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Soybeans:

November soybeans gained 0.25 cents on volume of 142,439 contracts. Total open interest increased by 4,544 contracts, which relative to volume is approximately 30% above average. The September contract accounted for loss of 1,214 of open interest. As this report is being compiled on August 22, November soybeans are trading 2.25 cents higher while the September contract +19.50. At this time, there is tightness in old crop soybeans and soybean meal and this is boosting prices on August 22. September meal is trading up $20.00. New crop soybeans are performing abysmally and as we have stated before, the critical growing period in August is coming to a close and weather has been almost ideal. The trend is down and will be interrupted by sporadic bear market rallies. Stand aside.

Corn:

December corn advanced 1.50 cents on heavier than normal volume of 288,327 contracts.Volume was the strongest since August 13 when December corn advanced 0.75 cents on volume of 301,810 contracts and total open interest declined by 7,420 contracts. On August 21, total open interest declined by 1,154 contracts, which relative to volume is approximately 85% less than average. The September contract accounted for loss of 8,496 of open interest. As this report is being compiled on August 22, December corn is trading 1.75 higher and has made a daily high of 3.73 3/4, which takes out yesterday’s high.It appears that corn is struggling to break out, but so far is unable to muster the buy side momentum to generate a short-term buy signal. On August 12, December corn made its contract low at 3.58 on very heavy volume. For December corn to generate a short-term buy signal, the low the day must be above OIA’s key pivot point of 3.75 5/8. If December corn is on its way to making new contract lows, the high of the day must be below OIA’s key pivot point of 3.67 5/8. Stand aside.

Chicago wheat:

December Chicago wheat advanced 5.50 on volume of 98,488 contracts. Total open interest declined by 7,424 contracts, which relative to volume is approximately 210% above average meaning that liquidation was extremely heavy on the advance. The September contract lost 5,435 of open interest, December -3, March 2015 -1733. Stats Canada reported they estimated the Canadian wheat crop at 27.704  million metric tons versus the previous year’s crop of 37.530  million metric tons.This means there will be reduced competition for North American wheat. As this report is being compiled on August 22, December wheat is trading 8.25 higher on Russia-Ukraine pproblems. For December Chicago wheat to generate a short-term buy signal, the low the day must be above OIA’s key pivot point of 5.66 5/8. If the contract low is going to be tested, the high of the day must be below OIA’s key pivot point of 5.52 3/8. Stand aside.

Live cattle:

October live cattle advanced 15 points on light volume of 42,714 contracts. Total open interest increased by 1,157 contracts, which relative to volume is average. The August contract lost 1,177 of open interest, October -15. After the close today the USDA will release its Cattle on Feed report, and this will drive trading early next week. Yesterday, October cattle made a low of 1.44450, which is slightly above 1.44250, the low of August 20, which has been the low for the move. As this report is being compiled on August 22, October cattle is trading 1.90 cents higher. October cattle remains on a short and intermediate term sell signal. Stand aside.

WTI crude oil:

October WTI crude oil advanced 51 cents on volume of 501,682 contracts. Volume increased substantially from August 20 when October WTI advanced 59 cents on volume of 409,337 contracts and open interest increased by 760 contracts.On August 21, total open interest increased only 252 contracts. The September contract lost 595 of open interest, October -5896, November – 1018. During the past 2 days, October WTI has advanced $1.10, but total open interest has increased only 1,012 contracts. This is bearish considering the magnitude of the advance. Yesterday, October WTI made a low of 92.50, which is the low for the move thus far. As this report is being compiled on August 22, October WTI is trading 65 cents lower and has made a daily low of 92.92 on light volume. October WTI remains on a short and intermediate term sell signal. Stand aside.

Natural gas:

October natural gas advanced 7.00 cents on relatively heavy volume of 311,707 contracts. Volume was the strongest since August 14 when October natural gas advanced 6.8 cents on volume of 352,409 contracts and total open interest increased by 4,405 contracts.On August 21, total open interest increased by 2,321 contracts, which relative to volume is approximately 60% below average, however, the September contract lost 10,500 of open interest, which makes the total open interest increase more impressive (bullish).Yesterday, October natural gas closed at 3.93, which is the highest close since August 14 (3.93). As this report is being compiled on August 22, October natural gas is trading 2.7 cents lower and has made a daily low of 3.87, which is considerably above yesterday’s low of 3.83.For October natural gas to generate a short-term buy signal, the low the day must be above OIA’s key pivot point of 3.938. Until this occurs, stand aside.

Copper:

September copper lost 10 points on volume of 55,266 contracts. Total open interest declined by 2686 contracts, which relative to volume is approximately 95% percent above average, meaning that liquidation was extremely heavy on the fractional decline. The September contract lost 5,149 of open interest. September copper made a high of $3.1845, and as this report is being compiled on August 22, has made another new high at 3.2110.This is the highest price for September copper since August 11, when it made a spike high of 3.2470 on August 11. This will be formidable resistance. For the past 2 days (not including today), September copper has advanced 8.75 cents and total open interest has declined by 6,458 contracts.

Granted, the September contract has lost 14,629 contracts of open interest during this period, however by comparison, silver has lost 10,998 of open interest in the September contract and yet total open interest has increased by 2,701 in the 2 day time frame. In short, there are large numbers of potential participants who are unwilling to make commitments (long or short) to copper. This is bearish. In other words, neither side of the trade has strong feelings about copper one way or the other. Remember, open interest increases when longs and shorts disagree about the direction of the commodity and declines when longs and shorts are in agreement. For copper to continue to advance, new longs and shorts must be willing to enter the market at current prices. In order for September copper to generate a short-term buy signal, the low the day must be above OIA’s key pivot point of 3.2040.It will be interesting to see what happens with open interest when the final report for Friday is released Monday morning. Stand aside.

Gold:

December gold lost $19.80 on volume of 154,384 contracts. Volume was the highest since August 15 when December gold lost 9.50 on volume of 203,490 contracts and total open interest declined by 3,116 contracts. On August 21, total open interest declined only 1,250 contracts, which relative to volume is approximately 55% below average.Ever since August 15, gold has been trading lower and yet open interest has been declining at a rate that is below average. As we’ve said before , it appears that some market participants are digging in and refusing to liquidate. As this report is being compiled on August 22, December gold is trading $5.20 higher and has made a daily low of 1274.60, which is above yesterday’s low of 1.273.40, the low for the move thus far. December gold remains on a short and intermediate term sell signal . Stand aside.

Silver:

September silver lost 8.2 cents on volume of 57,581 contracts. Total open interest increased by 122 contracts, which is minuscule and dramatically below average. However, the September contract lost 5,851 of open interest, which makes the very small total open interest increase more impressive (bearish).As we pointed out in the copper report, open interest has increased on August 20 and 21 despite massive declines in the September contract. We fully expect to see the net long position of manage money reduced in the upcoming Commitments Traders report to be released this afternoon. September silver remains on a short and intermediate term sell signal. Stand aside.

Euro:

The September euro advanced 17 pips on volume of 134,374 contracts. Total open interest increased by 6,356 contracts, which relative to volume is approximately 75% above average meaning that a battle ensued between longs and shorts and longs were able to move the euro fractionally higher by the close. However, on August 22, it is a very different story with the September euro trading 40 pips lower and making a new low for the move at 1.3222 on heavy volume.This is the lowest price on the weekly continuation chart since the week of September 9, 2013 when the low for that week was 1.3166. The euro is massively oversold and overdue for a rally,  and we think market participants may be surprised by the magnitude of the advance. Moves of this kind run out speculative shorts, and as a consequence make it somewhat safer to enter new short positions. We highly recommend against entering new short positions at current prices.

Australian dollar:

The September Australian dollar advanced 15 pips on volume of 79,703 contracts.Most telling was that volume was considerably below that of August 20 when the range traded was 43 pips versus 75 pips on August 21. On August 21, total open interest increased by 1,244 contracts, which relative to volume is approximately 35% below average, however, considering the range on August 21 and that the market was trading on the downside for most of the session, the total open interest increase is quite impressive.The September Australian dollar made a low of 92.21, which was the lowest print since 92.16 made on August 8. This move likely cleared out any weak longs. As this report is being compiled on August 22, the Australian dollar is trading 12 pips higher and has made a daily high of 93.15. For the September Australian dollar to generate a short-term buy signal, the low the day must be above OIA’s key pivot point of 93.25. The September Australian dollar remains on a short and intermediate term sell signal. Stand aside.

Cotton: December cotton will likely generate a short-term buy signal on August 22.

December cotton advanced 11 points on volume of 19,649 contracts. Total open interest increased by 193 contracts, which relative to volume is approximately 50% below average, however, the December contract accounted for loss of 1,218 of open interest, which makes the total open interest increased more impressive (bullish). This is the 2nd day in a row that total open interest has increased along with price, and as this report is being compiled on August 22, the December contract is trading 28 points higher and has made a daily high of 66.29, which is below yesterday’s high of 66.67.In the upcoming weekend report, we will provide an open interest analysis on cotton from the day made its contract low on August 1 through August 21.

Coffee:

December coffee advanced 65 points on volume of 13,009 contracts. Total open interest declined by 272 contracts, which relative to volume is approximately 20% below average, but is a disappointment nonetheless. The September contract lost 971 of open interest.As this report is being compiled on August 22, December coffee has closed at 1.8735, down 2.25 cents. We are disappointed with the price and open interest action of coffee despite it being on a short and intermediate term buy signal.The first sign of trouble is a break below 1.8285, the low made on August 20. A short-term sell signal would be generated if the high of the day is below OIA’s key pivot point of 1.8050. We continue to advise a defensive stance with respect to holding bullish positions. The problem with coffee is that the market can turn on a dime and if positions have been liquidated prior to this, it is difficult to get on board, especially when volatility has skyrocketed. We are recommending holding a small bullish position for those who are inclined to trade coffee. This is not a commodity for everyone.

From the August 20 report:

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.