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Soybeans:

March soybeans advanced 7.25 cents on volume of 166,689 contracts. Total open interest declined by 7,443 contracts, which relative to volume is approximately 70% above average meaning liquidation was extremely heavy on the advance. The January contract accounted for loss of 13,060 of open interest. In short, there was insufficient open interest increases in the forward months to offset the decline in the January contract.

As this report is being compiled on December 23, March soybeans are trading 0.25  cents higher and have made a daily high of 10.55 3/4, which is the highest print since 10.61 1/4 made on December 15. In order for the rally in March soybeans to continue, the low for the day must be above OIA’s key pivot point for December 23 of 10.49 1/4.A short-term sell signal will be generated if a high for the day is below OIA’s key pivot point for December 23 of 10.27 1/4. A close below the pivot point would be the first indication that prices are headed lower.We have no recommendation.

Soybean meal:

March soybean meal advanced $5.20 on volume of 74,843 contracts. Total open interest increased by 2,376 contracts, which relative to volume is approximately 30% above average. The January contract lost 7,699 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on December 23, March soybean meal is trading $1.40 higher and has made a daily high of 360.40, which is above yesterday’s high of 358.80. In order for the rally in March soybean meal to continue, the market must make a daily low above OIA’s key pivot point for December 23 of $358.20. A short-term sell signal will be generated if the daily high is below OIA’s key pivot point for December 23 of 348.50.We have no recommendation.

Corn:

March corn advanced 1.25 cents on volume of 136,587 contracts. Total open interest declined by a massive 6,880 contracts, which relative to volume is approximately 100% above average meaning that liquidation was extremely heavy on the modest advance. The March contract accounted for loss of 6,052 of open interest, May 2015-1,633, July 2015 -268. In short, there was liquidation in the 3 front months, which comprise most of the volume and open interest. We view the open interest decline in yesterday’s trading as bearish, and as this report is being compiled on December 23, March corn is trading 2.75 cents higher and has made a daily high of 4.15 3/4, which is a new high for the move. For March corn to continue to move higher, it must make a weekly low above OIA’s weekly key pivot point of 4.17 3/4.March corn remains on a short and intermediate term buy signal. We have no recommendation.

Chicago wheat:

March Chicago wheat lost 6.50 cents on volume of 85,875 contracts. Total open interest increased by 721 contracts, which relative to volume is approximately 55% below average. The March contract accounted for loss of 2,937 of open interest, which makes the total open interest increased more impressive (bearish). During the past 2 days, March wheat has fallen 29.50 cents and total open interest has increased by 3,152 contracts. As we pointed out in yesterday’s report, the open interest increases indicate that recent longs are not liquidating as prices move lower. This can spell potential trouble for them if Chicago wheat resumes its downtrend in earnest. Chicago wheat remains on a short and intermediate term buy signal. Stand aside.

Live cattle:

February live cattle advanced 72.5 points on volume of 26,146 contracts. Total open interest declined by 344 contracts, which relative to volume is approximately 45% below average. The December contract accounted for loss of 645 of open interest, April 2015 -389, June 2015-300, August and October 2015 contracts lost 105 of open interest. Interestingly, open interest in the February contract increased by 1,060 contracts. December 22 was the 3rd day in a row in which prices advanced and open interest declined.

From December 18 through December 22, February live cattle prices have advanced 5.00 cents and total open interest has declined by 12,491 contracts. This is clearly bearish open interest action relative to the 3 day price advance. Yesterday, we suggested that clients initiate bearish positions and use the penetration of yesterday’s daily high of 1.61425 as an exit point for these positions. As this report is being compiled on December 23, February live cattle is trading 80 points lower and has made a daily high of 1.61 175, below yesterday’s high. Maintain bearish positions and use the penetration of yesterday’s high as the exit point.

WTI crude oil:

February WTI crude oil lost $1.87 on light holiday volume of 514,995 contracts. Total open interest declined by 2,574 contracts, which relative to volume is approximately 75% below average. The January contract lost 1,186 of open interest. As this report is being compiled on December 23, February crude oil is rallying, up $1.84 and has made a daily high of 57.20, which takes out yesterday’s high of 58.53 and 58.42 made on December 19. The crude market is well overdue for a significant rally and as yet has not been able to mount one. After this occurs, we expect the market to make new contract lows. Stand aside.

Natural gas:

January natural gas lost 32.0 cents on heavy volume of 460,677 contracts.Volume was the strongest since November 20 when 638,618 contracts were traded and January natural gas closed at 4.649. As this report is being compiled on December 23, January natural gas is trading 1.1 cent lower and has made a new contract low of 3.098. On December 1, OIA announced that January natural gas generated a short and intermediate term sell signal.The market is massively oversold and a rally could occur at any time, especially if temperatures in the Midwest and East begin to drop significantly.

Gold:

February gold lost $16.20 on volume of 138,789 contracts. Total open interest increased by 806 contracts, which relative to volume is approximately 70% below average. Yesterday, February gold made a new low for the move at 1170.70, which is the lowest print since 1141.70 made on December 1.As this report is being compiled on December 23, February gold is trading $3.40 lower and has made a daily low of 1173.00. In order for February gold to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for December 23 of 1180.50. Stand aside.February gold remains on an intermediate term sell signal.

Silver:

March silver lost 34.2 cents on volume of 34,931 contracts. Total open interest increased by a massive 1,719 contracts, which relative to volume is approximately 100% above average meaning that new short sellers were aggressively entering the market in heavy numbers and driving prices to a new low for the move (15.53), which is the lowest print since 15.54 made on December 16. As this report is being compiled on December 23, March silver is trading 5.2 cents higher and has made a daily high of 15.895, which is below OIA’s key pivot point For December 23 of $15.936. This means if the high of the day holds, March silver will generate a short-term sell signal on December 23. This will reverse the short-term buy signal on December 11. Stand aside. 

Cocoa:

March cocoa advanced $6.00 on volume of 12,442 contracts. Total open interest increased by a massive 1,352 contracts, which relative to volume is approximately 320% above average meaning that a battle ensued between buyers and sellers and buyers had the edge by moving the market fractionally higher. This is the second day in a row in which prices have moved little, yet open interest has increased massively. We suspect the trade may be on the sell side of the market and speculators on the buy side. On December 8, March cocoa generated a short-term buy signal, but remains on an intermediate term sell signal.We are concerned that cocoa has been unable to generate an intermediate term buy signal, and strongly suggest that clients have appropriate sell stops in place, or a mental stop in the event that cocoa prices reverse.

Coffee:

March coffee lost 2.55 cents on volume of 12,614 contracts. Total open interest increased by 649 contracts, which relative to volume is approximately 105% above average meaning that new short sellers were aggressively entering the market in large than usual numbers and driving prices to a new low for the move (1.7110). As this report is being compiled on December 23, March coffee has closed at 1.7100, down 1.15 cents. March coffee remains on a short and intermediate term sell signal. Stand aside.

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

March cotton advanced 1.15 cents on volume of 21,050 contracts. Total open interest increased just 68 contracts. The March contract accounted for loss of 444 of open interest. The open interest increase is disappointing. As this report is being compiled on December 23, March cotton is trading 2 points higher and has made a daily high of 62.84, which is the highest print since 63.70 made on November 10.

Usually, after the generation of a buy signal, the market has a tendency to pullback from 1-3 days and this is the opportunity to initiate bullish positions if you are so inclined. The reality is the fundamentals for cotton are not very good and we see the current advance as a rally in a bear market. However, this does not mean that cotton prices cannot have a significant move. Cotton is notorious for outsized moves that confound speculators and commercials alike.