Soybeans:

July soybeans advanced 10.50 and the November contract added 9.00 cents on total light volume of 142,078 contracts. Volume was the lowest since June 4 when July soybeans lost 1.25 cents on volume of 141,417 contracts and total open interest increased by 634 contracts.On June 13, total open interest increased by 1,576 contracts, which relative to volume is approximately 50% below average. The July contract lost 5,436 of open interest. The below average increase of open interest on Friday on a rather small advance is confirmation that some market participants may think soybean prices are headed higher. After the 2 days of declines on June 11 and 12 of 47.25  cents, it would be normal to see open interest decline on a small advance indicating that some traders were liquidating on any rally. As this report is being compiled on June 16, July soybeans are trading unchanged and the November contract is -1.50. July soybeans generated a short-term sell signal on June 6. On June 2, OIA recommended the initiation of long puts in the November contract, and we advise holding this position.

Soybean meal:

July soybean meal lost $1.30 on volume of 76,143 contracts.  Total open interest declined by a substantial 5,958 contracts, which relative to volume is approximately 210% above average, meaning that liquidation was extremely heavy on the minor decline. The July contract accounted for loss of 11,911 of open interest. During the declines of June 11 and 12, total open interest increased by 10,803 contracts, and June 13 was the first total open interest decline since June 9 when July soybean meal lost 5.40 and total open interest declined by 2038 contracts. The COT report showed that managed money remained heavily long soybean meal as of June 10 by a ratio of 4.67:1, which is only slightly lower than the previous 2 weeks ratios. On July 11, July soybean meal generated a short-term sell signal, but remains on an intermediate term buy signal. The market has not had a countertrend rally, which would have enabled clients to initiate bearish positions. As a result, we recommend a stand aside posture.

Corn:

July corn gained 3.00 cents on volume of 311,069 contracts. Total open interest increased by 3,326 contracts, which relative to volume is approximately 50% below average. The July contract lost 22,366 of open interest, which makes the total open interest increase potentially bullish, however corn remains on a short and intermediate term sell signal. The increase of open interest on the advance indicates that some market participants may think corn has the potential to rally from this level. As this report is being compiled on June 16, July corn is trading 5.50 cents lower, but has not taken out the low for the move of 4.39 1/4 made on June 11. Stand aside.

Live cattle:

August live cattle advanced 1.60 cents on total volume of 64,633 contracts. Total open interest declined by 802 contracts, which relative to volume is approximately 45% less than average. However, the June contract lost 2633 of open interest and August -1139. On June 13, August live cattle made a new contract high at 1.47300, And as this report is being compiled on June 16, August cattle is trading 5 points higher on the day, but has not taken out Friday’s contract high.

We have been discussing the decline of open interest as prices have advanced, and though normally this would be bearish, especially since a pattern has developed, we view the open interest decline as confirmation that market participants are skeptical about cattle’s ability to move higher. This is potentially bullish. Additionally, we recommended 2 positions that should mitigate losses if the market reverses: Bull call spreading the August contract and purchasing puts in the August contract. If OIA is wrong about the direction of cattle and that open interest declines have signaled a top, client’s positions have some protection from a reversal. Continue to hold both positions.

From the June 15 Weekend Wrap:

“During the period covered by the COT report (June 4-June 10), managed money liquidated 248 contracts of long positions while during this time frame, August live cattle advanced 3.60 cents. Our report of June 10 pointed out the decline of open interest as prices advanced and the June 12 report stated this was positive for the market. In essence it confirmed a degree of skepticism by market participants as prices rose.With this in mind, OIA will be looking for a day when volume spikes and open interest increases massively. This may signal a top, or temporary top.”

From the June 10 report:

“We are becoming concerned about the very negative pattern of open interest declines while August cattle advances. During the past three-day period, August cattle advanced 2.075 cents while total open interest declined by 15,766 contracts. Most important, the August contract lost 3,514 contracts during this time.”

WTI crude oil:

July WTI crude oil advanced 38 cents on heavy volume of 703,991 contracts. Total open interest increased by a very disappointing 1,840 contracts, which is minuscule and dramatically below average. The July contract accounted for loss of 21,916 contracts. The open interest action on June 13 was disappointing, especially since WTI crude oil made a new contract high of $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. We wrote about the disappointing stats in the most recent COT report and are reprinting an excerpt from the report. As this report is being compiled on June 16, July WTI is trading 8 cents higher on the day and has made a daily high of 107.54, which is below Friday’s high of 107.68. July WTI remains on a short and intermediate term buy signal, but we are recommending a stand aside posture.

From the June 15 Weekend Wrap:

“Apparently, there is some skepticism about crude oil’s ability to advance based upon our reading of the latest COT report. For example, during the reporting period of June 4 through June 10, July WTI crude oil advanced $1.72, yet managed money liquidated 6,495 contracts and even added a small number of contracts to their short positions (273).”

Brent crude oil:

August Brent crude oil advanced 4 cents on volume of 822,973 contracts. Total open interest declined by 21,888 contracts, which relative to volume is average. The July contract accounted for loss of 8,959 of open interest and there were open interest decreases in the forward months, which brought the total open interest declined to an average number. August Brent crude made a new contract high of 114.07, which is the highest price on the continuation chart since September 9, 2013 when the October 2013 contract made a high of $116.10. The decline of open interest on Friday’s trading is most definitely negative..From June 4 through June 13, August Brent has slightly outperformed July WTI. For example, during this time, Brent crude advanced $4.77, or 4.43% while July WTI advanced $4.33, or 4.23%. For WTI to move higher, the Brent contract must show continued strength.As this report is being compiled on June 16, Brent crude is trading 42 cents higher, and is $1.19 from its contract high whereas WTI is 72 cents from its contract high. Brent crude remains on a short and intermediate term buy signal. Stand aside.

Natural gas:

July natural gas lost 2.3 cents on volume of 293,814 contracts. Total open interest declined by 619 contracts, which is minuscule and dramatically below average. The July contract accounted for loss of 20,032 of open interest, which means there was sufficient open interest increases in the forward months to bring the total open interest number down significantly. As this report is being compiled on June 16, July natural gas is trading 2.8 cents higher and has made a daily high of $4.886, which takes out the April 30 high of 4.877. On June 6, July natural gas generated a short-term buy signal, and remains on an intermediate term buy signal. We have no recommendation and as we wrote in the Weekend Wrap, our concern is that the inversion in the front month versus back months has reversed, which is a potential sign the market may be stalling at the upper end of its trading range. For this reason, we are recommending a stand aside posture.

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 the come. We have no recommended position in natural gas. However, if long protective sell stops (actual or mental) should be in place.”

British pound: On June 13, the September British pound generated a short-term buy signal, which reversed the short-term sell signal of May 29.The pound remains on an intermediate term buy signal.

The September British pound advanced by 1.31 cents on heavy volume of 199,017 contracts. Volume was the strongest since June 12 when the pound advanced 44 pips on 337,633 contracts and total open interest increased by an astounding 42,260 contracts. On June 13, total open interest increased substantially again, this time by 14,776 contracts, which relative to volume is approximately 185% above average meaning that new longs were heavily entering the market and driving prices to new highs for the move (1.6979). As this report is being compiled on June 16, the September pound is trading 17 pips higher and has made a new high for the move at 1.6997, which takes out Friday’s high. The pound remains on a short and intermediate term buy signal. We have no recommendation.

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 10 cents on very light volume of 87,034 contracts. Total open interest declined by 1,854 contracts, which relative to volume is approximately 20% below average. Gold made a new high for the move at 1278.10, and as this report is being compiled on June 16, August gold has made another new high at 1285.10, which is the highest price since May 27 of 1294.7. August gold is overbought relative to its 20 day moving average of 1266.50, but is below its 50 day moving average of 1286.10, which may in the short-term provide resistance. The action in gold since the beginning of June has been impressive, but we much prefer silver to gold at this juncture. Gold will not generate a short-term buy signal on June 16 and remains on an intermediate term sell signal.

Platinum:

July platinum lost 6.30 on heavy volume of 13,164 contracts. However, volume was dramatically below that of June 12 when July platinum lost $39.80 on volume of 30,820 contracts and total open interest increased by 2,064 contracts. On June 13, total open interest declined by an astounding 2,598 contracts, which relative to volume is approximately 570% above average meaning that liquidation was off the charts heavy. As this report is being compiled on June 16, July platinum has closed at 1439.10, which is up $4.10 from Friday’s close. The high on June 16 (1445.60) was significantly below that of June 13 (1457.30).

From the June 12 report:

“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.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 generated a short-term buy signal, but remains on an intermediate term sell signal.

July silver advanced 12.2 cents on relatively heavy volume of 67,979 contracts. However, volume shrank from the 80,674 contracts traded on June 12 when July silver advanced 36.1 cents and total open interest increased by 741 contracts. On June 13, total open interest declined by 1780 contracts, which relative to volume is average. The July contract accounted for loss of 4046 of open interest. As this report is being compiled on June 16, July silver has closed at $19.715 up 6.00 cents from Friday’s close. The market is overbought relative to its 20 day moving average of $19.175 and the 50 day moving average of 19.428. Usually, after the generation of a buy signal, the market has a tendency to pullback from 1-3 days and this is the opportunity to initiate bullish positions. We recommend waiting for a pullback, especially since it appears that platinum is going to generate a short-term sell signal any day and gold has not yet generated a short-term buy signal.