For Bloomberg access:{OIAR<GO>}

Soybeans:

March soybeans lost 18.25 cents on volume of 7875 contracts on volume of 259,717 contracts. Total open interest increased by 7,875 contracts, which relative to volume is approximately 20% above average. The open interest increases were strong across the board with the March 2015 through November 2015 gaining open interest.

Yesterday, March soybeans made a new low for the move at 9.85 1/4, which is the lowest print since 9.79 3/4 made on October 27. On January 2, OIA announced that March soybeans generated a short-term sell signal and had already been on an intermediate term sell signal. We have no recommendation.

Soybean meal:

March soybean meal lost $8.80 on volume of 95,523 contracts. Total open interest increased just 33 contracts. The March contract lost 1,734 of open interest, July 2015 -324. As this report is being compiled on January 16, March soybean meal is trading 1.50 higher and has made a new low for the move at 324.30. Though it has come close, March soybean meal has yet to generate an intermediate term sell signal.

This will occur if the high of the day is below OIA’s key pivot point of 336.10. The daily high thus far has been 329.00, which increases the likelihood that an intermediate term sell signal will be generated on January 16. In the report of January 5, OIA recommended bearish positions, and these are solidly profitable. Lower stops to protect profits because a counter trend rally could occur at any time.

Soybean oil:

March soybean oil advanced 17 points on volume of 123,660 contracts. Total open interest declined by 2,228 contracts, which relative to volume 25% below average. The March contract accounted for loss of 2,618 of open interest, May 2015-83. As this report is being compiled on January 16, March soybean oil is trading 25 points higher and has made a daily low of 32.77 which is below OIA’s key pivot point of 32.84.

March soybean oil must make a daily low above the pivot point for the rally to continue. On January 6, March soybean oil generated a short-term buy signal and an intermediate term buy signal on January 9. As we have pointed out in previous reports, our concern is the large contingent of managed money longs, which makes it vulnerable to a setback if the rest of the bean complex continues to head lower as we expect.

Corn:

March corn lost 1.00 cent on fairly heavy volume of 307,496 contracts. Volume shrank from January 14 when March corn lost 4.75 cents on volume of 437,227 contracts and total open interest increased by 8,621 contracts. On January 15, total open interest increased by 14,376 contracts, which relative to volume is approximately 75% above average meaning a battle occurred between buyers and sellers and sellers were able to move the market fractionally lower by the close.

There were open interest increases from March 2015 through March 2017 contracts. Total open interest declines have been rarities and the consistent open interest increases indicates there is a major difference of opinion between buyers and sellers regarding the direction of corn prices. On January 14, March corn generated a short-term sell signal, but remains on an intermediate term buy signal. We have no recommendation.

Chicago wheat: We are suspending coverage on Chicago wheat until we see a trading opportunity or signal change. March Chicago wheat generated a short-term sell signal on January 2 and an intermediate term sell signal on January 14.

WTI crude oil:

February WTI crude oil lost $2.23 on huge volume of 1,321,981 contracts. Volume traded on January 15 was the highest of 2015 and 2014.Total open interest on January 14 declined by 16,795 contracts, which relative to volume is approximately 45% less than average. The February contract accounted for loss of 27,295 of open interest.

As this report is being compiled on January 16, March WTI is trading $1.53 higher, but has not taken out yesterday’s high of 51.27. This afternoon, the COT report will be released and we will have a better idea of how managed money is positioned, especially since we have seen massive open interest increases over the past week. Stand aside.

Natural gas:

February natural gas lost 7.5 cents on very heavy volume of 611,043 contracts. Volume shrank from January 14 when February natural gas advanced 29.0 cents on volume of 687,062 contracts and total open interest increased by 19,859 contracts. On January 15, total open interest increased only 1,823 contracts, which is minuscule and dramatically below average. However, the February contract lost 8,411 of open interest, which makes the minor increase of open interest more impressive (bearish).

As this report is being compiled on January 16, February natural gas is trading 4.4 cents lower and has made a daily low with 3.024, which takes out yesterday’s low of 3.057. During the time natural gas was rallying, we cautioned clients to remain on the sidelines because natural gas had not generated a short-term buy signal.Unless there is a massive cold snap in the week ahead, we expect natural gas prices to drift lower and test the low print of 2.783 made on January 12. Stand aside.

Gold:

February gold advanced $30.30 on extremely heavy volume of 322,426 contracts. Volume was the strongest since December 1 when February gold advanced $42.60 on volume of 370,132 contracts and total open interest declined by 834 contracts. On January 15, total open interest increased by a massive 18,829 contracts, which relative to volume is approximately 140% above average meaning that aggressive new buyers were entering the market in large numbers and driving prices to a new high for the move (1267.20).

As this report is being compiled on January 16, February gold is trading $11.20 higher and has made a new high for the move at 1282.40, which is the highest print since September 2, 2014 when February gold made a high of 1291.00. The market has come very far very fast, which is not a surprise to those of you who read our work. In previous reports, we thought gold prices were headed higher and that impending quantitative easing in euro land was going to be the catalyst for higher prices.

However, the market is overbought, and the massive open interest increase in yesterday’s trading may be the first indication that a correction is imminent.We suspect that open interest will be up sharply on January 16 as well. We have encouraged clients to trade gold from the long side ever since it generated a short-term buy signal on December 11 and an intermediate term buy signal on January 13. 

Platinum: April platinum will generate an intermediate term buy signal on January 16 after generating a short-term buy signal on April 12.

April platinum advanced $23.80 on heavy volume of 20,646 contracts. Volume was the strongest since December 29 when April platinum lost $17.20 on volume of 21,109 contracts. On January 15, total open interest increased just 15 contracts, which is a definite disappointment considering the magnitude of the advance. The April contract accounted for loss of 240 of open interest. As this report is being compiled on January 16, April platinum is closed at $1269.40, and will generate an intermediate term buy signal, because the low the day is above OIA’s key pivot point for January 16 of 1241.90.

Silver:

March silver advanced 11.4 cents on volume of 63,190 contracts. Total open interest increased of 77 contracts. The March contract accounted for loss of 462 of open interest. As this report is being compiled on January 16, March silver is trading 61.3 cents higher and has made a new high for the move at $17.865, which takes out the previous high print of 17.810 made on October 15.

On January 13, OIA announced that March silver generated a short-term buy signal and an intermediate term buy signal will be generated if the low of the day is above OIA’s key pivot point for January 16 of $17.144. We have been encouraging clients to trade silver from the long side and use options for risk mitigation due to the volatility.

Cocoa:

March cocoa lost $15.00 on volume of 17,160 contracts. Total open interest increased by 493 contracts, which relative to volume is average. The March contract accounted for loss of 1,009 of open interest. As this report is being compiled on January 16, March cocoa has closed at 2942, down $35.00.

We have been telling clients the past couple of weeks that until March cocoa generated an intermediate term buy signal, we recommended a stand aside posture. 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 16 of 2991. Stand aside.

Coffee:

March coffee lost 3.20 cents on volume of 26,415 contracts. Total open interest declined by 556 contracts, which relative to volume is approximately 20% below average, however it is positive to see open interest decline along with prices. The March contract accounted for loss of 915 of open interest.

As this report is being compiled on January 16, March coffee is closed at 1.7100, down 6.25 cents. At this juncture, it appears that the short term buy signal generated on January 9 was false and the signal is going to be reversed. For this to occur, the high of the day must be below OIA’s key pivot point for January 16 of 1.7245.

Sugar: On January 16, March sugar generated a short-term buy signal

March sugar advanced 42 points on volume of 121,906 contracts. Volume was the strongest since January 6 when March sugar advanced 61 points on volume of 125,468 contracts and total open interest declined by only 439 contracts. On January 15, total open interest increased by 2,192 contracts, which relative to volume is approximately 25% less than average, however the May 2015 at October 2015 contracts lost 2349 of open interest, which makes the total open interest increase more impressive (bullish).

The advance on January 6 and 15 clearly indicate that speculators are digging in and refusing to liquidate. This is very important because according to the most recent COT report managed money is short sugar by ratio of 1.39:1. This means there is plenty of buying power to support an upside move.

As this report is being compiled on January 16, March sugar has closed at 15.33, down 2 points on the day and has made a daily high of 15.49, which is the highest print since 15.51 made on December 11, 2014. Usually, after the generation of a buy signal, the market has a tendency to pullback from 1-3 days and this is the opportunity to initiate bullish positions.