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Soybeans:

January soybeans lost 7.75 cents on volume of 227,572 contracts. Volume increased from December 12 when January soybeans advanced 5.00 cents on volume of 217,274 contracts and total open interest declined by 1,959 contracts. On December 15, total open interest declined by 2,712 contracts, which relative to volume is approximately 45% below average. The January contract accounted for loss of 9901 of open interest.

The performance of soybeans has been thoroughly unimpressive ever since the short-term sell signal on December 3 was reversed on December 9. Additionally, January soybeans have been unable to generate an intermediate term buy signal even though this has been generated for corn, soybean meal, Chicago and Kansas City wheat. In our view, the buy signal of December 9 was likely false and that a short-term sell signal is in the offing.

As this report is being compiled on December 16, January soybeans are trading 14.25 cents lower and have made a daily low of 10.22 1/2, which is the lowest print since December 5 (10.03 1/2). In order for January soybeans to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for December 16 of 10.19 7/8. The rally would resume if the low the day is above OIA’s key pivot point for December 16 10.43 1/4. We think the move higher in soybeans and soybean meal is over. Stand aside until a short-term sell signal is generated.

Soybean meal:

January soybean meal lost $1.60 on volume of 69,167 contracts. Total open interest increased by 897 contracts, which relative to volume is approximately 45% below average. The January contract accounted for loss of 5,155 of open interest, which makes the total open interest increase more impressive (bearish).As this report is being compiled on December 16, January soybean meal is trading down $8.60 or -2.35% versus soybeans are trading 1.54% lower.

From December 1 through December 16, January soybeans advanced 2.21% while January soybean meal prices increased 0.94%.Taking a look at a longer time frame, from November 12 through December 16 January soybean meal lost 4.02% while January soybeans are down only 0.79%. In short, soybean meal has lost its leadership, and is now leading the complex lower.A short-term sell signal will be generated in January soybean meal if the high of the day is below OIA’s key pivot point for December 16 of $361.70. Thus far today, the low in the January contract has been 356.20, which means there is an excellent chance a short-term sell signal will be generated tomorrow.

Corn:

March corn advanced 1.00 cent on volume of 249,100 contracts. Total open interest increased by 5,376 contracts, which relative to volume is approximately 15% below average. The March contract accounted for loss of 1,639 of open interest, which makes the total open interest increase more impressive (bullish). Yesterday, March corn made a high of 4.12 1/2, which is the highest print since 4.12 1/4 made on July 10, 2014.As this report is being compiled on December 16, March corn is trading 2.50 cents lower and is made a daily high of 4.11 1/2.

In order for the rally to continue, the weekly low must be above OIA’s weekly pivot point of 4.17 3/4. We don’t think the market has the fundamentals to move much beyond the pivot point, let alone make a weekly low above it. Also, it is a bit disconcerting that March corn is unable to trade on the positive side on December 16 when wheat has been trading higher for most of the session due to the possibility of restricted exports from Russia.March corn remains on a short and intermediate term buy signal. We have no recommendation.

Chicago wheat:

March Chicago wheat advanced 12.50 cents on volume of 89,405 contracts. Volume fell from December 12 when March Chicago wheat advanced 9.00 cents on volume of 113,193 contracts and total open interest declined by 1,553 contracts. On December 15, total open interest increased by 1,452 contracts, which relative to volume is approximately 35% below average. The September 2015 contract lost 91 of open interest.

Yesterday, March Chicago wheat made a new high for the move of 6.22 3/4, which was the highest print since 6.25 1/4 made on July 7, 2014. As this report is being compiled on December 16, March Chicago wheat is trading 7.25 cents higher and has made a daily high of 6.39, which is the highest print since 6.42 1/2 made on June 23, 2014. The move higher is all about turmoil in Russia and the threat of potential export restrictions. However, the fundamentals for wheat are negative and supplies on a global basis are burdensome.Although open interest action yesterday was positive, it was significantly below average and volume disappointed. March Chicago wheat generated a short-term buy signal on October 17 and an intermediate term buy signal on November 14. We have no recommendation.

Live cattle: On December 15, February live cattle generated an intermediate term sell signal after generating a short-term sell signal on December 3.

February live cattle lost 42.5 points on volume of 37,861 contracts. Total open interest declined by 667 contracts, which relative to volume is approximately 25% below average. The December contract accounted for loss of 1,228 of open interest, February 2015 -547.As this report is being compiled on December 16, The December 2014 through December 2015 contracts are limit down (3.00 cents).If bearish positions have not already been put on at higher levels, stand aside. The market is overdue for a rally.

From the December 9 report:

“According to the most recent COT report, managed money is long live cattle by a ratio of 9.97:1, which means there is plenty of liquidation ahead. As a result, rallies will be tepid as speculators long at higher levels look to liquidate to trim losses. Stand aside.”

WTI crude oil:

January WTI crude oil lost $1.90 on heavy volume of 897,513 contracts. Volume increased from December 12 when January WTI lost $2.14 on volume of 853,278 contracts and total open interest increased by 10,400 contracts. On December 15, open interest increased again, this time by 15,250 contracts, which relative to volume is approximately 35% below average. However, the January contract accounted for loss of 16,303 of open interest, which makes the total open interest increase more impressive (bearish). As this report is being compiled on December 16, January WTI is trading 17 cents lower after making a high of 57.15 and a new contract low of 53.60. Stand aside.

Natural gas:

January natural gas lost 7.6 cents on volume of 311,164 contracts. Total open interest declined by 10,785 contracts, which relative to volume is approximately 40% above average meaning that liquidation was heavy on the decline. Yesterday, January natural gas made a high of 3.936, which is highest print since 4.026 made on December 2.On December 1, January natural gas generated a short and intermediate term sell signal. Stand aside.

Gold:

February gold lost $14.80 on volume of 157,155 contracts. Total open interest increased by only 182 contracts. As this report is being compiled on December 16, February gold is trading $13.30 lower and has made a daily low of 1187.80, which is below yesterday’s low print of 1191.30.On December 11, February gold generated a short-term buy signal, and even though the market is sharply lower on December 16 will not reverse this signal. In order for a short-term sell signal to be generated, the high of the day must be below OIA’s key pivot point of 1180.30.

Keep in mind, the Federal Reserve will release minutes of its meeting tomorrow and this should generate some fireworks either up or down. At this juncture, we recommend a stand aside posture.  As we have said previously, gold has much more backing and filling to do before a sustained move higher is likely.

Silver:

March silver lost 49.4 cents on volume of 45,426 contracts. Total open interest increased by 631 contracts, which relative to volume is approximately 40% below average. As this report is being compiled on December 16, March silver has closed sharply lower at $15.752, down 81.1 cents. March silver will reverse the buy signal generated of December 11 if the high of the day is below OIA’s key pivot point for December 16 of $15.988. Silver has much more backing and filling to do before sustained move higher is possible, and is significantly under performing gold. Stand aside.

Cocoa:

March cocoa advanced $16.00 on volume of 12,668 contracts. Total open interest increased just 16 contracts. As this report is being compiled on December 16, March cocoa has closed at 2914, up $41.00. On December 8, March cocoa generated a short-term buy signal, and continues to be on an intermediate term sell signal.The action on December 16 indicates that cocoa is likely to make new highs for the move in the coming days.

From the December 8 report:

“From December 4 through December 8, March cocoa has advanced 51.00 and total open interest has increased by 3,135 contracts. This is a solid performance and it continues on December 9: March cocoa has closed at 2952, which is the highest close 2957 made on October 27. December 9 is the 4th consecutive day of advancing cocoa prices, and the market is likely to pullback now that a short-term buy signal has been generated. Once the pullback occurs, this would be the most opportune time to initiate bullish positions. According to the most recent COT report, managed money is long cocoa by a ratio of 3.17:1, which is one of the lowest readings of the past several weeks. In short there is firepower sitting on the sidelines that will likely enter the market as prices move higher.”

From the December 11 report:

“Considering the massive build up in open interest over the past several sessions, it is perfectly healthy and normal to expect a significant decline of it when cocoa undergoes a major decline in price.In order for the short term buy signal to be reversed, (generated on December 8), the high of the day must be below OIA’s key pivot point for December 12 of 2832. We think this is unlikely, and that prices at current levels represent solid value. Additionally, the term structure of the cocoa market is inverted which bodes well for higher prices.”

Coffee:

March coffee advanced 4.65 cents on volume of 13,088 contracts. Total open interest increased by 417 contracts, which relative to volume is approximately 30% above average meaning that new longs were entering the market and driving prices higher (1.7915). As this report is being compiled on December 16, March coffee has closed at 1.7770, down 95 points. Although coffee remains on a short and intermediate term sell signal, we think it has the potential to be one of the best commodity trades for 2015. The fundamentals for coffee are outstanding and the open interest action has been positive for the most part during the decline. However, at this juncture, we recommend a stand aside posture until coffee generates a short-term buy signal.