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Soybeans:

January soybeans gained 1.00 cent on volume of 169,814 contracts. Total open interest increased by 3,474 contracts, which relative to volume is approximately 20% below average. The January contract accounted for loss of 4,252 of open interest. As this report is being compiled on December 2, January soybeans are trading 15.25 cents lower after making a high of 10.22, which is one half cent below yesterday’s high.January soybeans have made a daily low of 9.95 on December 2..

The November 5 low of 9.95 1/4 has been taken out and January soybeans will generate a short-term sell signal if the high of the day is below OIA’s key pivot point for December 2 of 10.07 3/8. Clients should begin to position themselves on the bearish side of the market and consider writing out of the money calls.

Soybean meal:

January soybean meal lost $4.30 on volume of 65,436 contracts. Total open interest declined by 3,433 contracts, which relative to volume is approximately 100% above average, meaning that liquidation was extremely heavy on the decline. The December contract lost 1371 of open interest, January 2015 -5014. The COT report was released yesterday and it showed that managed money is long soybean meal by ratio of 3.69:1 and this is the lowest reading since the report of October 28.

In short managed money is becoming less bullish on soybean meal even though prices are still at the high-end of the range. As this report is being compiled on December 2, January soybean meal is trading $3.40 lower and has made a daily low of 357.40, which is the lowest print since 356.20 made on November 21. January soybean meal will generate a short-term sell signal if the high of the day is below OIA’s key pivot point for December 2 of 354.00. With managed money becoming increasingly bearish on the strongest commodity in the grain sector, it is only a matter of time before the bean complex resumes its downtrend.  

Soybean oil: On December 1, January soybean oil generated a short-term sell signal and remains on an intermediate term sell signal.

January soybean oil gained 7 points on volume of 128,077 contracts. Total open interest increased by 1,214 contracts, which relative to volume is approximately 50% below average. The December contract lost 1,984 of open interest, January 2015 -2,137. As this report is being compiled on December 2, January soybean oil is trading 76 points lower. Remarkably, the current COT report shows managed money long soybean oil by ratio of 1.38:1, which is the highest in 5 weeks. This ensures there will be plenty of fuel to fund a continued downside move.

Corn:

March corn advanced 1.00 cent on volume of 221,162 contracts. Total open interest declined by 1,305 contracts, which relative to volume is approximately 70% below average. The December contract accounted for loss of 4,625 of open interest. As this report is being compiled on December 2, March corn is trading 7.50 cents lower and has made a daily low of 3.81 1/2, which is the lowest print since 3.79 made on November 25. As the extract from the November 28 report states, March corn had to make a low above OIA’s key pivot point of 3.86 7/8 for the rally to continue, and the market has not had the strength to do so. In order for corn to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for December 2 of 3.77 3/8.

From the November 28 report:

“For March corn to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for December 1 of 3.77 1/4. For the rally to continue, the low the day must be above OIA’s key pivot point for December 1 of 3.86 7/8.Both Chicago and Kansas City wheat are rallying sharply and yet this is having  no major impact on the price of corn.We think a short-term sell signal is inevitable.”

Chicago wheat:

March Chicago wheat advanced 28.25 cents on heavy volume of 123,997 contracts. Volume increased substantially from November 28 when March Chicago wheat advanced 15.75 cents on volume of 91,290 contracts and total open interest increased by 8,193 contracts. Additionally, volume was the strongest since November 14 when Chicago wheat advanced 6.75 cents on volume of 140,269 contracts and total open interest increased by 3,058 contracts.

On December 1, total open interest increased again, this time by 2,232 contracts, which relative to volume is approximately 25% below average. The December contract lost 1,059 of open interest. In short, March Chicago wheat advanced by almost twice the amount on December 1 than November 28, yet the open interest increase was considerably less than November 28. In our view this may be the beginning of potential buyers backing off as prices reach their highest levels since August 6 (6.09 3/4). As this report is being compiled on December 2, March Chicago wheat is trading 0.75 cents lower and has made a daily high of 6.11 3/4 and a low of 5.96 3/4, which is above OIA’s longer-term pivot point of 5.92 7/8. If the pivot point is not violated during today’s session, it would appear that Chicago wheat prices are headed higher. 

WTI crude oil:

January WTI crude oil advanced $2.85 on volume of 853,819 contracts. Volume declined from November 28 when January WTI lost $7.54 on volume of 883,726 contracts and total open interest increased by 34,285. On December 1, total open interest increased only 1,718 contracts, which is dramatically below average. The January contract accounted for loss of 12,406 of open interest.On December 1, the January contract made a new contract low of 63.72, which is the lowest print since 58.32, made during July 2009. As this report is being compiled on December 2, January WTI is trading $2.06 lower and has made a daily high of 69.32, which is below yesterday’s high of 69.54. In essence, there has been no follow through on yesterday’s rally, and after some backing and filling, we expect prices to continue their downtrend.

Natural gas: On December 1, January natural gas generated a short and intermediate term sell signal.

January natural gas lost 7.7 cents on volume of 357,882 contracts. Total open interest increased by 9,518 contracts, which relative to volume is average.The January contract gained 775 of open interest. The open interest increase confirms the bearish bias of the market and a continued move lower.As this report is being compiled on December 2, January natural gas is trading 14.0 cents lower and has made a daily low of 3.856, which is the lowest print since October 30 (3.849). Stand aside.

Gold:

February gold advanced $42.60 on huge volume of 370,132 contracts.Volume traded on December 1 was the highest of 2014. On December 1, total open interest declined by 834 contracts, which is minuscule and dramatically below average. It would have been very positive had open interest increased on the massive advance. The action on December 1 blew out longs and shorts.On December 1, February gold made a high of 1221.00, which is the highest print since October 29 (1231.00).Yesterday, February gold made a low of 1141.70, which was above its contract low of 1132.00 made on November 7.

The action on December 1 represented capitulation, and although we expect continued volatility on the up and downside, it appears likely that a short-term buy signals will be generated in the precious metals. For February gold to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point of 1202.40. Until this occurs, clients should be on the sidelines. 

Platinum:

January platinum advanced $30.30 on heavy volume of 22,222 contracts. Total open interest increased by just 3 contracts. January platinum made a new high for the move at $1247.70, which is the highest print since October 31 (1249.70). January platinum will generate a short-term buy signal if the low the day is above OIA’s key pivot point for December 2 of 1237.90. Until this occurs, clients should be on the sidelines.

Silver:

March silver advanced by an astounding $1.136 on very heavy volume of 128,927 contracts.Volume was the strongest since April 24, 2014 when 135,155 contracts were traded and May 2014 silver closed at $19.688. As this report is being compiled on December 2, March silver has closed at $16.456, down 23.6 cents. In order for March silver to generate a short-term buy signal, the low the day must be above OIA’s key pivot point for December 2 of $16.607. Until this occurs, clients should be on the sidelines.

Coffee:

March coffee advanced 2.95 cents on healthy volume of 26,729 contracts. Total open interest increased by a massive 6,132 contracts, which relative to volume is approximately an astounding 720% above average meaning that huge numbers of new longs were entering the market and driving prices higher. Yesterday, the market made a low 1.8385 and then proceeded to rally for the rest of the session to the high of 1.9080. Unfortunately, coffee did not have the wherewithal to continue the rally and as this report is being compiled on December 2, March coffee has closed at 1.8340, down 7.00 cents on low volume.

Coffee is headed for support at 1.8060, which was the low on September 19 and 22. March coffee remains on a short and intermediate term sell signal.The odd aspect of coffee trading is that open interest action has been very positive: increasing on price advances and declining when prices move lower. We have not seen open interest increases on lower prices, which would indicate that new short sellers are piling in on price declines. Ultimately, we think prices are headed higher, but the market may trend lower until new demand kicks in.