Soybeans:

July soybeans lost 30.25 and the November contract lost 8.50 cents on total volume of 279,281 contracts.Volume was higher than April 9 when 273,738 contracts were traded and the July contract closed at $14.78. On June 12, total open interest declined by 3777 contracts, which relative to volume is approximately 45% below average. The July contract accounted for loss of 22,001 of open interest.As this report is being compiled on June 13, July soybeans are trading 9.25 cents higher on the day and November +9.50. Both July and November contracts remain on short-term sell signals, and intermediate term buy signals. Continue to hold the long put position in November beans recommended on June 2.

Soybean meal:

July soybean meal lost $13.10 on extremely heavy volume of 147,714 contracts.Volume traded on June 12 was the highest of 2014 and took out the previous volume high of 133,509 contracts traded on February 27 when July soybean meal closed at $438.20. On June 12, total open interest increased by 3164 contracts, which relative to volume is approximately 15% below average, however the July contract lost 14,714 of open interest, which makes the total open interest increase much more impressive (bearish). June 12 was the 2nd day in a row that prices declined and open interest increased.This is a new pattern for soybean meal, and indicates that lower prices are in store. Longs are not liquidating as they should as prices decline.On June 11, July soybean meal generated a short-term sell signal, but remains on an intermediate term buy signal. We have no recommendation. Yesterday, we advised the liquidation of the Long July 2014-short August 2014 spread.

Corn:

July corn gained 3.00 cents on volume of 360,055 contracts. Volume fell from the 425,884 contracts traded on June 11 when July corn lost 4.50 cents and total open interest increased by 9,033 contracts. On June 12, total open interest increased by 6,791 contracts, which relative to volume is approximately 25% less than average. The July contract accounted for loss of 19,758 of open interest, which makes the total open interest increased potentially bullish, however corn remains on a short and intermediate term sell signal. Stand aside.

Cotton:

July cotton gained 11 points on volume of 48,134 contracts. Total open interest increased by 6,019 contracts, which relative to volume is approximately 35% above average. The July contract accounted for loss of 8,600 of open interest. At this juncture, cotton has been trading in a sideways pattern, and though it may be headed lower, we think at this juncture it is best to take profits on the bearish position and liquidate the call position as well. We think there better opportunities on the board.

Live cattle:

August live cattle advanced 2.85 cents on volume of 75,866 contracts. Volume was the highest since May 19 when August cattle advanced 2.175 cents on volume of 78,577 contracts and total open interest increased by 10,329 contracts. On June 12, total open interest increased only 2,435 contracts, which relative to volume is approximately 25% above average. The June contract accounted for loss of 2406 of open interest and August -208. June 12, was the 5th day in a row the August contract lost open interest. We attribute this to profit taking by longs and shorts getting blown out of the market.

On June 9, when August cattle advanced 1.975 cents, total open interest declined by 10,924 contracts on total volume of 64,684 contracts.In short, during 2 days when cattle prices advanced strongly,(June 9 and June 12) open interest totals have been unimpressive.As a contrary indicator, we think this bodes well for higher prices. Additionally, the open interest decline in the August contract during the past 5 days confirms skepticism on the part of longs that cattle can move higher.

In short, cattle is climbing a wall of worry as it enters nosebleed territory. As this report is being compiled on June 13, August cattle prices are again advancing strongly up by 1.675 cents making new contract highs. It appears the market is headed to the February high of 1.5300, and we will be looking for 2 data points that may signal a top: (1) extremely heavy volume on a strong advance. (2) A huge increase in open interest. Ideally, these will occur on the same day. This will tell us the Johnny-come-lately’s have gotten on board. Continue to hold the bull call spread recommended in the report of May 29 and the out of the money put in the August contract recommended on June 10.

WTI crude oil:

July WTI crude oil advanced $2.13 on huge volume of 896,614 contracts. Volume was the heaviest since March 12 when 1,082,134 contracts were traded and July WTI crude oil closed at $96.44. On June 12, total open interest increased by  24,318 contracts, which relative to volume is average. Although the open interest number was high, relative to volume, it was not terribly impressive considering the magnitude of the advance and that the July contract made a new contract high. The July contract lost 18,939 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on June 13, July WTI is trading 38 cents higher and has made another new contract high at $107.68,which is the highest print on the continuation chart since September 19, 2013 when October 2013 WTI made a high of 108.99. July WTI remains on a short and intermediate term buy signal, but we continue to recommend a stand aside posture.

Brent crude oil:

August Brent crude oil advanced $3.05 on huge volume of 1,179,198 contracts. Not only was volume the highest of 2014, but it is the highest in at least one year. On June 12, total open interest increased by 32,293 contracts, which relative to volume is average. The July contract lost 42,129 of open interest, which makes the total open interest increased more impressive (bullish).On June 12, August Brent crude made a high of $112.75, which is the highest print since December 27, 2013 when it reached 112.80. As this report is being compiled on June 13, Brent crude is trading 18 cents higher and has made another new high of 114.07, which is the highest print since September 9, 2013 ($116.18). Brent crude oil remains on a short and intermediate term buy signal. Stand aside.

Heating oil: On June 12, July heating oil generated a short and intermediate term buy signal.

Natural gas:

July natural gas advanced 25.4 cents on very heavy volume of 533,085 contracts.Volume was the highest of February 19 2014 when 621,768 contracts were traded and July natural gas closed at $4.787. On June 12, total open interest increased by a strong 21,609 contracts, which relative to volume is approximately 55% above average, meaning that new longs were heavily entering the natural gas market and driving prices to new highs for the move (4.769). The July contract accounted for loss of 18,381 of open interest, which makes the total open interest increased much more impressive (bullish). As this report is being compiled on June 13, July natural gas is trading 2.2 cents lower and has made a daily high of 4.793, which takes out yesterday’s high. On June 6, July natural gas generated a short-term buy signal, and at this juncture we recommend waiting for a setback before entering new bullish positions.

Euro:

The June euro advanced 36 pips on heavy volume of 347,446 contracts.Although volume shrank from the 370,335 contracts traded on June 11 when the euro lost 16 pips and total open interest increased by 33,698 contracts, it was the highest of the past several days. On June 12, total open interest increased by 4410 contracts, which relative to volume is approximately 45% below average. As this report is being compiled on June 13, the September euro is trading 29 pips lower on the day. The euro remains on a short and intermediate term sell signal. We have no recommendation.

British pound:

The June British pound advanced 44 pips on volume of 337,633 contracts. Volume traded on June 12 was off the charts and easily took out the previous high volume for 2014 and is the highest going back one year.On June 12, total open interest increased by an astounding 42,260 contracts, which relative to volume is approximately 425% above average meaning that huge numbers of new longs entered the market and drove prices to new highs for the move (1.6931), which is the highest price since May 9 (1.6939). The Bank of England Governor Carney made some hawkish comments about interest rates, and it now appears that England will be among the first to raise rates among the G-7 countries. As this report is being compiled on June 13, the September pound is trading 1.23 cents higher and has made another new high of 1.6979, which is the highest print since 1.6992 made on May 6. Interestingly, on May 6 when the British pound advanced 1.16 cents, volume traded was only 98,297 contracts, however, total open interest increased by 8,067 contracts, which relative to volume is a strong 230% above average. The daily low on June 13 is 1.6911, which is above OIA’s key pivot point of 1.6815, and this means the advance resumes. Additionally, on June 13, the September pound will reverse the short-term sell signal generated on May 29.

From the June 10 report:

“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.”

Gold:

August gold advanced $12.80 on light volume of 120,582 contracts. Total open interest increased by 1,730 contracts, which relative to volume is approximately 40% less than average.August gold made a new high for the move the $1275.10, which is the highest print since 1294.80 made on the May 27. As this report is being compiled on June 13, August gold is trading 90 cents higher and has made a new high for the move at 1277.60. Although gold has put in a very solid performance, it will not generate a short-term buy signal on June 13. However, it does not appear it would take much to get speculators interested in gold. For example, the 50 day moving average in the August contract is 1286.30 and the 200 day moving average is only several dollars above that at 1293.80. In short, if gold were able to close above the 50 and 200 day moving averages, which is only approximately $10.00 and $20.00 above current prices respectively, we think speculator interest will rise, especially with the specter of possible inflation on the horizon in part due to increased energy and meat prices.

Platinum:

July platinum lost $39.80 on huge volume of 30,820 contracts.Volume was the heaviest since March 27 when 31,627 contracts were traded and July platinum closed at 1397.20. On June 12, total open interest increased by a massive 2,064 contracts, which relative to volume is approximately 160% above average. The July contract gained 661 of open interest. The strong open interest increase on a massive price decline is bad news for anyone long platinum. With the previous huge build of open interest, speculators who hold long positions should be liquidating, but in this case they are digging in and refusing to do so. In short, prices are currently trading around the lows of early June, yet total open interest has increased. This provides potential massive selling pressure if prices continue to decline. As this report is being compiled on June 13, platinum is closed at 1435.00, down $6.30 from the previous day’s close.We think platinum prices are headed lower.

Silver: On June 13, July silver will generate a short-term buy signal, but remains on an intermediate term sell signal.

July silver advanced 36.1 cents on heavy volume of 80,674 contracts.Volume was the heaviest since 85,541 contracts were traded on April 28 when July silver closed at $19.588. On June 12, total open interest increased by 741 contracts, which relative to volume is approximately 50% below average, but the July contract lost 4,403 of open interest, which makes the total open interest increased more impressive (bullish). June 12 was the 3rd day in a row that July silver advanced and open interest increased. This is bullish open interest action relative to the price advance.

We are very impressed with the action in silver, and what makes this potentially a terrific trade is that managed money is short by a ratio of 1.22:1, and there is a good chance this ratio will increase in today’s COT report due for release at 2: 30 p.m. CDT. On June 12, July silver closed at 19.533, which is approximately 10 cents above the 50 day moving average of 19.43 on the July chart. This is the first time silver has closed above its 50 day moving average since mid March. We suggest that clients begin to position themselves on the long side of silver because it now appears the market is going higher after being the dog of the precious metals complex for a year.

 10 Year Treasury Notes:

The September 10 year Treasury Note advanced 15 ticks on volume of 1,367,721 contracts.Volume was the highest since June 6 when the September Note closed at 125-07.5. On June 12, open interest increased only 5,382 contracts, which is minuscule and dramatically below average. The fact that notes did not experience a strong increase of open interest confirms our thinking that the appetite for lower interest rates is ebbing. On June 10, September notes generated a short-term sell signal, and through June 12 has had a two-day rally, which is consistent with OIA’s 3 day time frame for a countertrend rally after the generation of a sell signal. Conceivably,  there may be one more day of a rally, but we think the inflation mindset is beginning to penetrate the thinking of many market participants.