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Soybeans:

November soybeans lost 13.75 cents on very light volume of 120,606 contracts.Volume was lower than the trade on July 18 when 121,176 contracts changed hands and November beans closed at 10.85 1/4. Additionally, volume traded on August 5 was the lowest since May 30 when 104,984 contracts were traded and November beans closed at 12.33 3/4. On August 5, total open interest increased by 3,651 contracts, which relative to volume is approximately 20% above average meaning that new short sellers were entering the market and driving prices lower. The August contract lost 1,133 of open interest, September -324, November -134 and the January 2015 through September 2015 contracts all gained open interest.

As we said in yesterday’s report, we think the short side of soybeans been played out for now, and the very low volume on the decline is additional corroboration of this. It is likely that soybeans move higher from here. As this report is being compiled on August 6, November soybeans are trading 8.25 cents higher and have taken out yesterday’s high of 10.75 1/2. Also mentioned in yesterday’s report was the likelihood of short sellers becoming less aggressive due to the potential for a weather scare during the critical month of August. November soybeans remain on a short and intermediate term sell signal. Stand aside.

Corn:

September corn lost 2.50 cents on volume of 168,120 contracts. Volume declined significantly from August 4 when September corn advanced 6.25 on volume of 221,156 contracts and total open interest increased by 3,664 contracts. On August 5, total open interest increased only 378 contracts, which is minuscule and dramatically below average. The September contract accounted for loss of 11,039 of open interest and there were open interest increases in the December 2014 through December 2016 contracts.As this report is being compiled on August 6, September corn is trading 7.00 cents higher and has made a daily high of 3.64, which is the highest print since 3.64 1/4 made on July 30. Like soybeans, it is likely that the short side of corn has been played out for now and the entire grain complex appears is in a rally mode. September corn remains on a short and intermediate term sell signal. Stand aside.

Chicago wheat:

September Chicago wheat advanced 8.50 cents on volume of 96,737 contracts. Volume declined from August 4 when September Chicago wheat advanced 9.75 cents on volume of 111,393 contracts and total open interest increased by 2,509 contracts. On August 5, total open interest increased 614 contracts, which relative to volume is approximately 60% less than average. The September contract accounted for loss of 3,885 of open interest and there were sufficient open interest increases in the forward months to offset this decline.

As this report is being compiled on August 6, September wheat is trading 19.00 cents higher and has made a new high for the move at 5.72, which is the highest print since 5.77 made on July 7.The reasons circulating for the move is increasing tensions in Ukraine, and wet weather in Europe, especially France, which may be impacting quality. Thus far, the Ukrainian situation has not dampened exports from the region, and we advise against taking a bullish stance based upon this alone.

Even with the strong advance on August 6, September Chicago wheat will not generate a short-term buy signal because the low the day is below OIA’s key pivot point of 5.54 1/8.The low the day must be above the pivot point and this is likely to occur tomorrow. Since July 30, prices have advanced every day. During this time through August 5, September Chicago wheat has advanced 32.50 cents while total open interest has increased by 1,355 contracts. This indicates that the heavy short position held by managed money is not being liquidated. The large short position will act to support Chicago wheat prices. Chicago wheat remains on a short and intermediate term sell signal. Stand aside.

Kansas City wheat:

September Kansas City wheat advanced 4.25 cents on volume of 16,172 contracts.Volume was the lowest since July 28 when 14,082 contracts were traded and September KC wheat lost 5.75 while total open interest declined by 118 contracts. On August 5, total open interest declined by 827 contracts, which relative to volume is approximately 100% above average meaning that liquidation was very heavy on the advance. The September contract accounted for loss of 1,902 of open interest.

Like Chicago wheat, September KC wheat has advanced every day since July 30. From July 30 through August 5, September KC wheat has advanced 25.75 cents versus 32.50 for Chicago wheat in the same time frame. Cumulative open interest has increased by 1,936 contracts versus Chicago wheat in the same time frame of 1,355. In short, Chicago wheat is outperforming on a price basis, but open interest wise KC wheat is the out performer. The fundamentals for Kansas City wheat are much stronger than the soft red contract of Chicago wheat.For the September KC wheat contract to generate a short-term buy signal, the low the day must be above OIA’s key pivot point of 6.56 3/4. The low on August 6 has been 6.42, significantly below the pivot point. Kansas City wheat remains on a short and intermediate term sell signal. Stand aside.

Live cattle:

October live cattle lost 57.5 points on low volume of 34,543 contracts. Total open interest increased by a massive 1,227 contracts, which relative to volume is approximately 40% above average meaning that new short sellers were entering the market and driving prices lower. The August contract accounted for loss of 1,345 of open interest and there were open interest increases in the October 2014 through December 2015 contracts. As this report is being compiled on August 6, October cattle is trading 40 points higher and has made a daily low of 1.54725, which is the lowest print since 1.54425 made on August 1.We expect cattle to challenge the all-time highs made in late July, but the market is likely to trade in a sideways pattern for now. Stand aside.

WTI crude oil:

September WTI crude oil lost 91 cents on volume of 567,327 contracts. Volume increased from the 398,994 contracts traded on August 4 when September WTI advanced 41 cents and total open interest declined by 16,313 contracts. On August 5, total open interest declined by 6,008 contracts, which relative to volume is approximately 50% below average. The September contract accounted for loss of 10,672 of open interest. As this report is being compiled on August 6, September WTI is trading 27 cents lower and has made a new low for the move at 96.93, which takes out yesterday’s low of 97.00.

Though we have been bearish ever since WTI generated a short-term sell signal on July 3 and the intermediate term sell signal on July 30, we have been surprised by the lack of a counter trend rally, even though crude oil stocks continue decline. In the report just released by the Energy Information Administration, crude oil inventories declined again for the 6th week in a row, this time by 1.8  million barrels. The total inventory decline during the past 6 weeks amounts to 22.6 million barrels.This should be bullish, but the market is telling a different story.

In the July 21 report, we recommended shorting crude oil calls, and the trade continues to work well. Continue to hold the position.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.8 million barrels from the previous week. At 365.6 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories decreased by 4.4 million barrels last week, and are in the middle of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 1.8 million barrels last week but are near the lower limit of the average range for this time of year. Propane/propylene inventories rose 1.3 million barrels last week and are near the upper limit of the average range. Total commercial petroleum inventories decreased by 
8.4 million barrels last week. 

 From the July 29 report:

During the month of July when September WTI prices slid from a high of 105.40 on July 1 down to 98.68 on July 15 and subsequent moves higher and lower, there has never been an open interest increase of the magnitude seen on July 29. As a matter of fact there have been very few open interest increases on price declines.In our view, this signifies that market participants are becoming bearish on WTI at long last. Today’s decline of inventories announced by the Energy Information Administration marked the 5th week in a row that crude inventories have declined.

In short, during the past 5 weeks, crude inventories have declined by a total of 20.8 million barrels, yet prices have been declining for the past 5 weeks. September WTI topped out on June 23 (106.60).This is an example of how fundamental analysis can lead the most intelligent speculator astray.As this report is being compiled on July 30, September WTI is trading 78 cents lower and has made a new low for the move at 99.90, which takes out yesterday’s low of 100.37.In the report of July 21, we recommended the initiation of short call positions, and this is profitable. Continue to hold the position.

Natural gas:

September natural gas advanced 6.3 cents on volume of 172,210 contracts. Total open interest increased by 259 contracts, which is minuscule and dramatically below average. The September contract lost 4,705 of open interest, which makes the total open interest increase more impressive (bullish). For the past 2 days, natural gas has advanced each day bringing the total increase to 9.9 cents and open interest has increased each day for total of 2605 contracts.

Examining our records for July in June, we found one example of 2 days in which prices advanced along with open interest. This occurred on June 5 when natural gas advanced 6.1 cents and open interest increased by 12,328 contracts and the following day, June 6 when natural gas advanced 9 ticks and total open interest increased by 6,813 contracts.On June 6, September natural gas closed at 4.676, which was not far from the high close for the move at 4.743 on June 12. September natural gas topped on June 16 at 4.874.

In short, open interest is acting the best since prices were at a much higher level and natural gas was on a short and intermediate term buy signal. September natural gas is now on a short and intermediate term sell signal and for a short-term buy signal to be generated, the low the day must be above OIA’s key pivot point of 4.002. Stand aside. 

Copper:

September copper lost 3.95 cents on volume of 62,291 contracts.Volume was the heaviest since July 24 when September copper advanced 5.95 cents on volume of 71,826 contracts and total open interest increased by 1,925 contracts. On August 5, total open interest declined by a massive 2,930 contracts, which relative to volume is approximately 75% above average meaning that liquidation was extremely heavy on the decline. As this report is being compiled on August 6, September copper has closed 3.85 cents lower and has made a new low for the move at 3.1570, which is the lowest print since 3.1505 made on June 26.As readers of our reports know, we have been less than impressed with copper, though it has held up better than expected, especially against the other metals we follow. However, it appears likely that a short-term sell signal will be generated. Stand aside.

Gold:

December gold lost $3.60 on very low volume of 115,740 contracts. Total open interest increased by 262 contracts, which relative to volume is dramatically below average. As this report is being compiled on August 6, December gold is trading sharply higher,  up $19.60 on light volume. Increased tension in Ukraine is most likely the reason, but December gold remains on a short and intermediate term sell signal.It will be interesting to see what happens to open interest on today’s advance. Stand aside.

Platinum:

October platinum lost $10.70 on volume of 10,685 contracts. Total open interest declined by a massive 679 contracts, which relative to volume is approximately 140% above average, meaning that liquidation was extremely heavy on the decline. Yesterday, October platinum made a low of 1451.10, and the low on August 6 is 1451.20 and the market is trading sharply higher. On August 1, October platinum generated a short-term sell signal, but remains on an intermediate term buy signal. Stand aside.

Silver:

September silver lost 40 cents on very heavy volume of 65,788 contracts.Volume was the heaviest since July 24 when silver lost 58 cents on volume of 67,327 contracts and total open interest declined by 1,718 contracts. On August 5, total open interest increased by 493 contracts, which relative to volume is approximately 60% below average. As this report is being compiled on August 6, September silver is closed 19.1 cents higher on the day. September silver generated a short-term sell signal once July 28, but remains on an intermediate term buy signal. Stand aside.

Euro:

September euro lost 47 pips on heavier than normal volume of 187,032 contracts. Volume was the strongest since July 30 when the September euro lost 18 pips on volume of 203,116 contracts and total open interest increased by 8,410. On August 5, total open interest increased by 5,750 contracts, which relative to volume is approximately 20% above average meaning that new short sellers were entering the market in larger than usual numbers and driving prices to a new low for the move (1.3360). As this report is being compiled on August 6, the euro is trading 4 pips higher on the day after making a new low for the move at 1.3335. The euro remains on a short and intermediate term sell signal. Stand aside.

Canadian dollar:

The September Canadian dollar lost 48 pips on volume of 60,910 contracts. Total open interest increased by 2,508 contracts, which relative to volume is approximately 55% above average meaning that new short sellers were entering the market and driving prices to new lows for the move (91.01), which is the lowest print since June 18 (91.09). After numerous days of heavy liquidation, market participants are just beginning to get bearish, and are doing so at the very low-end of the trading range during the past couple of months. On July 28, the September Canadian dollar generated a short-term sell signal and on July 31 generated an intermediate term sell signal. Stand aside.

10 year Treasury Notes:

The September 10 year note gained +005 on volume of 1,192,125 contracts. Total open interest declined by 6,158 contracts, which relative to volume is approximately 75% below average. As this report is being compiled on August 6, the September note is trading 5 points higher and has made a high of 1.25-245.It appears that the 10 year note may generate a short-term buy signal on August 6, which would reverse the short-term sell signal of July 31. This market has been nothing but a whipsaw, and we advise a stand aside posture.

Coffee:

September coffee lost 1.10 cents on volume of 30,557 contracts. Total open interest declined by 1,153 contracts, which relative to volume is approximately 50% above average meaning that liquidation was fairly substantial on the modest decline. The September contract accounted for loss of 3,653 of open interest. As this report is being compiled on August 6, September coffee is trading 1.25 cents higher on the day.We think the worst of the downside is over, and that the low of 1.8330 made on August 4 is a terrific exit point for the bullish positions we recommended in the report of July 24.