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Soybeans:

March soybeans advanced 4.00 cents on volume of 110,423 contracts. Total open interest declined by 3,798 contracts, which relative to volume is approximately 40% above average meaning that liquidation was heavy on the modest advance The January contract accounted for loss of 1,765 of open interest, March 2015 -4,435, May 2015-606.

As this report is being compiled after the release of USDA report on January 12, March soybeans are trading sharply lower, down 28.25 cents and is making new lows as this report is being written.On January 2, March soybeans generated a short-term sell signal and proceeded to rally for a couple of days, which is usually the case after the generation of a sell signal. After this, we cautioned clients that soybeans remained on a sell signal (despite the rally) because it was unable to make daily lows above our pivot points after the sell signal.We have no recommendation at this juncture.

Soybean meal:

March soybean meal advanced $1.90 on volume of 46,801 contracts. Total open interest declined by 1,904 contracts, which relative to volume is approximately 55% above average meaning that liquidation was heavy on the modest advance. The January contract accounted for loss of 497 of open interest, March 2015 -3,112.

As this report is being compiled on January 12 after the release of USDA report, March soybean meal is trading sharply lower, down $8.70 and is making new lows as the report is being written. On January 2, OIA announced that March soybean meal generated a short-term sell signal and on January 5, we recommended the initiation of bearish positions.

For futures traders, we recommended using use the penetration of 358.00 as an exit point for these positions. Since making the recommendation, March soybean meal has not penetrated 358.00.In order for March soybean meal to generate an intermediate term sell signal, the high of the day must be below OIA’s key pivot point for January 12 of $336.60. Thus far in trading on January 12 the low has been 340.40, which is slightly above the low for the move of 340.10 made on January 5. Maintain bearish positions and futures traders should lower protective buy stops to protect profits.

Soybean oil: On January 9, March soybean oil generated an intermediate term buy signal, after generating a short-term buy signal on January 6.

March soybean lost 8 points on volume of 72,721 contracts. Total open interest declined by 1,559 contracts, which relative to volume is approximately 15% below average. The January contract lost 346 of open interest, March 2015-3116.As this report is being compiled after the release of USDA report, March soybean oil is trading 40 points lower and has made a daily low of 33.72, the lowest print since 32.69 January 7.

In trading on January 12, March soybean oil has made a high of 34.00, which is only 5 points above Friday’s high of 33.95. As we stated in the weekend report, the market is overbought and loaded with speculative longs. Managed money is long at a stratospheric level, especially compared to much higher price levels during 2014. We encourage you to review the weekend report regarding soybean oil. Stand aside.

Corn:

March corn advanced 6.00 cents on heavy volume of 270,848 contracts. Volume was the strongest since December 16 when March corn lost 2.50 cents on volume of 285,583 contracts and total open interest increased by 7,996 contracts. On January 9, open interest increased again, this time by 6,792 contracts, which relative to volume is average. However, the March 2015 contract lost 2,701 of open interest, May 2015 -121, which makes the total open interest increase more impressive (bullish).

As this report is being compiled after the release of USDA report, March corn is trading 1.75 cents higher and has made a daily high of 4.07, which is the highest print since 4.0 7 1/4 made on January 7. Additionally, it has made a daily low of 3.90, which is the lowest print since 3.89 1/4 made on December 10.In order for March corn to continue its uptrend, it must make a low above OIA’s key pivot point for January 12 of 4.02 3/8. March corn remains on a short and intermediate term buy signal. We have no recommendation.

Chicago wheat:

March Chicago wheat lost 3.25 cents on volume of 84,799 contracts. Total open interest declined by 1,379 contracts, which relative to volume is approximately 35% less than average. The March 2015 contract lost 2924 of open interest, May 2015-548.

As this report is being compiled after the release of USDA report, March Chicago wheat is trading 3.00 cents lower and has made a daily low of 5.54, which is a new low for the move and the lowest price since 5.55 1/2 made on November 26.On January 2, March Chicago wheat generated a short-term sell signal, and remains on an intermediate term buy signal.

For an intermediate term sell signal to be triggered, the high of the day must be below OIA’s key pivot point for January 12 of 5.49 7/8. After the generation of a sell signal, March Chicago wheat rallied for 2 days and then resumed its downtrend.

From the January 6 report:

“After generating a short-term sell signal on January 2, March Chicago wheat has had 2 days of a counter trend rally (perfectly normal), and is now resuming its downtrend.The downtrend will be further confirmed when the March contract makes a high below OIA’s key pivot point for January 7 of 5.78 3/4. Clients should trade Chicago wheat from the bearish side only.”

Live cattle:

February live cattle closed down the 3.00 cent daily limit on total volume of 66,811 contracts. Total open interest increased just 226 contracts. However, the February contract accounted for loss of 4,782 of open interest, which makes the very minor increase of open interest more impressive (bearish). As this report is being compiled on January 12, February live cattle is trading 42.5 points lower and has made a new low for the move at 1.59850. On December 3, OIA announced that February live cattle generated a short-term sell signal and generated an intermediate term sell signal on December 15. We have no recommendation.

WTI crude oil:

February WTI crude oil lost 43 cents on volume of 899,256 contracts. Volume increased from January 8 when February WTI advanced 14 cents on volume of 812,149 contracts and total open interest increased by 16,909 contracts. On January 9, total open interest increased by 20,137 contracts, which relative to volume is approximately 10% below average. The February contract lost 31,564 of open interest, which makes the total open interest increase more impressive (bearish). As this report is being compiled on January 12, February WTI is trading $1.85 lower and has made a new contract low of 45.90. Stand aside.

Natural gas:

February natural gas advanced 1.9 cents on volume of 324,902 contracts. Total open interest declined by 1,992 contracts, which relative to volume is approximately 70% below average. The February contract accounted for loss of 11,462 of open interest. As this report is being compiled on January 12, February natural gas is trading sharply lower, down 14.9 cents and has made a new contract low of 2.783, which takes out the previous contract low made on January 2 of 2.805. Stand aside.

Gold:

February gold advanced $7.60 on volume of 178,507 contracts. Total open interest increased by 3,030 contracts, which relative to volume is approximately 35% below average. However, the February contract accounted for loss of 5,365 of open interest, which makes the total open interest increase more impressive (bullish).

As this report is being compiled on January 12, February gold is trading sharply higher, up $15.10 has made a new high for the move at 1235.20. This is the highest print since $1233.40 made on December 11. On January 12, February gold has made a low of 1217.50, which is above one of OIA’s key pivot points for January 12 of 1212.60.This increases the likelihood of a continued move higher. For gold trading strategies, contact OIA if you subscribe to OIA Direct.

For February gold to generate an intermediate term buy signal, the low the day must be above OIA’s key pivot point of 1218.50, which we expect to occur in the next day or two. Gold should be traded only from the long side.

From the January 11 Weekend Wrap:

“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.”

“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.”

Platinum: On January 12, April platinum will generate a short-term buy signal, but will remain on an intermediate term sell signal. The market should have a setback lasting 1-3 days before resuming its uptrend.

April platinum advanced $7.10 on light volume of 7067 contracts. Total open interest increased by 162 contracts, which relative to volume is approximately 10% below average.As this report is being compiled on January 12, April platinum has closed at 1241.00, and has made a daily high of 1246.60, which takes out the previous high of 1245.60 made on December 12. For April platinum to generate an intermediate term buy signal, the low the day must be above OIA’s key pivot point for January 12 of 1240.90.

Silver:

March silver advanced 3.4 cents on light volume of 35,031 contracts. Total open interest increased by 683 contracts, which relative to volume is approximately 20% below average. As this report is being compiled on January 12, March silver has closed at $16.564, which is slightly above OIA’s key pivot point for January 12 of 16.539. 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 lost $18.00 on volume of 27,056 contracts. Total open interest declined by a massive 4,774 contracts, which relative to volume is approximately 480% above average meaning liquidation was off the charts heavy on a rather modest decline. We have no explanation for the massive decline of open interest, especially since the range traded on January 9 was only  $47.00. The March 2015 contract accounted for loss of 5,151 of open interest and May 2015 2015-189.

As this report is being compiled on January 12, March cocoa has closed at 2994 and made a daily low of 2933, which is considerably below OIA’s key pivot point for January 12 of 2961. Until March cocoa makes a low above the pivot point, it will trade sideways.

Coffee: On January 9, March coffee generated a short-term buy signal, but remains on an intermediate term sell signal.

March coffee advanced 3.15 cents on volume of 37,058 contracts. Total open interest declined by 641 contracts, which relative to volume is approximately 25% below average. The March contract accounted for loss of 1,247 of open interest, September 2015 -208.We are not terribly surprised to see a decline of open interest, especially since coffee has rocketed straight up after making its low for the move of 1.6010 on January 5. We would expect to see longs take profits and shorts head for the hills as it appears that the worst of the down slide in coffee prices is coming to a close.

After the generation of a buy signal, the market usually has a pullback that lasts from 1-3 days and this is the most opportune time to initiate bullish positions. As this report is being compiled on January 12, March coffee has had its first pullback after the buy signal and closed lower at 1.7675, down 3.30 cents.The market should have another corrective day and possibly a 3rd before it resumes its uptrend. We strongly suggest that clients use call options because coffee is extremely volatile.