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Soybeans:

January soybeans advanced 3.50 cents on volume of 219,109 contracts. Total open interest declined by a massive 9,013 contracts, which relative to volume is approximately 55% above average meaning liquidation was occurring on the advance. The January contract accounted for loss of 19,469 of open interest and there were insufficient increases in the forward months to significantly eliminate the loss of January open interest.Yesterday, January soybeans made a high of 10.34, which was below the previous days high (December 16) of 10.39. The high on December 15 was 10.55.

In short, for the past 3 sessions soybeans have been experiencing a series of lower highs and lower lows. As this report is being compiled on December 18, January soybeans have taken out yesterday’s high by 3 1/4 cents, but has pulled back and is trading 6.00 cents higher on the day.In order for March soybeans to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for December 18 of 10.25 1/2. If the rally is to resume in earnest, the low the day must be above OIA’s key pivot point for December 18 of 10.47 3/8. March soybeans remain on a short term buy signal, but an intermediate term sell signal.

The USDA reported sales of 696 thousand metric tons for the 2014 2015 season bringing total commitments to 1.5122 billion bushels versus USDA projections for the season of 1760 billion bushels. This week’s sales were above expectations, However, this is not moving the market significantly higher. When a market does not advance on positive news, caution on the long side is warranted.

Soybean meal:

January soybean meal advanced $2.70 on volume of 83,064 contracts. Total open interest declined by 2,346 contracts, which relative to volume is average. The January contract accounted for loss of 4,689 of open interest. As this report is being compiled on December 18, March soybean meal is trading $3.30 higher. For the March contract to generate a short-term sell signal the high of the day must be below OIA’s key pivot point for December 18 of $348.20. For the rally to resume in earnest, the March contract must make a daily low above OIA’s key pivot point for December 18 of 358.10. March soybean meal remains on a short and intermediate term buy signal. We have no recommendation.

USDA reported sales of 146.81 thousand metric tons bringing total commitments to date of 6996.9 thousand metric tons versus USDA projections for the season of 12,800 thousand metric tons.

Corn:

March corn advanced 2.25 cents on volume of 192,183 contracts. Volume fell sharply from December 16 when March corn lost 2.50 cents on volume of 285,583 contracts and total open interest increased by 7,996. On December 17, total open interest declined by 8,192, which relative to volume is approximately 60% above average meaning that liquidation was heavy on the modest advance. The March contract accounted for loss of 7,130 of open interest, May 2015-725, July 2015 -3,009.

In short there was liquidation across the board as prices moved higher, which is negative. Also troubling is the fact that corn has been dead in the water while wheat has been advancing sharply, which has to be a major disappointment to anyone long corn.According to the latest COT report, managed money is heavily long corn by ratio of 3.51:1, and for corn to continue its advance new longs must enter the market in order to drive prices higher. Although we think corn prices may continue to advance, but suspect it will be a labored effort. The upside target is the 200 day moving average for the March contract of 4.22 1/4.March corn remains on a short and intermediate term buy signal. We have no recommendation.

The USDA reported sales of 693.5 thousand metric tons bringing total commitments to 960.8 million bushels versus USDA projections for the season of 1.750 billion bushels.

Chicago wheat:

March Chicago wheat advanced 25.25 cents on heavy volume of 146,417 contracts.Volume was the highest since November 13 when 226,277 contracts were traded and March Chicago wheat closed at 5.56. On December 17, total open interest declined again, this time by 2,671 contracts, which relative to volume is approximately 25% below average, but the March contract accounted for loss of 4,034 of open interest and there were insufficient increases in the forward months to eliminate the open interest decline in March.

From December 11 through December 17, March Chicago wheat has advanced 66.75 cents while total open interest has declined by 4,809 contracts. This is bearish open interest action relative to the price advance. For a healthy advance, Chicago wheat should be experiencing open interest increases, which would indicate that new buyers are entering the market and bidding prices higher. Prices are moving higher primarily due to short covering, and longs are liquidating as well. This does not bode well for sustaining higher prices. As this report is being compiled on December 18, March Chicago wheat has made another new high at 6.77, which is the highest print since May 30, 2014 (6.84). We continue to advise clients to stand aside in this market. Do not attempt to pick a top.

From the December 16 report:

“Although Chicago wheat has advanced strongly since December 11, open interest action has been unimpressive. For example from December 11 through December 16, March Chicago wheat has advanced 41.50 cents. However total open interest during this four-day period has declined by 2,138 contracts. In short, the dominant action for the past 4 days has been one of liquidation, likely by speculators who have been short the wheat market for quite some time.”

Live cattle:

February live cattle lost 2.925 cents on heavy volume of 81,066 contracts. Volume was the strongest since November 13 when 107,551 contracts were traded and February cattle closed at 1.71025. On December 17, total open interest declined by a massive 9,396 contracts, which relative to volume is approximately 360% above average meaning that liquidation was off the charts heavy. The December contract accounted for loss of 2,356 of open interest, February -6,437.Yesterday, February live cattle made a low of 1.55750, which is the lowest print since 1.55 650 made on September 4. In short, anyone who bought after September 4 has losses to one degree or another.

As this report is being compiled on December 18, February live cattle is trading 2.525 cents higher, and is the first major rally since the collapse of prices on December 2. As we have said in previous reports, the cattle market has been massively oversold and due for a rally, however we don’t think it will get very far. There are large numbers of longs looking to liquidate on an advance in order to trim losses, or increase gains. OIA announced that live cattle generated a short-term sell signal on December 3 and an intermediate term sell signal on December 15. We have no recommendation.

WTI crude oil:

January WTI crude oil gained 21 cents on heavy volume of 1,013,407 contracts.Volume was the strongest since December 16 when January WTI advanced 2 cents on volume of 1,176,808 contracts and total open interest declined by 23,055 contracts. On December 17, total open interest declined by 15,834 contracts, which relative to volume is approximately 35% below average. The January contract accounted for loss of 24,559 of open interest. As this report is being compiled on December 18, February WTI is trading $2.44 lower and has made a daily low of 54.28. Stand aside.

Natural gas:

January natural gas advanced 8.3 cents on volume of 227,724 contracts. Total open interest declined by 336 contracts, which is minuscule and dramatically below average. However, an open interest decline on a price advance is bearish. The January contract accounted for loss of 10,316 of open interest and there were insufficient open interest increases in the forward months to offset the decline In January. On December 1, OIA announced that natural gas generated a short and intermediate term sell signal. Stand aside.

The Energy Information Administration announced that working gas in storage was 3,295 Bcf as of Friday, December 12, 2014, according to EIA estimates. This represents a net decline of 64 Bcf from the previous week. Stocks were 6 Bcf higher than last year at this time and 258 Bcf below the 5-year average of 3,553 Bcf. In the East Region, stocks were 162 Bcf below the 5-year average following net withdrawals of 55 Bcf. Stocks in the Producing Region were 83 Bcf below the 5-year average of 1,182 Bcf after a net withdrawal of 10 Bcf. Stocks in the West Region were 13 Bcf below the 5-year average after a net addition of 1 Bcf. At 3,295 Bcf, total working gas is within the 5-year historical range.

Gold:

February gold advanced 20 cents on volume of 180,948 contracts. Total open interest increased by 2,072 contracts, which relative to volume is approximately 45% less than average. As this report is being compiled on December 18, February gold is trading $1.70 higher and has made a daily high of 1213.90 and a low of 1188.50, which is above yesterday’s low of 1182.00.February gold remains on a short-term buy signal, but an intermediate term sell signal. Stand aside. We think gold has more work to do at current levels before it can mount a sustained advance. Most market professionals think February gold will test its contract low of $1,132 made on November 7, however we tend to think the low is in.Stand aside.

Platinum: On December 17, April platinum generated a short-term sell signal, and remains on an intermediate term sell signal.

April platinum advanced $2.80 on total volume of 22,575 contracts. Total open interest declined by 340 contracts, which relative to volume is approximately 40% below average. As this report is being compiled on December 18, April platinum has closed $4.10 lower. Stand aside.

Silver:

March silver advanced 17.6 cents on volume of 50,778 contracts. Total open interest declined by 729 contracts, which relative to volume is approximately 40% below average. Remarkably, March silver has not triggered a reversal of the buy signal generated on December 11. In order for this to occur, the high of the day must be below OIA’s key pivot point for December 18 of 15.966. Yesterday, March silver made a high of 16.060 and the high for December 18 has been 16.230.Stand aside.

Cocoa:

March cocoa advanced $1.00 on volume of 13,210 contracts. Total open interest increased by 564 contracts, which relative to volume is approximately 60% above average meaning a battle ensued between longs and shorts and longs were only able to move the market fractionally higher. The September 2015 contract lost 147 of open interest. As this report is being compiled on December 18, March cocoa has made a new high for the move at 2968 and has closed at 2965, up $50.00, which is the highest close since October 24 (3035). On December 8, OIA announced that March cocoa had generated a short-term buy signal and on December 18 remains on an intermediate term sell signal.

Coffee:

March coffee lost 5.85 cents on volume of 22,758 contracts. Total open interest declined by 516 contracts, which relative to volume is approximately 10% below average, but it is perfectly healthy to see open interest declined when prices decline. The March contract accounted for loss of 1,828 of open interest. As this report is being compiled on December 18, March coffee has closed at 1.7435, up 2.50 cents.March coffee remains on a short and intermediate term sell signal, however we think the long side of coffee will be one of the best trades if not the best trade for 2015.Stand aside.