Soybeans:

July soybeans lost 17.00 cents while the November contract lost 8.75 on total volume of 236,479 contracts.Volume was higher than that traded on May 22, when July soybeans advanced 13.50 cents on volume of 229,996 contracts and total open interest increased by 6,113 contracts. Additionally, volume was the highest since April 25 when 247,971 contracts were traded and soybeans advanced 24.25 cents while total open interest declined by 19,730 contracts. On June 11, total open interest declined by 4,707 contracts, which relative to volume is approximately 20% below average. The July contract accounted for loss of 19,081 contracts. As this report is being compiled on June 12, July soybeans are trading 26.50 lower and the November contract is trading down 11.50. Both contracts are making new lows for the move. For those of you who took our advice and initiated long puts on June 2, hold the position. On June 6, July soybeans generated a short-term sell signal, and as of June 12 remains on an intermediate term buy signal.

The USDA reported export sales of 86.66 thousand metric tons, which is the highest since the week of May 15. This brings total commitments to 1.655.7 billion bushels versus USDA projections for the season of 1.600. In the WASDE report released yesterday, ending stocks were reduced by 5 million bushels to 125 million bushels. Additionally, the USDA projected ending stocks for the 2014-2015 season of 325 million bushels.

Soybean meal: On June 11, July soybean meal generated a short-term sell signal, but remains on an intermediate term buy signal.

July soybean meal lost $2.20 on fairly heavy volume of 96,606 contracts. However, volume was below the recent record of 117,046 traded on June 9 when July soybeans lost $5.40 and total open interest declined by 2,038 contracts. On June 11, total open interest increased by a massive 7,639 contracts, which relative to volume is approximately 230% above average meaning that aggressive new short sellers entered the market and drove prices lower from the daily high of 492.50.

The only position remaining in soybean meal is the long July 2014-short August 2014 spread, and we recommend this position be liquidated immediately.

The USDA reported sales of 59.49 thousand metric tons bringing total commitments to 9609.6 thousand metric tons versus USDA projections for the season of 10,433 thousand metric tons. This week’s sale was the lowest in 5 weeks. There were no changes in the soybean meal balance sheet in yesterday’s WASDE report.

Corn:

July corn lost 4.50 cents on huge volume of 425,884 contracts. Volume traded was higher than May 9 when July corn lost 9.00 cents on volume of 416,471 contracts and total open interest increased by 735 contracts. Additionally, volume on June 11 was the highest since April 22 when May corn advanced 8.25 cents on volume of 433,504 contracts and total open interest declined by 8297. On June 11, total open interest increased by 9,033 contracts, which relative to volume is approximately 15% Below average. However, the open interest increase on June 11 was the 8th increase in a row. The July contract accounted for loss of 30,550 of open interest, which makes the total open interest increase more impressive (bearish). As this report is being compiled on June 12, July corn is trading 2.50 cents higher on the day, and has not taken out yesterday’s low of $4.39 1/4. Corn remains on a short and intermediate term sell signal. Stand aside.

The USDA reported weekly sales of 409.7 thousand metric tons bringing total commitments to date of 1.832.9 billion bushels versus USDA projections for the entire season of 1.900 billion bushels. This week’s sale was the lowest since the week of May 8. The USDA did not change the balance sheet of corn in yesterday’s WASDE report.

Chicago wheat:

July Chicago wheat lost 12.00 cents on huge volume of 156,278 contracts.Volume was the highest since April 16 when May wheat lost 14.50 cents on volume of 156,564 contracts and total open interest increased by 170. On June 11, total open interest increased by 5555 contracts, which relative to volume is approximately 40% above average meaning that aggressive new short sellers were entering the market and driving prices to new lows for the move ($5.88 1/2), which is the lowest print since 5.83 made on February 28, 2014. July Chicago wheat remains on a short and intermediate term sell signal. Stand aside.

Kansas City wheat:

July Kansas City wheat lost 21.75 cents on huge volume of 49,837 contracts. Volume traded on June 11 was the highest since August 8, 2013 when 50,355 contracts were traded and September Kansas City wheat closed at $7.02. Interestingly, July Kansas City wheat closed at $7.0 4 1/4 on June 11. On June 11, total open interest declined by 2764 contracts, which relative to volume is approximately 120% above average meaning that liquidation was very heavy on the significant decline. On May 19, July Kansas City wheat generated a short-term sell signal and on June 2 generated an intermediate term sell signal. Stand aside.

The USDA reported sales of wheat in all categories of 570.1 thousand metric tons bringing total commitments for the new season beginning on June 1 to 239.9 million bushels versus USDA projections for the season of 925 million bushels. The WASDE report showed that stocks for the 2013-2014 season were increased by 10 million bushels to 593 million bushels and ending stocks for the 2014-2015 season were increased by 34 million bushels to 574 million bushels.

Cotton:

July cotton lost 79 points on relatively heavy volume of 46,028 contracts. Volume shrank from the 56,925 contracts traded on June 10 when July cotton advanced 1.75 cents and total open interest increased by 1,648 contracts. On June 11, open interest increased only 129 contracts, which is minuscule and dramatically below average. The July contract accounted for loss of 7,118 of open interest, which makes the small total open interest increase more impressive (bearish). As this report is being compiled on June 12, July cotton is trading 56 points higher on the day. Maintain bearish positions coupled with long calls to offset any losses in bearish positions as a result of a short covering rally.

Live cattle:

August live cattle lost 1.20 cents on volume of 52,198 contracts. Volume increased slightly from June 10 when August cattle advanced 12.5 points on volume of 50,825 contracts and total open interest declined by 1283 contracts. On June 11, total open interest declined again, this time by 386 contracts, which relative to volume is approximately 60% below average. The June contract lost 1670 of open interest in August -823. The open interest decline on June 11 was to be expected and our chief concern has been about the open interest declines when cattle rallied strongly.As this report is being compiled on June 12, August cattle is trading 2.775 cents higher and has made a new contract high at 1.45200. In yesterday’s report, we advised the initiation of out of the money puts to protect profits of the bull call position recommended on May 29. Continue to hold both positions.

WTI crude oil:

July WTI crude oil advanced 5 cents on volume of 480,015 contracts. Total open interest increased by 13,790 contracts, which relative to volume is approximately 5% above average. The July contract lost 18,715 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on June 12, July WTI is trading $1.52 higher on the day and has made a new contract high of 106.53, which is the highest print on the continuation chart since September 20, 2013 when the November 2013 contract made a high of 106.11.Additionally, the August Brent crude oil contract has rocketed higher, and currently is outperforming the WTI contract, which of late has been unusual.

Today’s move is a major breakout, and it occurs amidst the backdrop of total chaos in Iraq, and the very real possibility the oilfields will be taken over by extremists and the result may be that crude production declines dramatically. Although WTI crude oil has been on a short and intermediate term buy signal, we have advised a stand aside posture because of our concern of the lopsided numbers of managed money longs and fairly large domestic stocks. Our analysis is not based upon what may or may not happen in the Middle East because this can change from day-to-day. Significant losses may be generated when trading on headlines. As we have said before, we much prefer the long side of natural gas.

Natural gas:

July natural gas lost 2.2 cents on volume of 289,711 contracts. Total open interest increased by 13,016 contracts, which relative to volume is approximately 5% above average. The July contract lost 18,517 of open interest. July 11 was the 3rd day of the decline, which is consistent with OIA protocols after July natural gas generated a short-term buy signal on June 6. As this report is being compiled on June 12, July natural gas has rocketed higher and is trading 22.5 cents above yesterday’s close. The July contract has made a daily high of $4.769, which takes out the June 9 high of 4.743.

As readers of this report know, we were very concerned about the increase of open interest on recent price declines. From June 9 through June 11 (3 days) total open interest increased each day totaling 20,179 contracts while July natural gas declined by 20.2 cents.This was clearly bearish open interest action relative to the price decline. As a result, we were not enthusiastic about entering bullish positions even though natural conformed to OIA’s 3 day correction protocol. At this juncture we have no recommendation except to watch the market for the next day or two and look for a spot to enter bullish positions on a pullback. Yesterday’s low of $4.504 is an excellent exit point for bullish positions if penetrated. Natural gas opened yesterday’s evening session at 4.526, which was above yesterday’s close of 4.508 and did not trade below 4.520 throughout the evening and day session.

The Energy Information Administration announced working gas in storage was 1,606 Bcf as of Friday, June 6, 2014, according to EIA estimates. This represents a net increase of 107 Bcf from the previous week. Stocks were 727 Bcf less than last year at this time and 877 Bcf below the 5-year average of 2,483 Bcf. In the East Region, stocks were 411 Bcf below the 5-year average following net injections of 65 Bcf. Stocks in the Producing Region were 358 Bcf below the 5-year average of 962 Bcf after a net injection of 29 Bcf. Stocks in the West Region were 107 Bcf below the 5-year average after a net addition of 13 Bcf. At 1,606 Bcf, total working gas is below the 5-year historical range.

Euro:

The June euro lost 16 pips on extremely heavy volume of 370,335 contracts. Volume was the highest since June 5 when the June euro lost 59 pips on volume of  527,863 contracts and total open interest increased by 4,961 contracts.On June 11, total open interest increased by an extraordinarily large 33,698 contracts, which relative to volume is approximately 250% above average meaning there was a battle between aggressive new short sellers and new buyers, and the euro closed fractionally lower and made a low that was only 11 pips below the low of June 10. As this report is being compiled on June 12, the euro is trading 27 pips higher on the day. We have advised a stand aside posture due to the massive increase of open interest on recent declines and the extraordinarily high level of managed money shorts. This makes the market vulnerable to a very sharp short covering rally. Stand aside.

British pound:

The June British pound advanced 39 pips on huge volume of 253,954 contracts.Volume traded on June 11 was the highest of 2014. On June 11, total open interest increased by 14,997 contracts, which relative to volume is approximately 140% above average. For the British pound to resume its advance, the low the day must be above OIA’s key pivot point of 1.6815, and a resumption of the downtrend will occur when the daily high is below OIA’s key pivot point of 1.6782.The pound remains on a short-term sell signal, but an intermediate term buy signal. We have no recommendation at this juncture.

Platinum:

July platinum lost $1.10 on volume of 14,624 contracts. Total open interest increased by 405 contracts, which relative to volume is average. The July contract made a new high for the move at 1488.40, which is approximately $9.00 below the May 22 high of 1497.80. As this report is being compiled on June 12, July platinum is trading 29.90 lower and has made a daily low of 1436.30, which is the lowest print since June 5 (1425.90). We have been warning clients to stand aside in platinum due to the massive long position of managed money, which makes the market highly vulnerable to the kind of correction we are seeing on June 12. Platinum remains on a short and intermediate term buy signal. Stand aside.

Silver:

July silver advanced 4 ticks on volume of 59,634 contracts. Volume increased from the 56,145 contracts traded on June 10 when July silver advanced 17.9 cents and total open interest increased by 2357 contracts. On June 11, total open interest increased again, this time by 2730 contracts, which relative to volume is approximately 75% above average. yesterday, the market made a new high for the move at 19.330 and today, made another new high of $19.565, which is the highest print since May 27 (19.500).

July silver has already closed on June 12 and the good news is it closed near the high of the day ($19.533), which is unusual, as it usually closes near the lows or mid-range. .The move today may be the result of the chaos in Iraq along with the dramatic breakout in the price of Brent and WTI crude oil, which is an indication of future inflation in the petroleum sector. Also, gold is advancing strongly, and the strength in gold and silver is occurring when platinum and copper is showing considerable weakness.It is possible that July silver will generate a short-term tomorrow.

It should be noted that since July silver bottomed on May 30 and through June 11, July silver has advanced 2.08% while August gold has gained only 0.74%. This explains why silver is likely to generate a short-term buy signal before gold.

From the June 10 report on silver:

“However, the big news is that open interest increased by a hefty 2,357 contracts, which relative to volume is approximately 55% above average. This is the first time that we have seen an open interest increase on a price advance in quite some time. Additionally the increase was considerably above average.”