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On December 31, soybeans, soybean meal and Chicago wheat are trading below OIA’s key pivot points for December 31.

On January 1, we will issue the delayed weekend report, which reflects the previous week’s action along with our analysis of the Commitment of Traders Report released on December 30.

Soybeans:

March soybeans lost 4.75 cents on volume of 163,688 contracts. Total open interest declined by 5,964 contracts, which relative to volume is approximately 45% above average meaning that liquidation was heavy on the decline. The January contract accounted for loss of 16,896 of open interest. As this report is being compiled on December 31, March soybeans are trading 17.50 cents lower and have made a daily low of 10.25 3/4, which is below OIA’s key pivot point for December 31 of 10.28 5/8. A confirmed short term sell signal will occur when the daily high is below the pivot point.A close below the pivot point is the first indication that a short-term sell signal is likely. Clients should begin to position themselves on the bearish side of the soybean market. Currently, March soybeans remain on a short-term buy signal, but an intermediate term sell signal.

Soybean meal:

March soybean meal lost $4.60 on volume of 55,125 contracts. Total open interest declined by 2,274 contracts, which relative to volume is approximately 55% above average meaning that liquidation was fairly heavy on the decline. The January contract accounted for loss of 3,475 of open interest. As this report is being compiled on December 31, March soybean meal is trading $5.70 lower and has made a daily low 346.60.In order for a confirmed short term sell signal to occur, the high of the day must be below OIA’s key pivot point for December 31 of 349.20.A close below the pivot point is the first solid indication that a short-term sell signal is likely. Clients should begin to position themselves on the bearish side of soybean meal. From November 12 through December 30, March soybean meal has been under performing soybeans. For example, during this time, March soybean meal lost 3.31% while March soybeans lost 0.90 percent. Additionally, managed money remains long soybean meal by ratio of 2.83:1, which means there is plenty of fuel to fund a continued downside move.

Soybean oil:

March soybean oil advanced 14 points on volume of 68,755 contracts. Total open interest declined by 2,374 contracts, which relative to volume is approximately 45% above average meaning liquidation was substantial on yesterday’s advance. The January contract accounted for loss of 4,043 of open interest, March 2015 -771. In order for March soybean oil to generate a short-term buy signal, the daily low must be above OIA’s key pivot point for December 31 of 32.72. March soybean oil remains on an intermediate term sell signal.Stand aside.

Corn:

March corn lost 6.25 cents on volume of 149,749 contracts. Total open interest increased by 2,641 contracts, which relative to volume is approximately 25% less than average, but an open interest increase on a price decline is negative. This is especially the case since the March contract lost 4,407 of open interest. In other words, there was sufficient open interest increases in the forward months to offset the decline in March. The COT report released yesterday shows that managed money is long corn by ratio of 4.75:1, which is a huge number. This indicates that there are large numbers of managed money longs who are not liquidating as prices move lower.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 31 of 3.93 5/8. March corn remains on a short and intermediate term buy signal.

Chicago wheat:

March Chicago wheat lost 13.50 cents on volume of 49,096 contracts. Total open interest declined by 1,316 contracts, which relative to volume is average.The March contract lost 2,396 of open interest, May 2015-77. As this report is being compiled on December 31, March Chicago wheat is trading 14.50 cents lower and has made a daily low of 5.87, which is significantly below OIA’s key pivot point for December 31 of 5.94. A confirmed sell signal will occur when the high of the day is below the pivot point. Clients should begin to position themselves on the bearish side of Chicago wheat.

Live cattle:

February live cattle lost 30 ticks on volume of 34,440 contracts. Total open interest declined by 671 contracts, which relative to volume is approximately 20% below average. The December contract lost 533 of open interest, February 2015 – 352, April 2015 -147. As this report is being compiled on December 31, February live cattle is trading 1.00 cent lower after making a daily high of 1.66000, which is below yesterday’s high of 1.66525. It appears likely that a test of the December 18 low of 1.55100 is in the offing.

From the December 29 report:

“We think there is a good chance that today’s high will be the high for the move. If we are wrong and live cattle continues to advance, it must make a daily low above OIA’s key pivot point for December 30 of 1.66080. February live cattle remains on a short and intermediate term sell signal.We have no recommendation.”

WTI crude oil:

February WTI crude oil advanced 51 cents on light volume of 392,522 contracts. Total open interest increased by a sizable 14,167 contracts, which relative to volume is approximately 45% above average meaning that aggressive new longs were entering the market in large numbers and driving prices fractionally higher.The February contract accounted for loss of 885 of open interest. As this report is being compiled on December 31, February WTI crude oil is trading $1.33 lower and has made a new contract low of $52.51. Stand aside.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.8 million barrels from the previous week. At 385.5 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 3.0 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 1.9 million barrels last week but are in the lower half of the average range for this time of year. Propane/propylene inventories fell 0.6 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories increased by 2.8 million barrels last week.

Natural gas:

February natural gas lost 10.5 cents on volume of  160,282 contracts. Total open interest increased by 1,150 contracts, which relative to volume is approximately 60% below average. The January contract accounted for loss of 1,010 contracts. As this report is being compiled on December 31, February natural gas is trading sharply lower, down 14.0 cents or -4.85%. The February contract has made a new contract low of 2.943. On December 1 natural gas generated a short and intermediate term sell signal.

The Energy Information Administration announced that working gas in storage was 3,220 Bcf as of Friday, December 26, 2014, according to EIA estimates. This represents a net decline of 26 Bcf from the previous week. Stocks were 232 Bcf higher than last year at this time and 81 Bcf below the 5-year average of 3,301 Bcf. In the East Region, stocks were 62 Bcf below the 5-year average following net withdrawals of 29 Bcf. Stocks in the Producing Region were 27 Bcf below the 5-year average of 1,126 Bcf after a net injection of 3 Bcf. Stocks in the West Region were 8 Bcf above the 5-year average after no net change. At 3,220 Bcf, total working gas is within the 5-year historical range.

Gold:

February gold advanced $18.50 on volume of 156,772 contracts. Total open interest increased by 4,813 contracts, which relative to volume is approximately 20% above average meaning that new buyers were entering the market in above average numbers and driving prices to a new high for the move (1210.90). However, as this report is being compiled on December 31, February gold has reversed course and is trading $13.50 lower making a daily low of 1181.60, which is above yesterday’s low of 1180.50. We continue to see a lot of chop in the gold market and it appears the market is trying to make up its mind which way it wants to go.Open interest action continues to be positive with it increasing on rallies and declining when prices move lower. We tend to think we have seen the worst, but gold has been unable to make a low above OIA’s key pivot point for December 31 of 1203.90.In order for the rally to continue, it must make a low above the pivot point.February gold remains on a short-term buy signal, but an intermediate term sell signal. Stand aside.

Cocoa:

March cocoa advanced $8.00 on volume of 12,549 contracts. Total open interest increased by a massive 1,848 contracts, which relative to volume is approximately 380% above average meaning a battle ensued between buyers and sellers and buyers were able to move the market fractionally higher. This is a pattern we have been seeing for quite some time and as we have pointed out in previous reports, it is of great concern. In our view, the massive build of open interest over the past couple weeks has been the result of new speculators on the long side and trade selling on the other. As this report is being compiled on December 31, March cocoa has closed sharply lower at 2910, down $62.00. Additionally, the market has made a daily low of 2902, which is the lowest print since 2890 made on December 17. The closing price on December 31 is the lowest since 2873 made on December 15.

From the December 23 report:

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 35 ticks on volume of 12,785 contracts. Total open interest increased by 885 contracts, which relative to volume is approximately 230% above average meaning a battle ensued between buyers and sellers and sellers had the edge on December 30 by moving prices fractionally lower. In the most recent COT report, which we will publish on January 1, managed money has significantly reduced their long positions and added to their short positions. However, commercial interests have significantly added to their long positions and liquidated their short positions for the 3rd week in a row. In our view this spells trouble for speculative short sellers. As this report is being compiled on December 31, March coffee has closed at 1.6660, up 1.80 cents. March coffee remains on a short and intermediate term sell signal. Stand aside.