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Soybeans:

August soybeans lost 6.00 cents while the November contract declined by 13.75 on total volume of 153,520 contracts. Volume shrank from the 174,544 contracts traded on July 29 when August soybeans lost 10.00 cents and the November contract lost 12.75 while total open interest declined 11,645 contracts. On July 30, total open interest declined again, this time by 5,225 contracts, will which relative to volume is approximately 40% above average meaning that liquidation was heavy on the decline. The August contract lost 6,204 of open interest. From July 24 through July 30, total open interest declined every day bringing the loss to 45,431 contracts while November soybeans have advanced 4.75 cents in this time frame. This is bearish open interest action relative to the 5 day advance. As this report is being compiled on July 31, August soybeans are trading 6.50 higher while November is barely unchanged. Stand aside.

The USDA reported sales of 187.43 thousand metric tons bringing total commitments to date of 1.691.1 billion bushels versus USDA projections for the 2013-2014 season of 1.620 billion bushels.

Corn:

September corn advanced 0.25 cents on volume of 221,083 contracts. Total open interest declined by 4,119 contracts, which relative to volume is approximately 20% below average. The September contract lost 4,989 of open interest and December – 2,378. As this report is being compiled on July 31, September corn is trading 4.50 lower, but has not yet taken out the contract low of 3.56 1/2 made on July 24. Stand aside.

USDA reported sales of 173.8 thousand metric tons bringing total commitments to date of 1.913.9 billion bushels versus USDA projections for the 2013-2014 season of 1.900 billion bushels. This week’s sale was the lowest since the week of June 12.

Chicago wheat:

September s Chicago wheat advanced 7.25 cents on volume of 96,511 contracts. Total open interest increased by 3,731 contracts, which relative to volume is approximately 50% above average meaning that new longs were entering the market in large numbers and driving prices higher. The September contract lost 1,956 of open interest, which makes the total open interest increase more impressive (potentially bullish).

Kansas City wheat advanced 5.50 cents on volume of 18,342 contracts while total open interest increased by 1,043 contracts, which relative to volume is approximately 120% above average meaning that huge numbers of new longs were entering the market and driving prices higher. The September contract lost 967 of open interest, which makes the total open interest increased more oppressive (potentially bullish). On July 29, Kansas City wheat made a new low for the move at $6.11 (a couple of cents above the contract low) and this was the low on July 30. As this report is being compiled on July 31, September Chicago wheat is trading unchanged on the day while KC wheat has advanced 3.25 cents. Stand aside in Chicago and Kansas City wheat. 

The USDA reported sales of wheat in all categories of 801 thousand metric tons bringing total commitments to date for the season that began on June 1 to 357.6  million bushels versus USDA projections for the entire season of 900  million bushels. This week’s sale was the largest since the beginning of the season.

Live cattle:

October live cattle advanced 85 points on volume of 38,857 contracts. Total open interest increased by 1,768 contracts, which relative to volume is approximately 75% above average meaning that new longs were heavily entering the market and driving prices higher. The August contract accounted for loss of 2,076 of open interest. As this report is being compiled on July 31, October cattle is trading 2.20 cents lower on the day. Stand aside.

Lean Hogs: On July 30, October August generated an intermediate term sell signal after generating a short-term sell signal on July 24.

October lean hogs lost 2.375 cents on volume of 59,967 contracts. Total open interest declined only 405 contracts, which relative to volume is approximately 65% less than average. The August contract accounted for loss of 2,518 of open interest. As this report is being compiled on July 31, October hogs are trading 27.5 points higher after making a new low for the move at 1.02550, which is the lowest print since April 30 (1,02450). Stand aside.

WTI crude oil: On July 30, September WTI crude oil generated an intermediate term sell signal, after generating a short-term sell signal on July 3.

September WTI crude oil lost 70 cents on volume of 515,748 contracts. Volume declined from July 29 when September WTI crude oil lost 70 cents as well on volume of 542,554 contracts and total open interest increased by 13,654 contracts. On July 30, total open interest increased again, this time by 8,580 contracts, which relative to volume is approximately 30% less than average. The September 2014 through January 2015 contracts all gained open interest. The open interest increases of the past 2 days clearly indicate that market participants have gotten bearish on WTI crude oil, but are doing so at the lower end of the trading range of the past two months. This makes crude oil a potential candidate for a counter trend rally. As this report is being compiled on July 31, September WTI crude oil is trading $1.79 lower and has made a daily low of 98.33, which is the lowest print since May 13 (98.00).Continue to hold the short call position, originally recommended in the report of July 21.

From the July 28 report:

Managed money liquidation will fund the continued move lower. As clients know, we have been negative on WTI, and the partial extract from the July 20 report provides an example of our thinking on the subject. In the July 21 report, OIA recommended the initiation of short calls in the month and strike price of your choosing. This trade continues to work well, and as this report is being compiled on July 29, the September contract is trading $1.09 lower and has made a daily low of 100.37. Although, September WTI crude remains on an intermediate term buy signal, and a short-term sell signal, we think the intermediate term buy signal will be reversed during the next couple of days.

Natural gas:

September natural gas lost 3.8 cents on volume of 163,184 contracts. Total open interest declined by 1,155 contracts, which relative to volume is approximately 65% less than average. The August contract lost 466 of open interest. As this report is being compiled on July 31, September natural gas is trading 8.4 cents higher and has made a daily high of 3.890, which is the highest print since 3.892 made on July 24. Conceivably, the low of 3.725 made on July 28 may be the seasonal low and that natural gas prices will continue to back and fill until such time as it generates a short-term buy signal. Although the EIA report showed inventories increasing by 88 Bcf, the market has shrugged it off. We think there will be a terrific opportunity on the long side of natural gas, but it is premature at this juncture.

The Energy Information Administration announced that working gas in storage was 2,307 Bcf as of Friday, July 25, 2014, according to EIA estimates. This represents a net increase of 88 Bcf from the previous week. Stocks were 530 Bcf less than last year at this time and 641 Bcf below the 5-year average of 2,948 Bcf. In the East Region, stocks were 302 Bcf below the 5-year average following net injections of 57 Bcf. Stocks in the Producing Region were 266 Bcf below the 5-year average of 1,035 Bcf after a net injection of 19 Bcf. Stocks in the West Region were 72 Bcf below the 5-year average after a net addition of 12 Bcf. At 2,307 Bcf, total working gas is below the 5-year historical range.

Copper:

September copper gained 2.25 cents on volume of 47,294 contracts. Total open interest declined by 1,810, which relative to volume is approximately 50% above average meaning that liquidation was fairly substantial on the price advance. This is potentially bearish open interest action. However, as this report is being compiled, September copper is holding up very well, trading unchanged on the day after making a low of 3.2250, which is above yesterday’s low of 3.2050. Although we recommend a stand aside posture, we are impressed with the ability of copper to hold up in the face of sharply declining equity, petroleum and precious metal prices.

Gold: December gold will likely generate an intermediate term sell signal on July 31 after generating a short-term sell signal on July 24.

December gold lost $3.60 on volume of 176,697 contracts. Total open interest declined by 6,619 contracts, which relative to volume is approximately 45% above average meaning that liquidation was very heavy for the 3rd day in a row.From July 23 through July 30, total open interest has declined every day bringing the 6 day decline to 37,769 contracts while December gold has declined $11.10. As we discussed in the July 28 report, market participants have been more than willing to close out positions in gold once it became apparent that gold prices have topped and were unlikely to resume their advance. As this report is being compiled on July 31, December gold is trading $12.50 lower and has made a low of 1281.90, which is the lowest print since 1277.00 made on June 19. Stand aside.

From the July 28 report:

“We have been surprised by the willingness of market participants to liquidate gold positions. We see no evidence of market participants digging in as prices move lower unlike WTI crude oil. For example, total open interest has declined every day from July 23 through July 28 and totals 17,562 contracts while August gold declined $3.00 in this time frame. This is a heavy open interest decline relative to the small price decline, and indicates market participants do not harbor strong feelings about gold one way or the other. On July 24, August gold generated a short-term sell signal, but remains on an intermediate term buy signal. Stand aside.”

Silver:

September silver advanced 1.4 cents on volume of 35,557 contracts. Total open interest increased by 847 contracts, which relative to volume is average.As this report is being compiled on July 31, September silver is trading 13.2 cents lower. On July 28, September silver generated a short-term sell signal, and it is it least 40 cents away from generating an intermediate term sell signal.

Euro:

The September euro lost 18 pips on volume of 203,116 contracts. Total open interest increased by 8410 contracts, which relative to volume is approximately 60% above average meaning that new short sellers were heavily entering the market and driving prices to a new low for the move (1.3369).As this report is being compiled on July 31, the September euro is trading unchanged and has not taken out yesterday’s low. The market is certainly overdue for a counter trend rally, and as a consequence, we recommend a stand aside posture.

British pound:

The September British pound lost 29 pips on volume of 93,210 contracts. Total open interest increased by 351 contracts, which is minuscule and dramatically below average. As this report is being compiled on July 31, the September pound is trading 28 pips lower and has made a new low for the move at 1.6849, which is the lowest print since 1.6825 made on June 13. From July 3 through July 30, the September pound has declined every day with the exception of July 9, July 15 and July 28. On July 25, the September pound generated a short-term sell signal, and it appears that an intermediate term sell signal is likely as well.The pound is well overdue for a good-sized counter trend rally, and we would wait for this to occur before considering bearish positions.

Canadian dollar: The September Canadian dollar will generate an intermediate term sell signal on July 31 after generating a short-term sell signal on July 28.

The September Canadian dollar lost 39 pips on volume of 66,076 contracts. Total open interest declined by 2662 contracts, which relative to volume is approximately 55% above average. For the past 3 days, the Canadian dollar has experienced a massive decline of open interest totaling 8,059 contracts while the September Canadian dollar has declined 72 pips. As this report is being compiled, the September Canadian dollar is trading 6 pips higher and has made a new low for the move at 91.40, which is the lowest print since 91.09 made on June 18. Stand aside.

Yen: On July 30, the September yen generated a short and intermediate term sell signal.

The September yen lost 71 pips on heavy volume of 172,267 contracts.Volume was the heaviest since June 12 when 230,449 contracts are traded and the September yen closed at .9842. On July 30, total open interest increased by 12,324 contracts, which relative to volume is approximately 185% above average meaning that aggressive new short sellers were heavily entering the market and driving prices to the lowest level since .9700 made on May 2.

10 year Treasury Note: The September note will generate a short-term sell signal on July 31, which reverses the short term buy signal generated on July 23. The September note remains on an intermediate term buy signal.

The September 10 year Treasury Note declined 23 points on heavy volume of 1,844,853 contracts.Volume was the heaviest since May 29 when 3,153,003 contracts are traded and the June note closed at 126-13. On July 30, total open interest declined by31,286 contracts, which relative to volume is approximately 30% below average. As this report is being compiled on July 31, the September note is trading 2 points lower.

Coffee:

September coffee advanced 1.80 cents on light volume of 14,065 contracts. volume was the lightest since July 21 when 13,061 contracts are traded and the September contract closed at 1.7290. On July 30, total open interest declined by 257 contracts, which relative to volume is approximately 25% below average. The September contract accounted for loss of 1003 of open interest. For the past 2 days, total open interest has declined by 589 contracts while coffee has advanced 1.40 cents in this time frame. As this report is being compiled on July 31, September coffee has rocketed higher and has closed at 1.9505, which is the highest close for the September contract since 1.9415 made on May 15. In the report of July 24, OIA recommended the initiation of a small bullish position in coffee. At the time, we thought the market could setback, which would be the time to add positions. Unfortunately, the setback never occurred and the market has climbing steadily since July 14. September coffee has only closed lower for 3 of the past 14 trading sessions.

From the July 24 report: 

“As clients know, our standard operating procedure is to wait for a pullback of at least a day and possibly 2 or 3 before recommending bullish positions. This is why we are recommending a small position and each client should take into account that coffee can certainly pull back from here and some temporary losses maybe sustained as a result.For September coffee to reverse the buy signal, the high for the day would have to be below OIA’s key pivot point of 1.6970. This is not to say it cannot happen, because signals occasionally reverse. However, with fundamentals of coffee being what they are, we think the worst is over and that prices will move higher during 2014.”