Bloomberg Access:{OIAR<GO>}

Corn: On December 22, March corn generated short and intermediate term sell signals.

March corn closed unchanged on light pre-holiday volume of 150,151 contracts. Total open interest declined by 2,530, which relative to volume is approximately 35% below average. As this report is being compiled on December 23, the March contract is trading 1.75 cents lower and has made a daily low of 3.45 1/2, a new low for the move.

It appears the entire grain complex is headed lower and undoubtedly part of this is the result of record dollar strength, and the dollar index is trading at the highest level in nearly 14 years. Although we see corn prices moving lower, the heavy net short position held by managed money makes us cautious about the momentum of the move lower.

Soybeans: March soybeans are getting close to generating an intermediate term sell signal and this will occur when the daily high is below OIA’s key pivot point for December 23 of 9.93 3/8. March soybeans generated a short term sell signal on December 21.

March soybeans lost 13.00 cents on volume of 257,790 contracts. Total open interest declined by 1,956 contracts, which relative to volume is approximately 55% below average. The January contract accounted for a loss of 13,451. Though beans have fallen substantially during the past week, we have yet to see open interest increases on price declines. While this is healthy, we think the next phase of the down cycle will be new short-sellers entering the market.

As this report is being compiled on December 23, the March contract is trading 5.00 cents lower and has made a daily low of 9.97, which is the lowest print since 9.91 1/4 made on November 18. We continue to recommend waiting until the market has undergone a counter trend rally lasting 1-3 days before entering bearish positions.

Soybean oil: March soybean oil is getting close to generating an intermediate term sell signal and this will occur when the daily high is below OIA’s key pivot point for December 23 of 35.21. On December 21, OIA announced that March soybean oil generated a short term sell signal.

March soybean oil lost 1.25 on volume of 173,659 contracts. Total open interest declined by 4,870 contracts, which relative to volume is average. The January contract accounted for a loss of 14,356 of open interest. Yesterday, the March contract made a new low for the move of 35.06 and this has been taken out on December 23 with another new low of 34.57. As we said in previous reports, we recommend waiting for a counter trend rally lasting 1-3 days before initiating bearish positions.

Canadian dollar: On December 22, the March Canadian dollar generated short and intermediate term sell signals.

The March Canadian dollar lost 47 pips on volume of 54,584 contracts. Total open interest increased by massive 3,812 contracts, which relative to volume is approximately 165% above average meaning aggressive new short-sellers were entering the market as the Canadian dollar made a new low for the move at 74.04. As this report is being compiled on December 23, the Canadian dollar is trading lower again, down 26 pips and has made a new low for the move of 73.72, which is the lowest print since 73.73 made on November 18.

Last week the COT report revealed that leverage funds added 3,564 to their long positions and also added 6,105 to their short positions. Consequently, leverage funds were short the Canadian dollar by a ratio of 2.57:1, down from the previous week of 2.80:1 and substantially below the ratio two weeks ago of 3.68:1. We have no recommendation.