The USDA will release its monthly WASDE report on July 11.

Soybeans:

August soybeans lost 15.00 cents while the November contract declined 8.00 on total volume of 130,961 contracts. Total open interest increased by 2,537 contracts, which relative to volume is approximately 20% below average. The July contract lost 2,108 of open interest, August -1,275, November +773. In the July 2 report, we mentioned that the dominant action from June 25 through July 2 was liquidation, and only 2 days when open interest increased. We should begin to see more days when total open interest increases, which would be a further sign that speculators are piling in on the short side. Ultimately, this sets the stage for a hefty short covering rally.Once this occurs, we will be looking for short selling opportunities.

As this report is being compiled on July 7, August soybeans have made another new low for the move at 12.69 1/2, which is the lowest print since February 20, 2014 (12.67 1/4) and November has made a daily low of 11.16, which is the lowest print since February 12 (11.16). Both August and November soybeans remain on a short and intermediate term sell signal. We continue to advise a stand aside posture, even though the trend is lower across the board in all grains and most commodities.

Corn:

September corn lost 2.75 cents on volume of 118,035 contracts. Total open interest increased by 2490 contracts, which relative to volume is approximately 15% less than average. The July contract lost 1,157 of open interest, which makes the total open interest increase more oppressive (bearish). As this report is being compiled on July 7, September corn has crashed through the $4.00 level and is currently trading at new contract lows. We expect the market to continue trading lower until we get closer to the Friday WASDE report. September corn remains on a short and intermediate term sell signal. Stand aside.

Chicago wheat:

September Chicago wheat gained 4.00 cents on total volume of 61,879 contracts. Total open interest increased by a massive 5,777 contracts, which relative to volume is approximately 250% above average meaning that new longs were driving prices fractionally higher. The July contract lost 279 of open interest. As this report is being compiled on July 7, September Chicago wheat is falling sharply, down 18.25 cents and has made a new contract low of 5.56.The Kansas City contract is trading 18.00 cents lower but is a distance away from the contract low of $6.08 3/4. Stand aside.

Live cattle:

August live cattle gained 2.675 cents on total volume of 61,374 contracts. Remarkably, total open interest declined by 835 contracts, which relative to volume is approximately 40% less than average.The August contract lost 3,923 of open interest. We continue to see a pattern of open interest declines when prices advance strongly. On July 2, when August cattle advanced 82.5 points on volume of 74,446 contracts, total open interest declined by 2,968 contracts and the August contract lost 5,351 of open interest. However, on July 1 when August cattle advanced 1.425 cents, total open interest increased by 2,242 contracts. It is a bit disconcerting to see total open interest decline on two consecutive days of advances. However, under the circumstances with prices at nosebleed levels it is normal to expect shorts to cover positions and longs to take profits. Continue to stand aside.

WTI crude oil: On July 3, August WTI crude oil generated a short-term sell signal, but remains on an intermediate term buy signal.

August WTI crude oil lost 42 cents on volume of 386,105 contracts. Total open interest declined by 6,137 contracts, which relative to volume is approximately 35% below average.The August contract accounted for loss of 9680 of open interest.As this report is being compiled on July 7, August crude is trading 69 cents lower and has made a new low for the move at $103.19, which is the lowest print since June 10 (103.12). With August crude on a short-term sell signal, the market should have a countertrend rally lasting 1-3 days and this is the opportunity to initiate bearish positions.Until then, stand aside.

Brent crude oil: On July 3, August Brent crude oil generated a short-term sell signal, but remains on an intermediate term buy signal.

August Brent crude oil lost 24 cents on total volume of 223,404 contracts. Total open interest declined by 4,295 contracts, which relative to volume is approximately 20% below average. The August contract accounted for loss of 13,958 of open interest. As this report is being compiled, the August contract is trading 38 cents lower on the day and has made a new low for the move at 110.09.

Heating oil: On July 3, August heating oil generated a short and intermediate term sell signal.

Natural gas:

August natural gas advanced 4.9 cents on volume of 192,661 contracts. Total open interest increased by 2435 contracts, which relative to volume is approximately 45% less than average. The August contract lost 6,202 of open interest, which makes the total open interest increase more impressive (bearish). As this report is being compiled on July 7, natural gas is trading sharply lower, down 17.3 cents or -3.93%. The August contract has made a new low for the move at 4.200, which is the lowest print since January 21, 2014 (4.061). On July 7, the market has crashed through 3 previous areas of support: 4.296 made on May 15, 4.300 made on April 22, 4.266 made on January 27, 2014. When the market was trading at its highs just a couple of weeks ago, OIA warned clients to stand aside because of the very negative spread action. 

From the June 15 Weekend Wrap:

“At the close on Friday, the July-November 2014 spread closed at the lowest level since April 16 (3.4 cents premium to November). In short, the July-November 2014 spread has gone from a high 4.5 cents premium to July on May 28 to a low of 3 cents premium to November on June 13. This may signify the rally in natural gas is temporary, and that the seasonal low, which is usually seen in July is yet to come. We have no recommended position in natural gas. However, if long protective sell stops (actual or mental) should be in place.”

Euro:

The September euro lost 52 pips on volume of 164,828 contracts. Total open interest increased by 3,399 contracts, which relative to volume is approximately 20% below average, however the open interest increase on the July 3 decline is bearish, especially since it is likely that a short-term sell signal will be generated on July 7. This would reverse the short-term buy signal generated on July 1, which apparently was a false buy signal. The 50 day moving average of 1.3679, is about to cross below the 200 day moving average of 1.3672, which reveals the basic weakness of the euro. The euro made its high on July 1 at 1.3705, which bumped up against the year to date moving average of 1.3707. In short, the market is weak and looks to go lower.We tend to think that rallies will be short-lived and relatively shallow and this will be the opportunity to initiate bearish positions once a short-term sell signal has been confirmed.The euro continues to be on an intermediate term sell signal.

Swiss franc: On July 7, OIA recommends the initiation of bullish positions in the September Swiss franc and to use the July 3 low of 1.1155 as an exit point for these positions. Also, we recommend bullish positions in CHFEUR (long Swiss franc-short euro). Use the July 7 low of .8217 as the exit point for these positions.

The September Swiss franc lost 60 pips on volume of 36,453 contracts. volume was the heaviest since June 30 when the Swiss franc September  advanced 58 pips on volume of 39,070 contracts and total open interest increased by a massive 1580 contracts. On July 3, total open interest declined by a healthy 1159 contracts, which relative to volume is approximately 25% above average meaning that liquidation was heavier than usual on a fairly large decline.

On June 27, the September Swiss franc generated a short-term buy signal, and it continued to rally on June 30. However, it began its pullback, which has lasted 3 days, and is consistent with OIA protocols for a 1-3 day pullback after the generation of a buy signal.On July 3, the Swiss franc made a low of 1.1155, which was the lowest print since June 20 (1.1150). As this report is being compiled on July 7, the September Swiss franc is trading 8 pips lower after making a daily low of 1.1169, which is 14 pips above the July 3 low.Open interest action has been very positive on advances and declines and the Swiss franc is in a bullish set up with the 50 day moving average at 1.1233 and the 200 day at 1.1193.The year to date moving average is 1.1244.

Australian dollar:

The September Australian dollar lost a hefty 80 pips on heavy volume of 105,221 contracts. Volume was the highest since June 12 when 167,294 contracts were traded. On July 3, total open interest declined by a hefty 5,969 contracts, which relative to volume is approximately 120% above average meaning that liquidation was substantial on the decline. The Australian dollar has seen large increases of open interest on advances, and it is perfectly normal to see a strong open interest decline when prices are declining. As this report is being compiled on July 7, the September Australian dollar is trading 16 pips higher and has made a low of 92.96, which is above the July 3 low of 92.70. The move over the past 2 days when the Aussie lost a total of 1.37 cents, appears to be a shakeout rather than a change in trend. The Australian dollar remains on a short and intermediate term buy signal. For those that are so inclined, bullish positions can be entered, but use the July 3 low of 92.70 as the exit point.

Gold:

August gold lost $10.30 on volume of 165,706 contracts. Total open interest increased by 2572 contracts, which relative to volume is approximately 40% below average. As this report is being compiled on July 7, August gold is trading 3.20 lower on the day and has made a daily low of $1312.10, which is above the July 3 low of 1309.40. After gold made its major move on June 19 of + $41.40, the market has been trading in a consolidation pattern and the question that remains is whether this is a consolidation pattern for a move higher, or whether the current highs represent a temporary top.The gold miners ETF ticker symbol GDX has rallied sharply indicating gold mining companies are beginning to perform well, which is a definite change from the past year.We have no recommendation in gold, because we much prefer silver, but if long gold sell stops should be in place at or slightly below the June 25 low of $1305.40.

Silver:

September silver lost 16.5 cents on volume of 43,961 contracts. Total open interest increased by 12 contracts. As this report is being compiled on July 7, September silver is trading 17.2 cents lower on light volume. Much like gold, after silver made its major move on June 19 of 87 cents, it has been trading sideways to higher. We are bullish silver and recommend that bullish positions recommended in the June 16 report continued to be held.