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Soybeans:

August soybeans lost 10.00 cents and the November contract declined by 12.75 on total volume of 174,544 contracts. Total volume rose from July 28 when August and November soybeans advanced 24.25 cents on volume of 162,404 contracts and total open interest declined by 9,119 contracts.On July 29, total open interest declined by 11,645 contracts, which relative to volume is approximately 160% above average meaning that liquidation was extremely heavy on the decline. The August contract lost 6,004 of open interest and enters 1st notice day this week. The September contract lost 1,351 of open interest and November -5,901 indicating there was liquidation across the board. As this report is being compiled on July 30, August soybeans are trading 1.25 higher while the November contract is trading 5.25 lower. Expect to see a continuation of tepid rallies and continued declines until there is a change in psychology, which could come from a drastic change in the weather outlook, or an unusually large soybean sale.Stand aside.

Corn:

September corn lost 6.25 cents on volume of 215,360 contracts. Volume increased substantially from July 28 when September corn advanced 4.75 on volume of 177,084 contracts and total open interest declined by 6,438 contracts. On July 29, total open interest increased by a massive 12,040 contracts, which relative to volume is approximately 120% above average meaning that aggressive new short sellers continued to enter the market to drive prices lower.The September contract lost 8,488 of open interest, which makes the total open interest increase more impressive (bearish). It is rapidly becoming apparent to market participants that the current corn crop may be one of the largest in recent memory, and as a consequence there is no reason to be long. As this report is being compiled on July 30, September corn is trading 1.25 cents lower and has made a daily low of 3.57 3/4, which is above the contract low of 3.56 1/2 made on July 24. Despite the bearish outlook, we recommend a stand aside posture.

Chicago wheat:

September Chicago wheat lost 14.75 cents on volume of 99,650 contracts. Volume was the highest since July 24 when September Chicago wheat lost 2.00 cents on volume of 100,368 contracts and total open interest increased by 378 contracts.On July 29, total open interest increased by 5179 contracts, which relative to volume is approximately 100% above average meaning that new short sellers aggressively entering the market and drove prices down to a new contract low (5.18 1/2). This took out the previous contract low of 5.20 1/4 made on July 23. As this report is being compiled on July 30, September Chicago wheat is trading 4.75 higher and has not taken out yesterdays contract low. Stand aside.

Live cattle:

October live cattle closed unchanged on volume of 43,381 contracts. Total open interest increased by 1,781 contracts, which relative to volume is approximately 55% above average meaning that a battle ensued between longs and shorts and neither side was able to move the market. The August contract lost 1,753 of open interest. As this report is being compiled on July 30, October cattle is trading 90 points higher, but has not taken out the all-time high of 1.60750 made on July 28.Although there appears to be buyer resistance at current levels, we see no top in the market, and think the advance can continue. However, one caveat is that hog prices have collapsed, and this will provide competition for beef during the summer grilling season.We think it is unwise to enter bullish positions at current levels. Stand aside.

Lean hogs: October lean hogs will likely generate an intermediate term sell signal on July 30 after generating a short-term sell signal on July 24.

WTI crude oil:

September WTI crude oil lost 70 cents on volume of 542,554 contracts. Volume increased substantially from July 28 when September WTI lost 42 cents on volume of 407,793 contracts and total open interest declined by 1,809 contracts.Also increasing substantially was open interest on July 29 having gained 13,654 contracts, which relative to volume is average,but is a large number nonetheless. The September contract lost 1,720 of open interest.

During the month of July when September WTI prices slid from a high of 105.40 on July 1 down to 98.68 on July 15 and subsequent moves higher and lower, there has never been an open interest increase of the magnitude seen on July 29. As a matter of fact there have been very few open interest increases on price declines.In our view, this signifies that market participants are becoming bearish on WTI at long last.Today’s decline of inventories announced by the Energy Information Administration marked the 5th week in a row that crude inventories have declined.

In short, during the past 5 weeks, crude inventories have declined by a total of 20.8 million barrels, yet prices have been declining for the past 5 weeks. September WTI topped out on June 23 (106.60).This is an example of how fundamental analysis can lead the most intelligent speculator astray.As this report is being compiled on July 30, September WTI is trading 78 cents lower and has made a new low for the move at 99.90, which takes out yesterday’s low of 100.37.In the report of July 21, we recommended the initiation of short call positions, and this is profitable. Continue to hold the position.

From the July 22 report:

“The interesting part of trading on July 23 is that the Energy Information Administration announced a decline of 4.0 million barrels yet prices are only fractionally higher on the day. This is the 4th week in a row that inventories have declined. Last week there was a decline of 7.5 million barrels. The previous week there was a decline of 2.4 million barrels. Four weeks ago, inventory declined by of 3.2  million barrels..This should be bullish, but it is not having a major impact on the market.”

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.7 million barrels from the previous week. At 367.4 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories increased by 0.4 million barrels last week, and are in the upper half of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 0.8 million barrels last week but are near the lower limit of the average range for this time of year. Propane/propylene inventories rose 1.8 million barrels last week and are near the upper limit of the average range. Total commercial petroleum inventories decreased by 0.5 million barrels last week. 

Natural gas:

September natural gas advanced 5.9 cents on volume of 202,442 contracts. Total open interest increased by 1,007 contracts, which relative to volume is approximately 75% below average. The August contract lost 6,147 of open interest, which makes the total open interest increase somewhat bullish. As this report is being compiled on July 30, natural gas is trading 6.9 cents lower, however it has not taken out the most recent low of 3.725 made on July 28.We expect to see managed money assume a net short position in the upcoming COT report, and think that natural gas will be one of the best trades of 2014 on the long side. As we have said before, the market needs to do more backing and filling before a rally can begin. Stand aside.

Copper:

September copper lost 2.45 cents on volume of 41,741 contracts. Total open interest declined by 2,036 contracts, which relative to volume is approximately 95% above average meaning that liquidation was very heavy on the decline. As this report is being compiled, September copper is trading 1.90 higher on low volume. September copper remains on a short and intermediate term buy signal. Stand aside.

Gold:

August gold lost 5.00 on extremely heavy volume of 354,549 contracts.Volume traded on July 29 took out the previous 2014 high of 351,192 contracts on May 27 when December 2014 gold closed at $1266.40. On July 29, total open interest declined by a massive 13,588 contracts, which relative to volume is approximately 50% above average meaning that liquidation was extremely heavy as market participants switched out of the August contract and into the December contract. We will be using the December gold contract from now on in our reports. As this report is being compiled on July 30, December gold is trading $3.10 lower on the day and has made a daily low of 1293.20, which is above the most recent low of 1291.00 made on July 25. On July 24, December gold generated a short-term sell signal, and as of July 30 still remains on an intermediate term buy signal. Stand aside.

Silver:

September silver gained 1.6 cents on volume of 40,071 contracts. Total open interest increased by 183 contracts, which relative to volume is approximately 75% below average. As this report is being compiled on July 30, September silver is trading 2.7 cents higher on the day. On July 28, September silver generated a short-term sell signal, but remains on an intermediate term buy signal. Stand aside.

Euro:

The September euro lost 24 pips on volume of 134,046 contracts. Total open interest declined by 2,862 contracts, which relative to volume is approximately 20% below average. As this report is being compiled on July 30, the September euro is making a new low for the move at 1.3369, which is the lowest print since 1.3359 made on November 12, 2013. All currencies that comprise the dollar index are trading lower as well. On July 16, the September dollar index generated a short and intermediate term buy signal.

British pound:

The September British pound lost 35 pips on volume of 75,983 contracts. Total open interest increased by 495 contracts, which relative to volume is approximately 60% below average. As this report is being compiled on July 30, the September pound is trading 41 pips lower and has made a daily low of 1.6883, which is the lowest print since 1.6825 made on June 13, 2014. The pound is showing uncharacteristic weakness and has declined every day since June July 16 through July 30, with only one day showing a positive close (July 28).The pound should find support between 2 of OIA’s key pivot points: 1.6824-1.6873. Stand aside.

Canadian dollar: Is likely that the September Canadian dollar will generate an intermediate term sell signal on July 30 after generating a short-term sell signal on July 28.

The September Canadian dollar lost 43 pips on volume of 52,487 contracts. Total open interest declined by 1660 contracts, which relative to volume is approximately 25% above average. For the past 2 days, the Canadian dollar has experienced a massive decline of open interest totaling 5397 contracts while the September Canadian dollar has declined only 33 pips. As this report is being compiled, the September Canadian dollar is trading 35 pips lower and has made a new low for the move at 91.48, which is the lowest print since 91.09 made on June 18. Stand aside.

Coffee:

September coffee lost 40 points on healthy volume of 22,496 contracts. Total open interest declined by 332 contracts, which relative to volume is approximately 40% below average. The September contract accounted for loss of 1878 of open interest, and the open interest increases in the forward months served to offset much of this decline. As this report is being compiled on July 30, September coffee is trading 1.90 higher and has closed at 1.8250, which is the highest close since May 29 (1.8435).Continue to hold bullish positions recommended in the July 24 report.