On June 30, the USDA will release its grain stocks and acreage report. This is a major report, and we recommend that clients be on the sidelines until after the release of the report.

Soybeans:

August soybeans lost 7.75 and the new crop November contract lost 9.25 cents on total volume of 178,192 contracts. Total open interest increased by 7,748 contracts, which relative to volume is approximately 60% above average meaning that aggressive new short sellers were entering the market and driving prices lower. The July contract accounted for loss of 3509 of open interest, which makes the total open interest increased more impressive (bearish). As this report is being compiled on June 25, August soybeans are trading 2.50 cents lower while the November contract is -2.25. The August and November contracts remain on short-term sell signals, but intermediate term buy signals. Stand aside. Soybean meal:

August soybean meal lost $4.50 on volume of 79,268 contracts. Total open interest increased by 748 contracts, which relative to volume is approximately 50% below average. However the July contract lost 3936 of open interest, which makes the total open interest increase more impressive (bearish). As this report is being compiled on June 25, August soybean meal is trading 2.40 higher on the day. Soybean meal remains on a short-term sell signal, but an intermediate term buy signal.

Soybean oil:

August soybean meal advanced 29 points on fairly heavy volume of 112,612 contracts.  Total open interest increased by 830 contracts, which relative to volume is approximately 65% below average. However, the July contract lost 7365 of open interest, which makes the total open interest increase more impressive (bullish). On June 23, August soybean oil generated a short-term buy signal, however the market has not had a pullback. Stand aside.

Live cattle:

August live cattle advanced sharply by 2.80 cents on surprisingly light volume of 56,438 contracts.It should be noted that average daily volume to date is 54,452 contracts, and volume on June 24 exceeded year to date average daily volume by approximately 2,000 contracts. Relatively low volume on sharp advances has become a familiar pattern. On June 24, total open interest increased substantially by 4341 contracts, which relative to volume is approximately 210% above average meaning that aggressive new longs were entering the market and driving prices to new contract highs (1.49825). The June contract lost 1334 of open interest and August – 182, which makes the total open interest increase more impressive (bullish). As this report is being compiled on June 25, August cattle is trading 1.10 cents higher and has made a new contract high of 1.51550. The market is moving parabolically, and the top may be signaled by an advance on major volume accompanied by a massive increase or decrease of open interest.We recommend a stand aside posture.

WTI crude oil:

August WTI crude oil lost 14 cents on light volume of 398,730 contracts. Total open interest increased by 13,301 contracts, which relative to volume is approximately 35% above average, which means there was a battle between longs and shorts and August WTI closed fractionally lower as a result. The July and August contracts lost a total of 2929 of open interest, which makes the total open interest increase neutral. As this report is being compiled on June 25, August WTI is trading 39 cents higher and has made a daily low of 105.47, which is above the low of 105.25 made on June 24 and the June 19 low of 105.11. In the early evening session on June 24, August WTI spiked higher at the opening and made a high of 107.50, which is the highest print since 107.45 made on June 23. The contract high for August WTI was made on June 13 at 107.68. It appears the market is having considerable difficulty breaking above the 107.50 area, and it may take some very negative news out of the Middle East before August WTI is able to overcome resistance.Although WTI seems to rebound from the lows, which is positive, we are concerned about a possible deal with Iran allowing them to pump more oil.We wrote about this in the June 22 report.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.7 million barrels from the previous week. At 388.1 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories increased by 0.7 million barrels last week, and are in the middle of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 1.2 million barrels last week but are near the lower limit of the average range for this time of year. Propane/propylene inventories rose 2.4 million barrels last week and are in the upper half of the average range. Total commercial petroleum inventories increased by 5.2 million barrels last week.

Natural gas:

August natural gas advanced 8.8 cents on volume of 235,576 contracts. Total open interest increased by 507 contracts, which is minuscule and dramatically below average. However, the July contract lost 5065 of open interest, which makes the total open interest increase more impressive (bullish).As this report is being compiled on June 25, August natural gas is trading almost unchanged on the day after making a high of 4.606, which is the highest print since 4.614 made on June 20. August natural gas remains on a short and intermediate term buy signal. Stand aside.

Gold:

August gold advanced $2.90 on volume of 127,692 contracts. Total open interest increased by 1677 contracts, which relative to volume is approximately 45% below average. Gold made a new high for the move at $1326.60, which is the highest print since 1327.30 made on April 15. From June 3 through June 24, August gold has rallied each day with the exception of June 4,6 and 17. The market has not had a correction since it generated a short and intermediate term buy signal on June 20. In our view, this underscores firm support for gold, despite the tepid volume of the past 2 trading sessions. The 20 day moving average of 1273.90 remains below the 50 day moving average of 1285.20. It appears highly likely the 50 day moving average will be crossing above the 200 day moving average of 1289.80, which should garner a certain amount of bullish talk in the financial press.We are friendly to gold, but think silver is where speculators should be at this particular time.

Platinum:

October platinum gained $15.60 on huge total volume of 38,715 contracts. Volume was the highest of 2014 and took out the previous high of 35,764 contracts made on March 26 when October platinum closed at 1409.70.On June 24, total open interest declined by 197 contracts, which relative to volume is approximately 75% below average. The July contract lost 8,990 of open interest, which makes the total open interest decline much more impressive (bullish). In short, there was sufficient buying in the forward months to offset the hefty decline in the July contract. As this report is being compiled on June 25, October platinum is trading $1.20 higher on the day. October platinum remains on a short and intermediate term buy signal, but as stated before, we think the big play on the long side of precious metals is in silver.

Silver:

September silver advanced 12.7 cents on heavy volume of 111,466 contracts. volume was the highest since June 20 when silver advanced 30.2 cents on volume of 109,636 contracts and total open interest declined by 265 contracts. On June 24, total open interest declined by a hefty 5155 contracts, which relative to volume is approximately 75% above average meaning that liquidation was heavy on yesterday’s advance. The July contract accounted for loss of 10,992 of open interest.We are a bit concerned about 2 back-to-back days of open interest declines, but the market is firm despite its overbought condition.

Remarkably, from June 2 through June 24, September silver has had only 2 days when it closed lower: June 6 and June 23. As this report is being compiled on June 25, September silver has closed at 21.171, which is the highest closing price since March 17 ($21.338). Continue to hold bullish positions recommended on June 16.

For the month of June through June 24, September silver is leading the pack with a gain of 11.97%, August gold +5.39%, October platinum +1.20%, September copper +0.54%.

Year to date (June 24), August gold is the out performer with a gain of 9.53%, September silver +7.65%, October platinum + 6.76%, September copper -6.67%.

Dollar index: The September dollar index will generate a short-term sell signal on June 25. This has bullish implications for commodities and precious metals in particular.