Bloomberg Access:{OIAR<GO>}

The US Employment report was released today by the US Department of Labor, and this is roiling markets on June 3. We will issue a complete report on today’s activity on Monday after we have obtained the final open interest stats, closing prices and volume. We will provide OIA’s key pivot point for buy/sell signals on June 3 to give you a frame of reference for next week’s activity.

Corn:

July corn advanced 1.50 cents on heavy volume of 452,013 contracts. Volume exceeded that of June 1 when the July contract gained 9.00 cents on volume of 386,934 contracts and total open interest increased by a massive 22,444. On June 2, total open interest declined by 2,890 contracts, which relative to volume is approximately 65% below average. The July contract lost 25,178 of open interest, which means there were insufficient open interest increases in the forward months to offset the decline in July. Yesterday, the July contract made a new high for the move of 4.19 1/2 and this has not been taken out on June 3. Yesterday’s open interest action confirmed liquidation despite increased volume that exceeded the previous day when corn had a sharp rally.

As this report is being compiled on June 3, the July contract is trading unchanged on the day, yet July Chicago wheat is trading 8.00 above yesterday’s close and has made a new high for the move of 4.94 1/4, the highest print since 4.97 made on April 28. However, this is not helping the corn market, nor is the sharp decline in the dollar index which is the result of the Employment report released earlier this morning. July corn remains on short and intermediate term buy signals. We have no recommendation.

Soybeans:

July soybeans advanced by a massive 44.50 cents on huge volume of 497,781 contracts.Volume was the strongest since May 10 when the July contract advanced by 57.50 (based upon a bullish USDA report) on volume of 571,446 contracts and total open interest increased by 30,229.

On June 2, total open interest declined by 5,161 contracts, a major disappointment considering the magnitude of the advance and volume traded. The July and November 2016 contracts lost a total of 12,389 and there were insufficient open interest increases in the forward months to offset the decline in the two delivery months. Yesterday’s action was abysmal and this was further confirmed by the activity in soybean meal which experienced a move of +$19.20 (close to limit up) on volume of 163,885 and total open interest declined by 1,623.

Although price action in soybean meal has been very impressive, total open interest action has been almost consistently negative. As this report is being compiled on June 3 the July contract has made another new contract high of $11.69, which takes out 11.48 1/4 made on July 17, 2014.

As we pointed out in yesterday’s report, there is no resistance until $12.49 1/4, which was the low made on July 9, 2014 and is the high of the gap between 11.48 1/4 and 12.49 1/4. In previous reports we have emphasized that, soybeans tend to top out in either June or July and with prices currently at nosebleed levels, it is becoming increasingly hazardous to participate in the market. If long from lower levels make sure sell parameters are in place. Do not attempt to pick a top in this market and do not enter new bullish positions.

Lean hogs: On June 2, July and August lean hogs generated short and intermediate term buy signals.

August lean hogs advanced 1.65 cents on strong volume of 46,343 contracts. Volume exceeded that of June 1 when the August contract gained 1.375 cents on volume of 45,328 contracts and total open interest increased by a massive 4,838. On June 2, total open interest increased massively again, this time by 4,618 contracts, which relative to volume is approximately 300% above average. The June contract accounted for a loss of 813 of open interest.

The action for the past two days has been outstanding, and it continues on June 3 with the August contract trading 1.525 cents higher with a new high for the move of 85.900, which takes out 84.250 made the week of June 1, 2015 for the July 2015 contract. There does not appear to be any resistance until the January 2015 high of 91.500.

The anticipated driver of prices is the extreme tightness in pork supply in China and Chinese hog prices have increased by over 35% during the past year. If exports pickup substantially, higher prices could be in the offing, and the market is already anticipating this. We have no recommendation.

Gold:

August gold lost $2.10 on light volume of 120,001 contracts. Total open interest declined by a massive 5,698 contracts, which relative to volume is approximately 120% above average meaning that liquidation was extremely heavy on yesterday’s modest decline. As this report is being compiled after the release of the US Employment report, the August contract is rocketing higher, up $29.50 or +2.44%.

Remarkably, total open interest has declined every day from May 17 through June 2 (13 days) with one exception that occurred on May 31 when the August contract gained 80 cents on volume of 256,501 and total open interest increased by 1,241. In summary, there has been massive liquidation in gold and we have no doubt that today’s COT report will show that managed money has substantially reduced their net long position. Also, there is a high likelihood that next Friday’s the report also will show another reduction in the net long position.

The first indication that August gold may be in the process of generating a short-term buy signal will be if the daily low is above OIA’s pivot point for June 3 of 1230.90. A confirmed short term buy signal will occur if the daily low is above OIA’s key pivot point for June 3 of 1261.10. Stand aside.

Silver:

July silver advanced 9.8 cents on volume of 46,805 contracts. Total open interest declined by a substantial 1,912 contracts, which relative to volume is approximately 55% above average. The July contract accounted for loss of 3,529 of open interest. As this report is being compiled on June 3 the July contract is trading 33 cents above yesterday’s close.

The first indication that silver may generate a short-term buy signal will be if the daily low is above OIA’s pivot point for June 3 of $16.298. A confirmed short term buy signal will occur if the daily low is above OIA’s key pivot point for June 3 of 16.922. Stand aside.

Dollar index: The June dollar index will generate a short term sell signal if the daily high is below OIA’s key pivot point for June 3 of 94.627. Currently, the June contract is trading 1.546 points lower on the day. The June dollar index remains on an intermediate term sell signal.

Euro: The June euro will generate a short-term buy signal if the daily low is above OIA’s key pivot point for June 3 of 1.1318. Currently, the June euro is trading 1.92 cents above yesterday’s close and has made a daily low of $1.1139. The June euro remains on an intermediate term sell signal.

Yen: The June yen will generate a short term buy signal if the daily low is above OIA’s key pivot point for June 3 of. 9212. The June yen remains on an intermediate term buy signal. Currently, the June yen is trading 199 pips above yesterday’s close and has made a daily low of .9164.

Australian dollar: The June Australian dollar will generate a short-term buy signal if the daily low is above OIA’s key pivot point for June 3 of 73.14. The June Australian dollar remains on an intermediate term sell signal. Currently, the June contract is trading 1.27 above yesterday’s close and has made a daily low of 72.16.

Canadian dollar: The June Canadian dollar will generate a short-term buy signal if the daily low is above OIA’s key pivot point for June 3 of 77.31. The June Canadian dollar remains on an intermediate term buy signal. Currently, the June contract is trading 99 pips above yesterday’s close and has made a daily low of 76.29.

10 Year Treasury Note: The September 10 year treasury note will generate a short-term buy signal if the daily low is above OIA’s key pivot point for June 3 of 130-105. The September note remains on an intermediate term sell signal. Currently, the September contract is trading 1-030 points above yesterday’s close and has made a daily low of 129-270.