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Soybeans:

March soybeans lost 4.75 cents on volume of 174,440 contracts. Total open interest declined by 6,163 contracts, which relative to volume is approximately 40% above average. The January contract accounted for loss of 12,323 of open interest. As this report is being compiled on December 22, March soybeans are trading 9.50 higher and have made a daily high of 10.50, which is slightly above the December 18 high of 10.49.

In order for the rally to continue, March soybeans must make a daily low above OIA’s key pivot point for December 22 of 10.49. The Commitment of Traders report shows that managed money has very little appetite for soybeans, and we expect a short-term sell signal to be generated, perhaps this week. March soybeans remain on a short-term buy signal, but an intermediate term sell signal.

Soybean meal:

March soybean meal lost $1.90 on volume of 61,799 contracts. Total open interest declined by 1,262 contracts, which relative to volume is approximately 20% below average. The January contract lost 6,685 of open interest. As this report is being compiled on December 22, March soybean meal is trading $5.90 higher and has made a daily high of 358.80. In order for the soybean meal rally to continue, the March contract must make a low of the day above OIA’s key pivot point for December 22 of $358.10. In the weekend report, we discussed the significant decline of open interest among managed money speculators, and think that a short-term sell signal is more likely than a continuation of the uptrend. March soybean meal remains on a short and intermediate term buy signal.

Corn:

March corn lost 0.50 cents on volume of 183,583 contracts. Total open interest increased by 8998 contracts, which relative to volume is approximately 100% above average meaning that a battle ensued between buyers and sellers, and neither side was able to make a major impact by the close. The March 2015 through July 2016 contracts all gained open interest. December 19 was the second day in a row that open interest increased massively, but the advance was unimpressive.

On December 18 , March corn advanced 2.75 cents on volume of 188,713 contracts and total open interest increased by 9,341 contracts. The Commitments of Traders report showed that managed money has been liquidating long and short positions during the reporting period of December 10 through December 16. Commercials on the other hand increased their long and short positions. As this report is being compiled on December 22, March corn is trading 1.50 cents higher and has made a daily high of 4.14 1/4, which is slightly above the 4.14 print of December 18. March corn remains on a short and intermediate term buy signal. We have no recommendation.

Chicago wheat:

March Chicago wheat lost 23.00 cents on volume of 105,938 contracts. Volume fell dramatically from December 18 when March Chicago wheat closed 6.75 cents higher after making a new high for the move at 6.77 and 170,618 contracts changed hands while total open interest increased by 2,143 contracts. On December 19, total open interest increased by 2,431 contracts, which relative to volume is approximately 15% below average. The March contract accounted for loss of 611 of open interest, which makes the total open interest increase more impressive (bearish).

Considering the significant recent increase in long positions by manage money, it would have been expected to see a total open interest decline when March wheat lost 23.00 cents. This indicates that recent longs are digging in and refusing to liquidate as prices move lower. We think there is an excellent chance the March contract made its top on December 18 and that lower prices are in store. March Chicago wheat remains on a short and intermediate term buy signal. Stand aside.

Live cattle: Initiate bearish positions in February live cattle and use today’s high of 1.61425 as the exit point for these positions.

February live cattle advanced 1.575 cents on volume of 42,070 contracts. Total open interest declined by a massive 2,525 contracts, which relative to volume is approximately 140% above average. In short, liquidation was extremely heavy on the advance, which is bearish.The December 2014 through April 2015 contracts lost a total of 3,033 of open interest. December 19 was the second day in a row in which live cattle prices advanced and total open interest declined.

On December 18, February live cattle closed 2.70 cents higher, but total open interest declined by a massive 9,622 contracts on volume of 59,108. As this report is being compiled on December 22, February live cattle is trading 32.5 points higher, which is down considerably from its daily high on December 22 of 1.61425, which is above Friday’s high of 1.60775. According to the COT report released on Friday, managed money remains heavily long live cattle by a ratio of 10.54:1. In short there is a significant amount of fuel to fund further downside action. On December 3, February live cattle generated a short-term sell signal and generated an intermediate term sell signal on December 15.

WTI crude oil:

February WTI crude oil advanced $2.77 on lighter than usual volume of 631,224 contracts. Volume was the weakest since December 9 when crude oil advanced 77 cents on volume of 633,292 contracts and total open interest increased by 4,279 contracts. On December 19, total open interest declined by 11,961 contracts, which relative to volume is approximately 65% below average, but an open interest decline on an advance of the magnitude seen on Friday is decidedly bearish. The January contract accounted for loss of 15,627 of open interest.

On Friday, February WTI made a high of 58.42 and the high on December 22 has been 58.53 and the February contract is trading $1.74 lower. In short, the market was able to rally for one day and lost a good portion of the gain on December 22.This underscores the weakness of the market and confirms our thesis that rallies will be met by distressed longs who are looking to trim losses. Stand aside.

Natural gas:

January natural gas lost 16.9 cents on volume of 344,327 contracts. Total open interest increased by 2,161 contracts, which relative to volume is approximately 65% below average. However, the January contract lost 9,443 of open interest, which makes the total open interest increase more impressive (bearish). As this report is being compiled on December 22, February natural gas is trading 31.1 cents lower and has made a daily low of 3.12, which is a new contract low. On December 1, OIA announced that natural gas generated a short and intermediate term sell signal. Since the generation of the short term sell signal, the market has fallen approximately 88 cents. 

Gold:

February gold advanced $1.20 on volume of 76,551 contracts. Total open interest increased by 1,076 contracts, which relative to volume is approximately 40% below average. As this report is being compiled on December 22, every gold is trading 17.20 lower. It appears highly likely that gold is headed for a short-term sell signal, which will reverse the short-term buy signal on December 11. We have been advocating a stand aside posture in gold.

Silver:

March silver advanced 9.6 cents on very light volume of 23,949 contracts. Total open interest declined by a massive 995 contracts, which relative to volume is approximately 60% above average, meaning that liquidation was heavy on the modest advance. As this report is being compiled on December 22, March silver is trading 37.0 cents lower, and appears that it will reverse the short-term buy signal generated on December 11. We have been advocating a stand aside posture in silver.

Cocoa:

March cocoa advanced $15.00 on volume of 21,956 contracts. Total open interest increased by a massive 1,357 contracts, which relative to volume is approximately 140% above average meaning that buyers and sellers engaged in a battle and buyers had the edge. As this report is being compiled on December 22, March cocoa has closed at 2986 and has made a new high for the move at 2996. On December 8, March cocoa generated a short-term buy signal, but remains on an intermediate term sell signal.

Coffee:

March coffee advanced 35 ticks on light volume of 12,076 contracts. Total open interest increased by 379 contracts, which relative to volume is approximately 20% above average. The March contract accounted for loss of 382 of open interest. As this report is being compiled on December 22, March coffee has closed lower at 1.7215, down 2.15 cents. March coffee remains on a short and intermediate term sell signal.

Cotton: On December 22, March cotton will generate a short-term buy signal, but remains on an intermediate term sell signal.