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Soybeans:

March soybeans closed unchanged on volume of 153,947 contracts. Total open interest declined by 705 contracts, which relative to volume is approximately 75% below average. The January contract accounted for loss of 9,126 of open interest. Yesterday, March soybeans made a high of 10.55 3/4, but the market was unable to hold  the gain.

As this report is being compiled on December 24 in a holiday shortened session, March soybeans are trading 11.50 cents lower and have made a daily low of 10.31 1/4. Over the past several reports, we noted negative open interest action relative to price advances and think that a short-term sell signal is inevitable. This will occur if the daily high in the March contract is below OIA’s key pivot point for December 24 of 10.27 1/4. The first sign that the short term sell signal is imminent would be a close below the pivot point.

Soybean meal:

March soybean meal advanced $1.10 on volume of 62,209 contracts. Total open interest increased by 2,099 contracts, which relative to volume is approximately 35% above average meaning that a battle ensued between buyers and sellers and buyers had a slight edge by the close. The March contract accounted for loss of 2892 of open interest, which makes the total open interest increase bullish. As this report is being compiled on December 24 on a holiday shortened session, March soybean meal is trading $2.50 lower. March soybean meal will generate a short-term sell signal if the high of the day is below OIA’s key pivot point for December 24 of 348.50. A close below the pivot point would be the first indication that a short-term sell signal is imminent.

Corn:

March corn advanced 2.25 cents on volume of 122,272 contracts. Total open interest declined by 218 contracts, which is minuscule and dramatically below average.The March contract accounted for loss of 3,856 of open interest. During the past 4 sessions beginning on December 18, March corn has advanced by 6.75 cents while total open interest has increased by 11,241 contracts. While this is positive, prices have moved only incrementally higher. As this report is being compiled on December 24, March corn is trading 6.50 cents lower and has made a daily low of 4.05 3/4. In order for March corn to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for December 24 of 3.91 1/2.

Chicago wheat:

March Chicago wheat advanced 9.75 cents on volume of 46,550 contracts. Total open interest increased by a massive 3,604 contracts, which relative to volume is approximately 210% above average meaning that new aggressive buyers were entering the market in heavy numbers and driving prices higher.There were open interest increases across the board: from March 2015 through July 2016. As this report is being compiled on December 24, March Chicago wheat is trading 20.50 cents lower and has made a daily low of 6.06 1/4.This is the lowest print since 5.99 3/4 made on December 15. In order for March Chicago wheat to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for December 24 of 5.75 3/4.

Live cattle:

February live cattle lost 22.5 points on volume of 35,341 contracts to. Total open interest increased by 319 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on December 24, February live cattle is trading unchanged on the day after making a daily high of 1.61400, which is below the exit point for bearish positions of 1.61425. In the December 19 report we recommended the initiation of bearish positions and to use the penetration of the December 22 high to exit. Maintain bearish positions.

WTI crude oil:

February WTI crude oil advanced $1.86 on light pre-holiday volume of 458,035 contracts. Total open interest declined by 1,201 contracts , which is minuscule and dramatically below average. The January contract accounted for loss of 507 of open interest. As this report is being compiled on December 24, February WTI is trading $1.82 lower, but has not made a new contract low. The market continues to exhibit extreme weakness and this is evident by its inability to rally for more than a day or two. The EIA report showed a massive build in inventories in its latest report. Stand aside.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 7.3 million barrels from the previous week. At 387.2 million barrels, U.S. crude oil inventories are well above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 4.1 million barrels last week, and are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories increased by 2.3 million barrels last week but are in the lower half of the average range for this time of year. Propane/propylene inventories fell 0.5 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories increased by 6.4 million barrels last week

Natural gas:

January natural gas advanced 2.7 cents on volume of 266,810 contracts. Total open interest increased by 3,730 contracts, which relative to volume is approximately 40% below average. The January contract accounted for loss of 13 554 of open interest, which makes the total open interest increase neutral. As this report is being compiled on December 24, February natural gas is trading 15.4 cents lower and has made a new contract low of 3.043. On December 1, natural gas generated a short and intermediate term sell signal. Stand aside unless bearish positions have been initiated at higher levels.

Gold:

February gold lost $1.80 on volume of 111,879 contracts. Total open interest increased by 496 contracts, which relative to volume is approximately 70% below average. As this report is being compiled On December 24, February gold has closed at 1173.50, down $4.50. February gold will not generate a short-term sell signal on December 24, because the daily high of 1181.20 is above OIA’s key pivot point for December 24 of 1180.30. Stand aside.

Silver: On December 23, March silver generated a short-term sell signal, which reversed the short-term buy signal on December 11. March silver remains on an intermediate term sell signal.

This will be our final report on silver until we see a signal change and/or a trading opportunity.

March silver advanced 7.9 cents on volume of 26,474 contracts. Total open interest declined by 671 contracts, which relative to volume is average. As this report is being compiled on December 24, March silver has closed at $15.710, down 5.7 cents.

Cocoa:

March cocoa lost $20.00 on volume of 13,461 contracts. Total open interest increased again, this time by 1,259 contracts, which relative to volume is approximately 265% above average meaning that buyers and sellers engaged in a battle and the sellers had the edge in yesterday’s trading. As this report is being compiled on December 24, March cocoa has closed at 2964, down $2.00 after making a daily high of 2997, which is just $1.00 above the 2996 high of December 22.

We are becoming increasingly concerned about the massive build in open interest and that prices are not moving significantly higher. For example, from December 19 through December 23, March cocoa has advanced $1.00, but total open interest has increased by 3,968 contracts. This adds credence to our theory that there is a significant amount of trade selling at the high-end of the recent trading range and this likely spells trouble for cocoa going forward. Make sure protective sell stops are in place, whether actual or mental and be prepared to liquidate if prices turn lower, which now appears increasingly likely.

Coffee:

March coffee lost 1.15 cents on volume of 10,370 contracts. Total open interest increased by a massive 710 contracts, which relative to volume is approximately 170% above average meaning that new short sellers were aggressively entering the market in large numbers and driving prices lower. As this report is being compiled on December 24, March coffee has closed at 1.7015, down 85 ticks. March coffee remains on a short and intermediate term sell signal. Stand aside.

Cotton:

March cotton lost 22 points on volume of 18,627 contracts. Total open interest declined by a massive 1,111 contracts, which relative to volume is approximately 140% above average meaning liquidation was extremely heavy on the modest decline. Earlier in the session, March cotton made a new high for the move and 62.84, but was unable to hold the gain. The price and open interest action on December 23 was a disappointment. As this report is being compiled on December 24, March cotton has closed at 61.78, down 4 points.On December 22, March cotton generated a short-term buy signal, but remains on an intermediate term sell signal. We have no recommendation.

10 Year Treasury Notes: On December 23, the March 10 year treasury note generated a short and intermediate term sell signal.

The March 10 year treasury note lost 22.5 points on volume of 547,909 contracts. Total open interest declined by 9,997 contracts, which relative to volume is approximately 25% below average. As this report is being compiled on December 24, the March 10 year note is trading near unchanged on the day.We have no recommendation.