Soybeans:

July soybeans gained 11.75 and the November contract added 14.25 cents on light volume of 131,937 contracts. Volume was the lowest since May 30 when July soybeans lost 5.75 cents and total open interest increased by 1264 contracts on volume of 104,984. On June 19, total open interest declined by 2,533 contracts, which relative to volume is approximately 20% below average. The July contract lost 11,055 of open interest. As this report is being compiled on June 20, July soybeans are trading 17.00 cents lower while the November contract is trading -6.75. Remarkably, the July contract has not generated an intermediate term sell signal, but remain on a short-term sell signal. In the report of June 18, we recommended that the long put position in the November contract be liquidated.We have no recommendation at this juncture other than to stand aside.

Soybean meal: 

July soybean meal lost $2.00 on volume of 66,586 contracts. Total open interest increased by 1,084 contracts, which relative to volume is approximately 35% less than average. The July contract lost 5,143 of open interest. As this report is being compiled on June 20, the July contract is trading $5.50 lower and is trading on the lows of the day. July soybean meal is on a short-term sell signal, and an intermediate term buy signal. Stand aside.

Soybean oil: 

August soybean oil advanced 47 points on volume of 113,450 contracts. Total open interest declined by 4,787 contracts, which relative to volume is approximately 55% above average meaning that liquidation was substantial on the advance. The July contract accounted for loss of 10,132 of open interest. The August 2014-December 2014 spread widened to 22 points premium to August on June 19, and takes out 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.

As this report is being compiled on June 20, August soybean oil is trading down 20 points and the December contract is trading 25 points lower, meaning the spread is widening out even though soybean oil is pulling back. This is very positive bullish spread action.On June 19, August soybean oil made a high of 40.79, which is the highest print since May 23 (41.16) and on June 20, the high of June 19 has not been taken out. The challenge for August soybean oil is to move above OIA’s key pivot points of 41.15 and 41.58.

Live cattle:

August live cattle gained 2.450 cents on surprisingly light volume of 55,415 contracts. Volume declined from the 59,237 contracts traded on June 18 when August cattle lost 70 points and total open interest declined by 1,395 contracts. On June 19, total open interest increased by a massive 6047 contracts, which relative to volume is approximately 320% above average meaning that aggressive new longs entered the market and drove prices to new contract highs 1.48025. The June contract lost 1,920 of open interest and for a change the August contract gained 2,361 of open interest. As this report is being compiled on June 20, August cattle is trading 1.025 cents lower and has made a daily low of 1.46050. In the report of June 17, we recommended liquidating the bull call spread and the long put position. Clients should be on the sidelines.

Sugar #11: On June 19, October sugar generated a short and intermediate term buy signal.

October sugar advanced 34 points on heavy volume of 212,346 contracts.Volume contracted somewhat from June 18 when 217,576 contracts were traded and total open interest increased by 9,780 contracts. On June 19, total open interest increased by 6646 contracts, which relative to volume is approximately 20% above average. The July contract accounted for loss of 17,753 of open interest, which makes the total open interest increased much more oppressive (bullish). On June 19, October sugar reached its highest level since 18.89 made on May 16. From June 13 through June 19, October sugar advanced 1.18 cents while total open interest increased by 2714 contracts. OIA  is not impressed by the open interest increase relative to the price advance.

The reason for the rally has been a lack of monsoon rain particularly in India, which is a large sugar producer. Weather markets are extremely dangerous to trade, and sugar can be difficult to on a good day. As this report is being compiled on June 20, October sugar is trading 5 points higher and has made a new high for the move at 18.79. We are advising against initiating long positions at this juncture, and one of the reasons is October sugar is trading against resistance going back to early March 2014. Although the moving averages are in a bullish set up: 50 day 18.17, 100 day 17.95 and 200 day 17.76, the 20 day moving average remains at 18.01, and  October sugar is massively overbought relative to its moving averages. Additionally, according to OIA protocols, October sugar should go through a corrective phase lasting 1-3 days. Stand aside.

WTI crude oil:

August WTI crude oil advanced 46 cents on heavy volume of 781,559 contracts. Volume was the strongest since June 12 when WTI crude oil advanced $2.13 on volume of 896,614 contracts and total open interest increased by 24,318 contracts. On June 19, total open interest declined by 8,830 contracts, which relative to volume is approximately 45% less than average. The July contract lost 37,172 of open interest. June 19 was the 1st time since May 23 that total open interest declined on a price advance. For example, on May 23, the last time that open interest declined on a price advance, July WTI advanced 61 cents while total open interest declined by 8919 contracts on volume of 340,060 contracts.

As this report is being compiled on June 20, August WTI is trading 67  cents higher and it appears that August WTI crude oil may finally be moving out of its sideways pattern and looking to move higher. Although, August WTI remains on a short and intermediate term buy signal, we recommend a stand aside posture and will explain the reasons for this in the upcoming Weekend Wrap.

Brent crude oil:

August Brent crude oil advanced 80 cents on volume of 671,837 contracts. Total open interest increased by 13,092 contracts, which relative to volume is approximately 20% below average. The August contract gained 2,152 of open interest. As this report is being compiled on June 20, August Brent is trading 49 cents lower on the day after making a new contract high on June 19 of 115.71, which is the highest print on the continuation chart since September 9, 2013 (116.10). Stand aside.

Natural gas:

July natural gas lost 7.5 cents on heavy volume of 366,960 contracts. Volume was the heaviest since June 12 when July natural gas advanced 25.4 cents on volume of 533,085 contracts and total open interest increased by 21,609 contracts. On June 19, total open interest declined by 1441 contracts, which is 85% below average. The July contract lost 20,828 of open interest. On June 19, the July 2014-November 2014 spread closed at a 3.4 cents premium to November.We have been warning about the dramatic shift in the term structure of the natural gas market, and as a result have advised a stand aside posture. As this report is being compiled on June 20, July natural gas is trading 5.1 cents lower and has made a new low for the move at 4.516, which is the lowest print since 4.504 made on June 11. It appears that natural gas is about to generate a short-term sell signal. Stand aside.

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.”

Euro:

The September euro advanced 48 pips on volume of 153,672 contracts. Total open interest increased by 3,668 contracts, which relative to volume is approximately 10% below average.The September euro remains on a short and intermediate term sell signal, and we want to see a rally up to the 1.3677 area before OIA would consider recommending bearish positions. For now, stand aside.

British pound:

The September British pound advanced 89 pips on volume of 102,167 contracts. Total open interest increased by 5,778 contracts, which relative to volume is approximately 120% above average meaning that new longs were aggressively entering the market and driving the September pound to a new contract high and multi-year high of 1.7051. We have no recommendation at this juncture.

Gold: On June 20, August gold will generate a short and intermediate term buy signal.

August gold advanced by a spectacular $41.40 on heavy volume of 245,499 contracts. Volume was the strongest since May 28 when 315,282 contracts were traded and August gold closed at 1259.70. On June 19, total open interest increased by a healthy 6168 contracts, which relative to volume is average. On June 19, August gold made a new high for the move at 1322.00, which is the highest print since 1327.30 made on April 15, 2014.As this report is being compiled on June 20, August gold is trading $3.50 higher on the day. Now that gold has generated a short and intermediate term buy signal, the market should undergo a correction lasting 1-3 days, and this will be the opportunity to initiate bullish positions.

Platinum:

July platinum gained $23.70 on heavy volume of 19,124 contracts. Volume exceeded that traded on June 18 when July platinum advanced $7.70 on volume of 17,612 contracts and total open interest declined by 1,542 contracts. Additionally, volume was the highest since June 12 when July platinum lost 39.80 on volume of 30,820 contracts and total open interest increased by 2064 contracts. On June 19, open interest increased only 267 contracts, which relative to volume is approximately 45% below average.The July contract lost 2885 of open interest, which makes the total open interest increased more impressive (bullish). Platinum made a daily high of 1475.00, which is its highest print since 1485.20 made on June 12. As this report is being compiled on June 20, July platinum is trading 12.30 lower on the day. Stand aside in platinum because the market has been range bound for most of 2014.

Silver:

July silver advanced 87 cents on huge volume of 117,386 contracts.Volume was the strongest since April 24 when 135,155 contracts were traded and July silver closed at $19.714. On June 19, total open interest increased by 1850 contracts, which relative to volume is approximately 35% less than average. However, the July contract lost 4128 of open interest, which makes the total open interest increased more impressive (bullish). Since June 2, July silver has closed higher every day with the exception of June 6. The market is massively overdue for a pullback.Maintain bullish positions recommended in the June 16 report.