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Soybeans:

March soybeans lost 9.75 cents on volume of 190,263 contracts. Total open interest increased by 3,045 contracts, which relative to volume is approximately 35% less than average. The March contract accounted for loss of 3485 of open interest. As this report is being compiled on January 21, March soybeans are trading 4.00 cents lower, but have not taken out yesterday’s low. On January 2, March soybeans generated a short-term sell signal and remains on an intermediate term sell signal. It appears that a move to contract lows is inevitable. We have no recommendation.

Soybean meal:

March soybean meal advanced 30 cents on volume of 99,132 contracts. Total open interest increased by 554 contracts, which relative to volume is approximately 70% below average. The March contract accounted for loss of 3,373 of open interest. As this report is being compiled on January 21, March soybean meal is trading $1.20 higher on the day. Maintain bearish positions originally recommended in the January 5 report, but have stops in place whether actual or mental to protect profits. Contract lows appear to be inevitable.March soybean meal generated a short-term sell signal on January 2 and an intermediate term sell signal on January 16.

Soybean oil:

March soybean oil lost 55 points on volume of 105,075 contracts. Total open interest increased by 890 contracts, which relative to volume is approximately 55% below average. The March contract accounted for loss of 1,607 of open interest. Yesterday, March soybean oil made a low of 32.70, which is below OIA’s key pivot point of 32.84. In order for the rally to continue, March soybean oil must make a daily low above the pivot point.

As this report is being compiled on January 21, March soybean oil is trading 44 points lower and has made a daily low of 32.33, considerably below the pivot point. The low on January 21 is above the previous low print of 32.01 made on January 5. In past reports, we expressed our trepidation about the very large long position of managed money and fundamentals, which are not terribly positive, especially in the light of weak soybean and soybean meal prices.

March soybean oil remains on a short and intermediate term buy signal.For the short-term buy signal to reverse, the high of the day must be below OIA’s key pivot point for January 21 of 32.21. For the intermediate term buy signal to reverse, the high of the day must be below OIA’s key pivot point for January 21 of 32.73.Stand aside.

Corn:

March corn advanced 3.25 cents on volume of 218,408 contracts. Total open interest increased by 1,908 contracts, which relative to volume is approximately 45% below average. The March contract accounted for loss of 2,912 of open interest. As this report is being compiled on January 21, March corn is trading 2.25 cents lower on the day. On January 14, March corn generated a short-term sell signal, but remains on an intermediate term buy signal. Ever since generating the sell signal the market has held up fairly well, but we expect a breakdown of this pattern in the weeks ahead. We have no recommendation.

WTI crude oil: Due to the MLK holiday, the EIA petroleum report will be released tomorrow.

March WTI crude oil lost $2.66 on heavy volume of 856,378 contracts. Total open interest increased by 5,030 contracts, which relative to volume is approximately 65% below average. However, the February contract accounted for loss of 28,594 of open interest, which makes the total open interest increase more impressive (bearish). As this report is being compiled on January 21, March WTI crude oil has advanced 1.20 and made a daily high of 48.20, which is below yesterday’s high of 48.25 and the high of 49.34 made on January 16. Stand aside.

Natural gas:

February natural gas lost 29.6 cents on volume of 497,953 contracts. Total open interest increased by 9,014 contracts, which relative to volume is approximately 25% below average. The February contract lost 10,063 of open interest, which makes the total open interest increase more impressive (bearish). As this report is being compiled on January 21, March natural gas is trading 4.1 cents higher on the day. March natural gas remains on a short and intermediate term sell signal. Stand aside.

Gold:

February gold advanced $17.30 on heavy volume of 277,963 contracts. Total open interest increased by 5,742 contracts, which relative to volume is approximately 20% below average. However, the February contract lost 2,531 of open interest, which makes the total open interest increased more impressive (bullish). Yesterday, February gold made a new high for the move at 1297.20 and on January 21 has made another new high at 1307.00, which takes out the previous high print of $1305.15 made on August 18, 2014.

The market has gotten ahead of itself, and is vulnerable to a sharp setback. However, tomorrow is the much ballyhooed ECB meeting and anything can happen.We are reprinting the report from the January 11 Weekend Wrap, and on the Friday before the report, February gold closed at $1216.10.

From The January 11 Weekend Wrap:

“We have been surprised by the sturdy performance of gold in the face of a sharply rising dollar and declining petroleum prices. The rising dollar index was only blunting the advance of gold during calendar year 2014, not sending it sharply lower. During 2014, the dollar index rose by 13.40% while gold on the continuation chart lost 1.98%, or $21.50. Additionally, WTI crude oil lost 40.96% during 2014 and the Greenhaven Continuous Commodity index (an indication of future commodity deflation) lost 11.05%. The 10 year Treasury Note gained 1.40 %. In short, the stats which generally are cited for negatively affecting the price of gold did not have a major adverse impact on the yellow metal..This is one reason why we think the worst is over for gold and that higher prices are ahead.”

“Thus far in the 1st quarter, we are seeing a familiar pattern of a rising dollar, a declining crude oil price and yet gold continues to rally, up 3.39% year to date. Silver, which has been the weak sister has shown new strength in 2015 having gained 5.42% year to date.”

“The ECB is meeting on January 22 , and we anticipate that precious metals will continue to advance. If The ECB fails to take strong action to stimulate European economies, we think the euro will rally sharply and the dollar will fall just as dramatically.This could cause a spike move higher in the precious metals. On the other hand, if the ECB decides upon vigorous stimulus, we think this could be a positive development for the precious metals as well. It appears the euro is discounting additional stimulus.”

“Additionally, the Greek elections will be held shortly after the ECB meeting and this will be another event that will have a major impact on the precious metals.This may decide whether Greece remains a member of the eurozone. As we have said in previous reports, February gold must make lows above our key pivot points of $1212.60 and 1218.30 to continue its advance. This may come in the form of a major move to the upside in which volatility increases dramatically.”

Silver: On January 20, March silver generated an intermediate term buy signal, after generating a short-term buy signal on January 13.

March silver advanced 20.6  cents on volume of 63,905 contracts. Total open interest declined by 1014 contracts, which relative to volume is approximately 40% below average.The March contract accounted for loss of 1,327 of open interest. As this report is being compiled on January 21, March silver is trading sharply higher, up 24.4 cents, or +1.36% versus February gold, which is down 0.16%.

Additionally, March silver has made a new high for the move at 18.505, which is the highest print since $18.545 made on September 19, 2014. Although, the improvement in the technical picture of the precious metals is not on the media’s radar screen yet, it might surprise many to know that year to date, silver is outperforming gold by a significant margin. For example, March silver has advanced 14.68% through January 20 while February gold increased just 9.33%. April platinum has gained 5.04 % year to date. 

Cocoa:

March cocoa lost $17.00 on volume of 18,597 contracts. Total open interest declined by a massive 2,308 contracts, which relative to volume is approximately 420% above average meaning liquidation was extremely heavy on the modest decline. The March contract accounted for loss of 2,658 of open interest. As this report is being compiled on January 21, March cocoa has closed at 2852, down $73.00. This is the lowest close since December 11, 2014 (2854). We have been warning clients away from the long side due to cocoa’s inability to generate an intermediate term buy signal. It now appears certaint that a short-term sell signal will be generated tomorrow. In order for this to occur, the high for the day must be below OIA’s key pivot point for January 21 of 2917.

Coffee: March coffee will generate a short-term sell signal on January 21, which reverses the short-term buy signal of January 9. March coffee remains on an intermediate term sell signal.

March coffee lost 6.70 cents on volume of 34,756 contracts. Volume was the strongest since 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 20, total open interest declined by 1444 contracts, which relative to volume is approximately 55% above average meaning that liquidation was heavy on the sizable decline. The March contract accounted for loss of 1,554 of open interest, May 2015-353. As this report is being compiled on January 21, March coffee is trading 3.00 cents lower and has made a daily low of 1.6125. Stand aside.

Sugar: On January 21, March New York sugar generated an intermediate term buy signal, after generating a short-term buy signal on January 16. The market is massively overbought bought and is due for a major pullback.

March sugar advanced 50 points on heavy volume of 150,861 contracts.Volume was the strongest since November 11, 2014 when 161,584 contracts were traded and March sugar advanced 57 points. On January 20, total open interest increased by 2,854 contracts, which relative to volume is approximately 20% below average. However, the March contract lost 160 of open interest, October 2015 -252, which makes the total open interest increase more impressive (bullish).

During the past 3 sessions beginning on January 15 through January 20, March sugar has advanced 90 points while total open interest has declined only 2915 contracts.This indicates that speculators have not begun to panic about the rise in sugar prices.

As this report is being compiled on January 21, March sugar made a high of 16.16 and a low of 15.78, which is above OIA’s key pivot point for January 21 of 15.75 for the generation of an intermediate term buy signal. We have been advising a sideline stance, and sugar may be experiencing one of its typical bear market rallies. Also, volume will exceed 190,000 contracts and the market has made a spike high at 16.16 and sold off from the high to close at 15.92, up 9 points. This likely indicates a top or interim top. Stand aside.