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Soybeans:

March soybeans lost 36.25 cents on heavy volume of 289,370 contracts.Volume was the strongest since December 16 when 300,117 contracts were traded and March soybeans closed at 10.31 1/4. On January 12, total open interest increased by 3,670 contracts, which relative to volume is approximately 45% less than average. However, the January contract lost 1,882 of open interest, March 2015 – 2,068, which makes the total open interest increased more impressive (bearish).

Yesterday, March soybeans made a low of 10.15 1/2,  and this has been taken out on January 13 with another low of 10.03 1/2, which is below the previous low for the move of 10.0 6 1/4 made on January 5. On January 2, March soybeans generated a short-term sell signal and remains on an intermediate term sell signal.

Soybean meal:

March soybean meal lost $7.90 on heavy volume of 99,180 contracts.Volume was the strongest since December 12 when 100,695 contracts were traded and March soybean meal closed at 356.30. On January 12, total open interest increased by 2,442 contracts, which relative to volume is average. Relative to volume, the total open interest increase in soybean meal was much larger than soybeans. The January contract accounted for loss of 557 of open interest, March 2015 – 1,105, which makes the total open interest increased more impressive (bearish).

As this report is being compiled on January 13, March soybean meal is trading down $5.10 and has made a new low for the move at 335.00. In the report of January 5 , OIA recommended the initiation of bearish positions. These positions were profitable into the USDA report and March soybean meal did not penetrate the exit point for futures positions of 358.00.In the January 9 report, we recommended lowering buy stops on futures positions to protect profits. We think prices are headed lower and March soybean meal will generate an intermediate term sell signal if the daily high is below OIA’s key pivot point for January 13 of 336.60. Maintain bearish positions.

Soybean oil:

March soybean oil lost 1.08 cents on heavy volume of 114,736 contracts.Volume was the strongest since December 12 when 169,617 contracts were traded and March soybean oil closed at 32.57. On January 12, total open interest declined by 5725 contracts, which relative to volume is approximately 100% above average meaning that liquidation was extremely heavy on the large decline. This is positive open interest action. The January contract lost 180 of open interest, March 2015 -5,387, May 2015-946.

After a large build of open interest on price advances, it is healthy to see open interest decrease when prices decline. Still, the market has large numbers of speculative longs, which will add selling pressure if the rest of the bean complex continues to decline, which is likely. We recommend a stand aside posture in soybean oil.

Corn:

March corn advanced 1.75 cents on heavy volume of 462,814 contracts. Volume was the strongest since November 13 when 589,625 contracts were traded and March corn closed at 3.98 3/4.On January 12, total open interest declined by 3,773 contracts, which relative to volume is approximately 60% less than average. The March contract accounted for loss of 10,905 of open interest May 2015-877.

Yesterday, in a 15 minute time frame, after the release of the USDA report, volume totaled 55,975 contracts. The range encompassed by the 15 minute period was 3.90-4.07.These represent the parameters for trading going forward. The one that is broken first will signify the direction of the market in the coming weeks.

As this report is being compiled on January 13, March corn is trading 15.25 cents lower and has made a daily high of 4.06 1/2, below yesterday’s high and has taken out yesterday’s low.March corn will generate a short-term sell signal if the daily high is below OIA’s key pivot point for January 13 of 3.93 5/8. The problem for corn is there are large numbers of speculative longs who will be forced to liquidate as prices break below 3.90..We have no recommendation.

Chicago wheat:

March Chicago wheat lost 8.25 cents on volume of 109,914 contracts. Volume was the strongest since December 18 when 170,618 contracts were traded and March Chicago wheat closed at 6.55 1/4. On January 12, total open interest declined by 3,011 contracts, which relative to volume is average. The March 2015 contract lost 3,771 of open interest, May 2015-1828. As this report is being compiled on January 13, March Chicago wheat is trading unchanged on the day. On January 2, March Chicago wheat generated a short-term sell signal, and remains on an intermediate term buy signal. 

Live cattle: This will be our last report on live cattle until such time that we see a trading opportunity and/or a signal change. On December 3, live cattle generated a short-term sell signal and an intermediate term sell signal on December 15.

February live cattle lost 15 points on heavy volume of 92,519 contracts. Volume was the strongest since November 13 when 107,551 contracts were traded and February live cattle closed at 1.71025. On January 12, total open interest declined by 3,082 contracts, which relative to volume is approximately 35% above average, meaning that liquidation was fairly heavy on the modest decline. The February contract lost 10,386 of open interest. As this report is being compiled on January 13, February live cattle is trading 2.825 cents lower and appears to be headed toward the 3.00 cent limit. Stand aside.

WTI crude oil:

February WTI crude oil lost $2.29 on heavy volume of 871,787 contracts. The most notable feature in yesterday’s trading was the massive increase of total open interest of 37,212 contracts, which relative to volume is approximately 55% above average. Making the total open interest increase more impressive (bearish) was the February contract, which lost 23,438 of open interest.

Yesterday’s total open interest increase is the largest one day increase on a price decline during the entirety of the bear market. It indicates that market participants are getting very bearish at the low end of the 6 month trading range and this may be an indication that WTI is near a temporary bottom.As this report is being compiled on January 13, February WTI is trading 53 cents lower and has made a new contract low of 44.20. Stand aside.

Natural gas:

February natural gas lost 15.2 cents on volume of 380,690 contracts.Volume was slightly above that of January 8 when February natural gas advanced 5.6 cents on volume of 377,257 contracts and total open interest increased by 3,729 contracts. On January 12, total open interest increased by 4,424 contracts, which relative to volume is approximately 45% below average. However, the February contract lost 14,730 of open interest, which makes the total open interest increase more impressive (bearish). Yesterday, February natural gas made a new contract low of 2.783 and as this report is being compiled on January 13, February natural gas is rallying, up 10.1 cents and has not taken out yesterday’s low.Stand aside.

Gold:

February gold advanced $16.70 on volume of 162,346 contracts. Total open interest increased by a hefty 5,013 contracts, which relative to volume is approximately 30% above average. However, the February contract lost 7,602 of open interest, which makes the total open interest increase more impressive (bullish). Yesterday, February gold made a new high for the move at $1236.00, and on January 13 has made another new high of 1244.50, which is the highest print since October 23 (1245.00).

Thus far in trading on January 13, the low for the day has been 1230.70, which is considerably above OIA’s key pivot point for the generation of an intermediate term buy signal (1218.50). The market is significantly overbought relative to its 20 day moving average of 1199.70 and the 50 day moving average of 1193.30. Gold should be traded from the long side, and we recommend using options instead of futures. Keep in mind, the market is well overdue for a sizable pullback, and this will be the most opportune time to initiate bullish positions.

Platinum: On January 12, April platinum generated a short-term buy signal, but remains on an intermediate term sell signal.

April platinum advanced $10.90 on volume of 9835 contracts. Total open interest increased by 402 contracts, which relative to volume is approximately 55% above average meaning that new longs were entering the market aggressively and driving prices to a new high for the move (1246.60). This took out the previous high of 1245.60 made on December 12. As this report is being compiled on January 13, April platinum has closed at 1247.80, up $6.80. In order for an intermediate term buy signal to be generated, the low the day must be above OIA’s key pivot point for January 13 of $1241.00.

Silver:

March silver advanced 14.5 cents on volume of 28,723 contracts. Total open interest increased by a hefty 775 contracts, which relative to volume is average. As this report is being compiled on January 13, March silver is trading sharply higher, up 58.6 cents and has made a new high for the move of 17.215, which is the highest print since $17.230 made on December 12.

Thus far in trading, the daily low for March silver has been $16.570, which is only 3 ticks above OIA’s key pivot point for January 13 of 16.567, but this triggers a short-term buy signal for March silver on January 13.Usually, after the generation of a buy signal, the market has a tendency to pullback from 1-3 days and this is the opportune time to initiate bullish positions.

From the January 9 report:

“We expect that silver should begin to gather a bit more momentum now that platinum is on a short-term buy signal and gold is headed for an intermediate term buy signal.”

Cocoa:

March cocoa advanced $26.00 on volume of 18,367 contracts. Total open interest increased by 1,902 contracts, which relative to volume is approximately 300% above average, meaning a battle ensued between buyers and sellers and buyers definitely had the edge on January 12.As this report is being compiled on January 13, March cocoa has closed at 2991 and made a daily low of 2974, which is above OIA’s key pivot point for January 13 of 2964. This is very positive, however, before we get on the bullish bandwagon, we want to see March cocoa generate an intermediate term buy signal. This will occur when March cocoa makes a daily low above OIA’s key pivot point for January 13 of 2991.

Coffee:

March coffee lost 3.30 cents on heavy volume of 39,390 contracts. Volume was the highest since January 7 when March coffee advanced 15 ticks on volume of 40,107 contracts and total open interest increased by 3,026 contracts. On January 12, total open interest declined by 847 contracts, which relative to volume is approximately 15% below average. The March contract accounted for loss of 1513 of open interest.

The open interest decline in yesterday’s trading is healthy, especially since there were open interest increases during the recent price advances. As this report is being compiled, March coffee is trading 1.10 higher on the day and March coffee has made a daily low of 1.7385. On January 9, March coffee generated a short-term buy signal, and as we said yesterday and the prior day’s report, the market is likely to experience a setback for 1-3 days. Yesterday was the first day of a correction.

The action on January 13 likely indicates that any further setbacks will be shallow and short-lived. We recommend the use of call options due to the volatility of coffee.