for soybean prices.In this week’s report of export sales by the USDA, for the 2013-2014 season, there were cancellations totaling 89.6 thousand metric tons. Stand aside.

Corn:

December corn lost 4.75 cents on volume of 268,761 contracts. Total open interest declined by 5,571 contracts, which relative to volume is approximately 20% below average. The September contract accounted for loss of 18,457 of open interest. As this report is being compiled on August 21, December corn is trading 1.50 higher and has made a daily high of 3.73, which takes out yesterday’s high of 3.72. For the 2013-2014 season USDA reported sales of 99.9 thousand metric tons, which was up from the previous week but down 15% from the prior four-week average. Stand aside.

Chicago wheat:

December Chicago wheat lost 8.50 on volume of 113,231 contracts. Volume was the strongest since August 15 when December wheat advanced 10.75 cents on volume of 133,847 contracts and total open interest increased by 1,342 contracts. On August 20, total open interest declined by 2,306 contracts, which relative to volume is approximately 20% below average.The September contract accounted for loss of 10,935 of open interest. As this report is being compiled on August 21, December Chicago wheat is trading 5.25 higher and has made a daily high of 5.57 1/4, which is considerably below yesterday’s high of 5.61 1/2. Stand aside.The USDA reported sales in all wheat categories of 209.2 thousand metric tons, which is a major disappointment and down 38% from the previous week and 62% from the prior four-week average.

Live cattle: On August 20, October live cattle generated an intermediate term sell signal after generating a short-term sell signal on August 7.

October live cattle lost 1.825 cents on volume of 47,154 contracts. Volume traded was above August 19 when October cattle lost 1.325 on volume of 39,861 contracts and total open interest declined by 238 contracts. Additionally, volume was the highest since August 13 when October cattle lost 1.125 cents on volume of 70,440 contracts and total open interest declined by 755 contracts. On August 20, total open interest declined by 1,313 contracts, which relative to volume is average.The August contract lost 1284 of open interest, October -1870.

We continue to see low volumes and relatively low declines of open interest as cattle moves lower.We need to see sufficient liquidation by speculators in order to relieve selling pressure in futures. This is not occurring, and the Commitments of Traders report released tomorrow will give us a more accurate picture of the position of speculators, managed money in particular. As this report is being compiled on August 21, October cattle is trading 30 points lower after making a daily low of 1.44450, which is slightly above yesterday’s low of 1.44250, which is the low for the move. Stand aside.

WTI crude oil:

October WTI crude oil advanced 59 cents on very light volume of 409,337 contracts. Volume was the weakest since August 4 when October WTI advanced 41 cents on volume of 398,994 contracts and total open interest declined by 16,313 contracts. On August 20, total open interest increased by only 760 contracts, which is minuscule and dramatically below average. The September contract accounted for loss of 14,617 of open interest, which makes the minor total open interest increase more impressive (bullish).There were open interest increases in the October 2014 through January 2015 contracts.As this report is being compiled on August 21, October WTI is trading 85 cents higher and has made a daily high of 94.45, which is nearly $2.00 above the low of 92.62 made on August 19. October WTI crude remains on a short and intermediate term sell signal. Stand aside.

 From the August 19 report:

“We always look for signs of potential capitulation, and the massive total open interest decline on August 19 may indicate the market has reached a meaningful low. Additionally, Brent crude also is indicating a possible low in yesterday’s trading. the EIA report released today shows that inventories declined by 4.5 million barrels from the previous week.”

Brent crude oil:

October Brent crude oil advanced 72 cents on light volume of 499,248 contracts. Total open interest increased by a hefty 16,725 contracts, which relative to volume is approximately 35% above average meaning that new longs were entering the market and driving prices higher. As this report is being compiled on August 21, October Brent is trading 40 cents higher and has made a new high for the move at 102.76, which takes out yesterday’s high of 102.37. October Brent remains on a short and intermediate term sell signal. Stand aside.

Natural gas:

October natural gas lost 4.8 cents on volume of 231,724 contracts. Total open interest declined by 6,757 contracts, which relative to volume is approximately 20% above average. The September contract lost 19,544 of open interest and there were open interest increases in October 2014 through March 2015 contracts. While this is bearish, we think the low of 3.74 made on July 28 is going to be the season’s lowest print, and that prices will work their way higher into fall. As this report is being compiled on August 21, October natural gas is trading 4.8 cents higher and has made a new high for the move at 3.988, which is the highest print since 4.013 made on August 13.

Upon the release of today’s EIA storage report, October natural gas went from a high of 3.939 to a low of 3.830 on heavy volume of 5,538 contracts on the 15 minute chart. Today’s low nearly matches yesterday’s low of 3.829, which is slightly above the previous day’s low (August 19) of 3.815. In short we think a tradeable low is in place at the 3.80 level, and that prices will move higher from here.For October natural gas to generate a short-term buy signal, the low the day must be above OIA’s key pivot point of 3.998. Until this occurs, the market will trade sideways to lower. Stand aside.

The Energy Information Administration announced that working gas in storage was 2,555 Bcf as of Friday, August 15, 2014, according to EIA estimates. This represents a net increase of 88 Bcf from the previous week. Stocks were 500 Bcf less than last year at this time and 535 Bcf below the 5-year average of 3,090 Bcf. In the East Region, stocks were 251 Bcf below the 5-year average following net injections of 65 Bcf. Stocks in the Producing Region were 223 Bcf below the 5-year average of 1,029 Bcf after a net injection of 14 Bcf. Stocks in the West Region were 60 Bcf below the 5-year average after a net addition of 9 Bcf. At 2,555 Bcf, total working gas is below the 5-year historical range.

 Copper:

September copper September copper advanced 8.85 cents on very heavy volume of 91,356 contracts.Volume was the highest since August 13 when September copper lost 4.25 cents on volume of 91,284 contracts and total open interest increased by 1,579 contracts. On August 20, total open interest declined by 3,772 contracts, which relative to volume is approximately 55% above average meaning that liquidation was substantial on the large advance.This is bearish. The September contract lost 9,480 of open interest and there was insufficient open interest increases in the back months to turn the total open interest number positive. We consider this to be negative.

Yesterday , September copper made a high of 3.1785, and this has been taken out slightly by today’s high of 3.1845, which is the highest print since August 12 (3.1890). We consider yesterday’s action to be a rally in a bear market, and sharp rallies are to be expected after a precipitous decline. Copper was massively oversold, and it appears that large numbers of buy stops were triggered, which propelled the market higher. Copper has rallied to its 20 day moving average of 3.1770 and the 50 day moving average of 3.1795, but still remains on a short and intermediate term sell signal. We advise waiting for another day before contemplating bearish positions and we will provide guidance about timing and exit points.Stand aside for now.

Gold:

December gold lost 70 cents on light volume of 90,375 contracts. Total open interest declined only 49 contracts. As this report is being compiled on August 21, December gold is trading $19.90 lower and has made a daily low of 1273.40, which is the lowest print since June 18 (1268.00).Ever since gold had its big range day of $23.50 on August 15 when December gold made a low of 1293.00, and closed at 1306.20, volume has dried up as prices have moved lower. Even as prices are sharply lower on August 21, volume is tepid, which may indicate that market participants are digging in and refusing to liquidate. We will know more when the COT report is released tomorrow. Stand aside.

Platinum:

October platinum lost $10.30 on volume of 11,411 contracts. Total open interest increased by a massive 1659 contracts, which relative to volume is an off the charts number of 370% above average meaning that liquidation was huge. In the past, we have commented on the massive net long position held by managed money and according to the latest report, which was tabulated on August 12, managed money was long platinum by an astounding 27.95:1. As is usually the case, managed money is liquidating en masse at the low-end of the trading range. October platinum generated a short-term sell signal on August 1 and an intermediate term sell signal on August 18. Stand aside.

Silver:

September silver gained 8.5 cents on fairly heavy volume of 61,304 contracts. Volume was the highest since August 15 when September silver lost 38.1 cents on volume of 64,963 contracts and total open interest increased by 2,403 contracts. On August 20, open interest increased again, this time by 2,579 contracts, which relative to volume is approximately 60% above average. The September contract lost 5,147 of open interest. Please note that open interest declined significantly in the September silver contract as it did in copper. However, there were sufficient open interest increases in the forward months to turn open interest positive in silver. This did not occur in copper. As this report is being compiled on August 21, September silver is trading 8.7 cents lower after making a new low for the move at 19.285, which takes out yesterday’s low of 19.395. Stand aside.

Euro:

The September euro lost 56 pips on volume of 178,181 contracts. Total open interest declined by 1,930 contracts, which relative to volume is approximately 45% below average. As this report is being compiled on August 21, the September euro is trading 16 pips higher after making a daily low of 1.3243, which takes out yesterday’s low of 1.3257. The market is massively oversold and is well overdue for a sharp counter trend rally. Stand aside.

British pound:

The September British pound lost 20 pips on heavier than normal volume of 125,595 contracts.Volume was the strongest since August 13 when the September pound lost 1.25 cents on volume of 162,642 contracts and total open interest increased by 10,461 contracts. On August 20, total open interest declined by a massive 6,520 contracts, which relative to volume is approximately 105% above average meaning that liquidation was off the charts heavy. This is not terribly surprising considering the most recent COT report showed leveraged funds were long the pound by a ratio of 2.51:1. As this report is being compiled on August 21, the pound is trading 12 pips lower and has made a new low for the move at 1.6562, which is the lowest print since 1.6556 made on April 4. The September pound remains on a short and intermediate term sell signal. The market is well overdue for a sharp counter trend rally. Stand aside.

Cotton:

December cotton advanced 1.65 cents on heavy volume of 21,564 contracts.Volume was the strongest since August 1 when 24,253 contracts were traded and December cotton closed at 63.27. On August 20, total open interest increased by a massive 2,148 contracts, which relative to volume is approximately 300% above average. This is a number that must be taken seriously, and we cannot dismiss the possibility that December cotton may generate a short-term buy signal. In order for this to occur, the daily low in December cotton must be above OIA’s key pivot point of 66.65.December cotton remains on a short and intermediate term sell signal. Stand aside.

Coffee:

December coffee advanced 2.80 cents on heavy volume of 35,144 contracts. Volume was the strongest since August 13 when coffee advanced 65 points on volume of 39,857 contracts and total open interest increased by 1,146 contracts. On August 20, total open interest declined by a massive 6,522 contracts, which relative to volume is approximately 460% above average meaning that liquidation was off the charts heavy. The September contract accounted for loss of 7,895 of open interest, and the December contract only gained 993, which relative to outstanding open interest in the December contract of 98,131 is approximately 50% less than average.

All in all, open interest action relative to the price advance was very negative.We have advised trading coffee using options, and with this latest open interest debacle, we suggest that clients adopt a defensive stance. We continue to advocate using yesterday’s low of 1.8285 as an exit point for bullish positions, and a move below this would be very negative.