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Soybeans:

August soybeans lost 16.50 cents while November was unchanged on total volume of 195,855 contracts. Volume increased from July 14 when August soybeans advanced 1.25 cents and the November contract gained 11.25 cents on volume of 160,717 contracts and total open interest increased by 3,884 contracts. On July 15, total open interest increased by 1,383 contracts, which relative to volume is approximately 65% below average. The August contract lost 1,951 of open interest and there were open interest increases in the September 2014 through January 2015 contracts. As this report is being compiled on July 16, August soybeans are trading 8.25 cents higher and have made a daily high of 12.03 1/2, which is above yesterday’s high of 11.95, but below the high of July 14 of $12.11 1/2. The November contract is trading 12.25 cents higher on the day, which is the highest price for the November contract since July 10 (11.15). As we said in previous reports, we expect tepid rallies, and soybeans need a major weather scare to change the prevailing mood. Stand aside.

Corn:

September corn lost 7.50 cents on total volume of 283,367 contracts. Volume increased substantially from trading on July 14 when September corn advanced 3.25 on volume of 206,346 contracts and total open interest declined by just 9 contracts. However, volume was below that of July 11 when September corn lost 8.00 cents on volume of 296,815 contracts and total open interest increased by a massive 11,000 contracts. On July 15, total open interest increased again, this time by 7,043 contracts, which relative to volume is average. The September contract accounted for loss of 1,276 of open interest, which makes the total open interest increased more impressive (bearish). As this report is being compiled on July 16, September corn is trading 4.50 higher and has made a daily high of 3.86 1/4, which is the highest print since July 11 (3.88 1/2).Tepid rallies should continue until the prevailing zeitgeist changes. Stand aside.

Wheat:

September wheat closed unchanged on total volume of 62,918 contracts. Total open interest increased by a massive 4727 contracts, which relative to volume is approximately 210% above average meaning that a battle occurred between longs and shorts and neither side was able to move the market much in either direction. There were open interest increases in the September 2014 through September 2015 contracts. As this report is being compiled on July 16, September wheat is trading 1.50 cents higher and has made a daily high of 5.44 3/4, which is the highest print since July 11 (5.49 3/4). Stand aside.

Live cattle:

August live cattle gained 77.5 points on total volume of 55,964 contracts. Total open interest increased just 37 contracts. The August contract lost 4,183 of open interest. Yesterday’s action is indicative of a lack of enthusiasm for the long side at this particular time. That there was  insufficient buying in the forward months to offset the decline in the August contract showed an unwillingness by market participants to make commitments as prices moved higher. As this report is being compiled on July 16, August cattle is trading 1.075 cents lower and has made a daily low of 1.47275, which is the lowest print since July 14 (1.47275). The market is under going a consolidation phase, and unless August cattle generates a short-term sell signal, the market still has a good chance of challenging the old all-time highs made on July 7 (1.56475). At this juncture, we see the market trading sideways to lower. Stand aside.

WTI crude oil:

August WTI crude oil lost 95 cents on extremely heavy volume of 839,302 contracts. Volume was the strongest since June 12 when August WTI crude oil advanced $2.13 on volume of 896,614 contracts and total open interest increased by 24,318 contracts. On July 15, total open interest declined only 2,431 contracts, which is minuscule and dramatically below average. The August contract lost 11,206 of open interest.

From July 3 when August WTI crude oil generated a short-term sell signal through July 15, the August contract lost $4.10, and made a low (99.01), which was 5.05 lower than the July 3 close. During this time, total open interest declined only 28,247 contracts.The minor open interest decline from July 3 through July 15 is indicative of longs who refuse to liquidate, and the latest COT report confirms this.As this report is being compiled on July 16, August WTI is trading $1.19 higher and has made a high of 101.39, which is slightly above yesterday’s high of 101.06 and the July 14 high of 101.19.

The interesting part of trading on July 16 is that the Energy Information Administration announced a decline of 7.5 million barrels in crude oil inventories. Yet the market has only moved a bit more than a dollar higher on low volume. Another factor to consider is that the decline in inventories in today’s report is the 3rd week in a row that crude oil inventories have declined. The EIA report of July 1 showed an inventory decline of 3.2  million barrels and the July 8 report showed a decrease of 2.4 million barrels.This should be bullish, but it is not having a major impact on the market. We want to see more of a rally before recommending bearish positions.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 7.5 million barrels from the previous week. At 375.0 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 0.2 million barrels last week, and are in the middle of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 2.5 million barrels last week but are near the lower limit of the average range for this time of year. Propane/propylene inventories rose 3.2 million barrels last week and are near the upper limit of the average range. Total commercial petroleum inventories increased by 1.2 million barrels last week.

Natural gas:

August natural gas lost 5.00 cents on volume of 212,563 contracts. Total open interest declined by 6174 contracts, which relative to volume is approximately 20% above average.The August contract lost 11,404 of open interest. From June 16 when natural gas topped through July 15, August natural gas has declined by 62.1 cents while total open interest has declined by 30,525 contracts.The decline of open interest parallels the decline in the long to short ratio of natural gas. It is abundantly clear that market participants do not feel comfortable shorting natural gas, and the net long position of manage money may turn into a net short position, not because of new shorts, but rather from the decrease in the long positions.We think there will be a terrific opportunity on the long side of natural gas, but this is in the future. Stand aside.

Euro: The September euro will generate a short-term sell signal on July 16.It remains on an intermediate term sell signal.

The September euro lost 51 pips on fairly heavy volume of 211,064 contracts. Volume exceeded the number traded on June 13 when the September euro lost 30 pips on volume of 203,091 contracts and total open interest increased by 1,738 contracts. On July 15, total open interest increased by a massive 14,446 contracts, which relative to volume is approximately 160% above average meaning that aggressive new short sellers were entering the market and driving prices to the lowest level since June 19.As this report is being compiled on July 16, the September euro is trading 45 pips lower and has made a daily low of 1.3524, which is the lowest print since June 19 (1.3517). Although the euro looks very weak, we recommend waiting for a rally before initiating bearish positions.

Swiss franc: The September Swiss franc will generate a short-term sell signal on July 16. It remains on an intermediate term sell signal.

The September Swiss franc lost 49 pips on heavy volume of 46,568 contracts.Volume was the highest since June 19 when 49,946 contracts were traded and the September Swiss franc closed at 1.1189. As this report is being compiled on July 16, the September Swiss franc is trading 35 pips lower and has made a new low for the move at 1.1129, which is the lowest print since June 18 (1.1121). Yesterday, we recommended that bullish positions in the September Swiss franc and the Swiss franc-euro cross trade be liquidated. Clients should be on the sidelines.

Dollar index: The September dollar index will generate a short and intermediate term buy signal on July 16.

Gold:

August gold lost $9.60 on heavier than normal volume of 203,408 contracts. Volume declined from July 14 when August gold lost 30.70 on volume of 240,101 contracts and total open interest declined by 3,845 contracts. On July 15, open interest declined by 980 contracts, which relative to volume is approximately 75% below average. From June 20 (which was the day after the major move in gold) through July 15, total open interest increased 21,585 contracts, however, August gold lost $19.50 in this time frame. This is bearish open interest action relative to the price decline from June 20 through July 15.We think gold is vulnerable to further downside because speculators who acquired gold at higher prices will be forced to liquidate as prices move lower. Stand aside

Silver:

September silver lost 2.5 cents on volume of 56,480 contracts. Total open interest increased by 358 contracts, which relative to volume is approximately 60% below average. As this report is being compiled on July 16, September silver is trading 10.2 cents lower and has made a new low for the move at 20.63, which takes out yesterday’s low of 20.67. Clients should have liquidated bullish positions yesterday and be on the sidelines. The silver trade proved to be very lucrative, but it appears silver wants to go lower for now. We recommend a sideline stance until a new trading opportunity presents itself.