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Soybeans:

March soybeans lost 12.00 cents on heavier than normal volume of 200,214 contracts. Volume fell from January 12 when March soybeans lost 36.25 cents on volume of 289,370 contracts and total open interest increased by 3,670 contracts. On January 13, total open interest increased by 4,207 contracts, which relative to volume is 15% below average. The January contract lost 1,277 of open interest, July 2015 – 673, which makes the total open interest increase more impressive (bearish).

As this report is being compiled on January 14, March soybeans are trading unchanged on the day after making a new low for the move at 9.92 3/4, which is the lowest print since 9.91 made on December 3. On January 2, March soybeans generated a short-term sell signal and has been on an intermediate term sell signal. We have no recommendation.

Soybean meal: March soybean meal will generate an intermediate term sell signal on January 14 if the daily high is below OIA’s key pivot point for January 14 of 336.40.

March soybean meal lost $7.60 on relatively heavy volume of 97,469 contracts. Volume fell somewhat from January 12 when March soybean meal lost 7.90 on volume of 99,180 contracts and total open interest increased by 2,442 contracts.

On January 13, total open interest increased by a massive 5,978 contracts, which relative to volume is approximately 140% above average meaning that aggressive new short sellers were entering the market in heavy numbers and driving prices to a new low for the move (333.10). This is the lowest print since November 4 (332.40).

Note the difference in total open interest increases between soybean meal and soybeans. This is the second day in a row in which soybean meal open interest has increased significantly greater relative to volume than soybeans. As this report is being compiled on January 14, March soybean meal is trading 80 cents lower and has made a new low for the move at 329.00.In the report of January 5, OIA recommended the initiation of bearish positions, and clients should continue to hold these. On January 2, March soybean meal generated a short-term sell signal.

Soybean oil:

March soybean oil lost 6 points on heavy volume of 102,126 contracts. Volume fell from January 12 when March soybean oil lost 1.08  cents on volume of 114,736 contracts and total open interest declined by 5,725 contracts. On January 13, total open interest declined by 927 contracts, which relative to volume is approximately 55% below average. The January contract accounted for loss of 164 of open interest, March 2015 -2,793. On January 6 March soybean oil generated a short-term buy signal and generated an intermediate term buy signal on January 9.

For the short-term sell signal to reverse, March soybean oil must make a daily high below OIA’s key pivot point for January 14 of 32.15. For the rally to continue, March soybean oil must make a daily low above OIA’s key pivot point for January 14 of 32.80.

The intermediate term buy signal will reverse if the high for the day is below OIA’s key pivot point for January 14 of 32.74. Our concern about soybean oil is the weakness of soybeans and soybean meal, in addition to the very large long position held by managed money. For this reason, we recommend a stand aside posture. 

Corn: March corn will generate a short-term sell signal on January 14. An intermediate term sell signal will be generated if the high of the day is below OIA’s key pivot point for January 14 of 3.79 1/4

March corn lost 16.25 cents on heavy volume of 425,107 contracts. Volume slipped from January 12, the day of the USDA report when March corn advanced 1.75 cents on volume of 462,814 contracts and total open interest declined by 3,773 contracts. On January 13, total open interest increased by 4,535 contracts, which relative to volume is approximately 50% below average, however, the March 2015 contract lost 6,721 of open interest, which makes the total open interest increase more impressive (bearish).

The fact that open interest increased at all is a danger sign to anyone long the corn market. A decline of this magnitude should have caused a significant amount of liquidation as prices moved to the lowest level since December 4 (3.80 1/4). After generating a short-term sell signal on January 14, March corn should have a counter trend rally and this will be the opportunity to initiate bearish positions . 

Chicago wheat: If the high of 5.49 3/4 holds on January 14, March Chicago wheat will generate an intermediate term sell signal. On January 2, March Chicago wheat generated a short-term sell signal.

March Chicago wheat lost 7.50 cents on volume of 101,174 contracts. Total open interest declined by 1,753 contracts, which relative to volume is approximately 25% below average. The March contract accounted for loss of 528 of open interest, May 2015-1,713. As this report is being compiled on January 14, March Chicago wheat is trading 9.25 cents lower and has made a daily low of 5.36, which is the lowest print since 5.36 made on November 20.

WTI crude oil:

February WTI crude oil lost 18 cents on heavy volume of 1,102,517 contracts. Volume was the strongest since December 16 when 1,176,808 contracts were traded and February WTI closed at $56.26.On January 13, total open interest increased massively by 45,907 contracts, which relative to volume is approximately 55% above average meaning that huge numbers of new short sellers were entering the market and driving prices to a new contract low (44.20). Making the total open interest increase more impressive (bearish) was the fact that February lost 19,530 of open interest.

January 13 was the 2nd day in a row that open interest increased massively relative to volume. On January 12, February WTI lost $2.29 on volume of 871,787 contracts and total open interest increased by 37,212 contracts. In short, February WTI has lost $2.47 during the past 2 days, but total open interest has skyrocketed by a massive 83,119 contracts. As we said in yesterday’s report, this may be an indication that WTI has found a temporary bottom as the Johnny-come-lately’s enter the market, afraid they will miss the downside move.

As observers and chroniclers of the commodities markets, OIA is on the lookout for any indication that a market is near a bottom or top. The massive open interest increases during the past 2 days is the first reliable indicator that a temporary bottom may be in place. We don’t think this is the end of the downside move, but the market certainly is overdue for a massive rally to blowout the new short sellers. Stand aside.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 5.4 million barrels from the previous week. At 387.8 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 3.2 million barrels last week, and are well above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased last week.Distillate fuel inventories increased by 2.9 million barrels last week but are in the lower half of the average range for this time of year. Propane/propylene inventories fell 0.8 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories increased by 10.2 million barrels last week.

Natural gas:

February natural gas advanced 14.8 cents on volume of 380,541 contracts. Total open interest increased by 13,411 contracts, which relative to volume is approximately 40% above average. The February contract lost 11,980 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on January 14, February natural gas is trading 25.9 cents higher and has made a daily high of 3.246, which is the highest print since 3.274 made on December 23.

Colder temperatures are the catalyst for the move higher. In order for February natural gas to generate a short-term buy signal, the low the day must be above OIA’s key pivot point for January 14 of 3.493. February natural gas remains on a short and intermediate term sell signal. Stand aside.

Gold: On January 13, February gold generated an intermediate term buy signal after generating a short-term buy signal on December 11.

February gold advanced $1.60 on heavy volume of 209,305 contracts. Total open interest increased by 2,583 contracts, which relative to volume is approximately 45% less than average. However, the February contract accounted for loss of 5,832 of open interest, which makes the total open interest increase more impressive (bullish).

As this report is being compiled on January 14, February gold is trading $3.40 higher and has made a daily high of 1244.60, which is 10 cents above yesterday’s high.Considering the strength in the dollar, weakness in crude oil and weak equities, the gold market is performing admirably. Gold should be traded from the long side only.

Silver: On January 13, March silver generated a short-term buy signal, but remains on an intermediate term sell signal.

March silver advanced 59.2 cents on heavy volume of 70,528 contracts. Volume was the strongest since December 16 when March silver lost 81.1 cents on volume of 81,502 contracts and total open interest increased by 235 contracts. On December 16, March silver closed at 15.752.

On January 13, total open interest increased by a positive 1,299 contracts, which relative to volume is approximately 25% less than average, but the total open interest increase accompanied by significantly higher volume is the most positive day in silver for many months.

As this report is being compiled on January 14, March silver is trading 17.1 cents lower and has made a daily low of 16.560, which is a fraction below yesterday’s low of 16.570. For anyone looking to initiate bullish positions, we recommend the use of options due to silver’s volatility. We think higher prices are in store.

Cocoa:

March cocoa lost $3.00 on volume of 24,918 contracts. Total open interest increased by a massive 4,509 contracts, which relative to volume is approximately 470% above average meaning a battle ensued between buyers and sellers and neither side was able to move the market much by the close. The March contract accounted for loss of 236 of open interest.

As we have said in previous reports, we need to see cocoa generate an intermediate term buy signal before we can get enthusiastically bullish on the commodity. Consistently, cocoa has failed to do this, and in our estimation is a potential danger sign to anyone long the market. In order for March cocoa to generate an intermediate term buy signal, the low the day must be above OIA’s key pivot point for January 14 of 2991. Stand aside.

Coffee:

March coffee advanced 20 ticks on heavy volume of 33,297 contracts. Volume fell from January 12 when March coffee lost 3.30 cents on volume of 39,390 contracts and total open interest declined by 847 contracts. On January 13, total open interest increased by 908 contracts, which relative to volume is average. The March contract accounted for loss of 1,483 of open interest, which makes the total open interest increase (constructive).

As this report is being compiled on January 14, March coffee has closed 1.7985, up 2.90 cents. On January 9, March coffee generated a short-term buy signal, but remains on an intermediate term sell signal. Setbacks are buying opportunities. We recommend the use of options due to the volatility of the market.