Soybeans: Liquidate long put positions in the November 2014 soybean contract.

July soybeans advanced 10.75 and the November contract gained 1.00 cent on total volume of 157,802 contracts. Total open interest declined by 401 contracts, which relative to volume is approximately 85% below average. The July contract accounted for loss of 6,456 of open interest and the August 2014 through August 2015 contracts all gained open interest. As this report is being compiled on June 19, July soybeans are trading 10.50 higher and the November contract is trading 12.00 cents above yesterday’s close. July and November soybeans remain on a short-term sell signal, and an intermediate term buy signal.

We have been looking at the November chart, and it looks as if the market has found a temporary base. For example, the November contract made a low for the move on June 5 of $12.01 1/4 and attempted to test that low on June 17 at 12.02 1/2. Although, we think November soybeans are ultimately headed lower, a rally in old crop soybeans due to its oversold condition could likely take the November contract higher as well. On June 2, we recommended long put positions in the November contract, and the position likely has a small gain/loss, or break even. OIA recommends liquidating the position and we will look for another spot to enter bearish positions at a more opportune time. After liquidating stand aside.

The USDA reported sales of 97.9 thousand metric tons bringing total commitments to date of 1659 billion bushels versus USDA projections for the entire season of 1.600 billion bushels.

Soybean meal:

July soybean meal advanced $2.50 on volume of 89,566 contracts. Total open interest increased by 2,886 contracts, which relative to volume is approximately 30% above average meaning that new buyers were entering the market and driving prices higher. The July contract accounted for loss of 6,660 of open interest, which makes the total open interest increase potentially bullish. However, soybean meal remains on a short-term sell signal and will not generate an intermediate term sell signal on June 19. Stand aside in soybean meal.

The USDA reported sales of 54.7 thousand metric tons bringing total commitments to 9664.3 thousand metric tons versus USDA projections for the season of 10,433  thousand metric tons.

Soybean oil: It appears that soybean oil may be turning around after a protracted period in the doldrums. August soybean oil will generate a short-term buy signal if the daily low is above OIA’s key pivot point of 40.12.

August soybean oil advanced 44 points on total volume of 112,501 contracts. Total open interest increased by 2339 contracts, which relative to volume is approximately 20% below average. However, the July contract lost 10,465 of open interest which makes the total open interest increase much more impressive (bullish). The August 2014 through August 2015 contracts all gained open interest. It appears that soybean oil may be another stealth bull market much like precious metals.

For example, from June 3 when August soybean oil made its low at 37.89 (above the contract low of 37.61) through June 18, August soybean oil has advanced 4.63% while August soybeans lost 4.05% and August meal -7.33%. On June 11, August soybean oil made a secondary low at 38.42 and from June 11 through June 18, August soybean oil is trading 4.38% higher while August soybeans have lost 1.84% and August soybean meal -4.30%.

Another factor to consider is that nearby soybean oil has inverted and the August contract is selling at a premium to the December contract. As this report is being compiled on June 19, the August contract is selling at a 20 point premium to December, which is the highest print since August sold at a 21 point premium to December on May 16. On that day, August soybean oil closed at 40.77.

Since bottoming on June 3, through June 18, total open interest has increased by 8470 contracts, which is very impressive considering the July contract has been losing open interest due to its impending 1st notice day. Managed money is short soybean oil by a ratio of 1.28:1, which is up from the COT tabulation date of June 3 when managed money was short by 1.20:1. As a result, there will be additional fuel to power soybean oil to further gains.At this juncture, we have no recommendation other than to wait for a short-term buy signal to be generated and wait for the pullback.

The USDA reported soybean oil sales of 10.33 thousand metric tons bringing total commitments to 737 thousand metric tons versus USDA projections for the season of 793.8 thousand metric tons. The season ends on September 30.

Chicago wheat:

July Chicago wheat advanced 5.25 cents on volume of 120,199 contracts. Total open interest increased by only 198 contracts. The July contract lost 11,367 of open interest and the September 2014 through July 2015 contracts all gained open interest. As this report is being compiled on June 19, July Chicago wheat has made a daily high of 5.96 1/2, which is shy of the 5.98 high made on June 18. July Chicago wheat remains on a short and intermediate term sell signal. Stand aside.

Kansas City wheat:

July Kansas City wheat advanced 15.25 cents on heavy volume of 34,471 contracts. Volume was the heaviest since June 12 when 38,713 contracts were traded and July KC wheat advanced 1.25 cents while total open interest increased by 171 contracts. On June 18, total open interest increased only 129 contracts, which relative to volume is approximately 85% below average. The July contract accounted for loss of 2,361 of open interest and the September 2014 through July 2015 contracts all gained open interest. As this report is being compiled on June 19, July KC wheat is trading 1.00 cent lower and has made a daily high of 7.38, which is shy of yesterday’s high of 7.41 3/4. July Kansas City wheat remains on a short and intermediate term sell signal. Stand aside.

The USDA reported sales in all wheat categories of 372.6 thousand metric tons bringing total commitments to date of 253.6  million bushels versus USDA projections for the season of 925 billion bushels. The season began on June 1.

Live cattle:

August live cattle lost 70 points on volume of 59,237 contracts. Total open interest declined by 1,395 contracts, which relative to volume is approximately 10% below average. The June contract lost 1,232 of open interest and August -2062, October – 516. As this report is being compiled on June 19, August cattle has reversed itself from yesterday and is trading 2.625 cents higher and has made a new contract high at 1.48025. Yesterday we advised liquidating the bull call spread and long put. Although this may have been premature, we are comfortable with being on the sidelines at current lofty prices. The trade was profitable for clients,  and this is our primary goal.

WTI crude oil:

August WTI crude oil lost 28 cents on heavy volume of 748,697 contracts. Total open interest declined by 2,939 contracts, which is minuscule and dramatically below average. The July contract accounted for loss of 33,275 of open interest. As this report is being compiled, August WTI is trading 40 cents higher and has made a daily high of 106.39, which is below yesterdays high of 106.47. After making its contract high at 107.68 on June 13, the market has been trading in a sideways pattern.Brent crude has been the out performer. August WTI remains on a short and intermediate term buy signal.Stand aside.

Brent crude oil:

August Brent crude oil advanced 81 cents on volume of 678,833 contracts. Volume increased slightly from June 17 when August Brent advanced 51 cents on volume of 655,274 and total open interest increased by 19,542 contracts. On June 18, total open interest increased only 6,573 contracts, which were relative to volume is approximately 50% below average. The August contract gained 822 of open interest. As this report is being compiled on June 19, August Brent has made another new contract high at 115.71,which is the highest print since September 9, 2013 when the high on that day was $116.10. August Brent remains on a short and intermediate term buy signal. Stand aside.

Natural gas:

July natural gas lost 5.00 cents on light volume of 196,463 contracts. Total open interest declined by 2,739 contracts, which relative to volume is approximately 40% less than average. The July contract accounted for loss of 15,226 of open interest.As this report is being compiled on June 19, July natural gas is trading 5.2 cents lower and has made a new low for the move at 4.578, which is the lowest print since June 12 (4.520). In previous reports we have explained the change in spreads has made OIA leery of being long natural gas at this juncture.

The Energy Information Administration announced that working gas in storage was 1,719 Bcf as of Friday, June 13, 2014, according to EIA estimates. This represents a net increase of 113 Bcf from the previous week. Stocks were 706 Bcf less than last year at this time and 851 Bcf below the 5-year average of 2,570 Bcf. In the East Region, stocks were 397 Bcf below the 5-year average following net injections of 70 Bcf. Stocks in the Producing Region were 350 Bcf below the 5-year average of 981 Bcf after a net injection of 27 Bcf. Stocks in the West Region were 104 Bcf below the 5-year average after a net addition of 16 Bcf. At 1,719 Bcf, total working gas is below the 5-year historical range.

Gold:

August gold gained 70 cents on very light volume of 89,610 contracts. Total open interest increased by 1,255 contracts, which relative to volume is approximately 40% less than average. As this report is being compiled on June 19, August gold has exploded to the upside on heavy volume and will likely generate a short-term buy signal on June 20. Gold has been trading in a lackluster manner during the time that silver showed leadership, and it appears that gold is about ready to play catch-up. As this report is being compiled on June 19, August gold is trading $35.20 higher on the day and has closed at $1314.10, which is the highest close since April 14, 2014 (1327.70). As we said in yesterday’s report: “In order for gold to generate a short-term buy signal, the low for the day must be above OIA’s key pivot point of $1283.50″

Platinum:

July platinum gained $7.70 on heavy volume of 17,612 contracts. Volume was the strongest since 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 18, total open interest declined by a massive 1,542, which relative to volume is approximately 230% above average meaning that liquidation was extremely heavy on the advance.The July contract accounted for loss of 2,958 of open interest, and there was not sufficient open interest increases in the forward months to offset the decline in the July contract. As this report is being compiled on June 19, July platinum is trading $18.80 higher and has closed at 1474.50. July platinum remains on a short and intermediate term buy signal. We have no recommendation.

Silver:

July silver advanced 4.6 cents on total volume of 54,557 contracts. Total open interest declined by 401 contracts, which relative to volume is approximately 65% below average. The July contract accounted for loss of 2,939 of open interest. As this report is being compiled on June 19, July silver has rocketed higher and is trading 82.3 cents above yesterday’s close. In the report of June 16, OIA recommended bullish positions in September silver and to use the June 17 low of 19.435 as the exit point. Additionally, we recommended using options because the volatility was low. On June 19, volatility has soared thereby making options far more expensive.

From the June 16 report:

“The market has been acting extremely well during the past several days and also very positively during the pullback. We are concerned that the pullback to the low on June 17 (almost touched the 50 day moving average of $19.422) may be the extent of the correction and for this reason are recommending the initiation of bullish positions using today’s low as an exit point.”