OIA will provide an analysis on the USDA’s report released on June 30.

June 30 is 1st notice day for all July grain contracts.

Soybeans:

August soybeans lost 3.75 and the November contract lost 16.25 cents on total volume of 200,650 contracts. Volume was the highest since June 17 when soybeans lost 23.50 cents on volume of 212,406 contracts and total open interest declined by 2,668 contracts. On June 27, total open interest declined by 9,344 contracts, which relative to volume is approximately 75% above average meaning that liquidation was very heavy on the modest decline in old crop and a larger decline in new crop soybeans. The July contract accounted for loss of 15,052 of open interest. As this report is being compiled on June 30, after the release of the USDA report, August soybeans are trading 37.00 cents lower while the November contract – 39.75. The August contract has made a low of 13.14 1/4 and the November contract, 11.75 3/4. More than likely, August and November soybeans will generate an intermediate term sell signal tomorrow. We have been advising clients to stand aside in all grains until after the report, and the downtrend continues across the board. Stand aside.

Soybean meal:

August soybean meal gained $1.40 on volume of 76,415 contracts. Total open interest declined by a hefty 6,206 contracts, which relative to volume is approximately 230% above average meaning that liquidation was off the charts heavy.The July contract accounted for loss of 5,882 of open interest. As this report is being compiled after the release of the USDA report, August soybean meal is trading $19.40 lower. Undoubtedly, August soybean meal will generate an intermediate term on July 1. Stand aside

Soybean oil:

August soybean oil lost 50 points on volume of 75,693 contracts.Total open interest declined by 1,719 contracts, which relative to volume is approximately 10% below average. The July contract accounted for loss of 2,474 of open interest. As this report is being compiled on June 30, August soybean oil is trading 80 points lower on the day and has made a daily low of 38.90, which is at its lowest level since June 13 (38.69). Soybean oil will generate a short-term sell signal on July 1 which will reverse the short-term buy signal generated on June 23. Stand aside

Corn:

September corn gained 4.00 cents on volume of 356,282 contracts. Total open interest declined by 3,255 contracts, which relative to volume is approximately 250% above average meaning that liquidation was off the charts heavy. The July contract accounted for loss of 41,797 contracts.As this report is being compiled on June 30 after the release of the USDA report, September corn is trading 14.75 cents lower and has made a new contract low of $4.19, which takes out the previous contract low of 4.28 1/4.Corn remains on a short and intermediate term sell signal.Stand aside

Chicago wheat:

Chicago wheat advanced 8.75 cents  on volume of 92,686 contracts. Total open interest declined by 1,371 contracts, which relative to volume is approximately 45% below average. The July contract accounted for loss of 6,711 of open interest. As this report is being compiled on June 30, September Chicago wheat is trading 13.00 cents lower and has made a daily low of $5.67 1/2, which is just shy of its contract low of 5.65 1/2. September Chicago wheat remains on a short and intermediate term sell signal. Stand aside.

Kansas City wheat:

September Kansas City wheat advanced 8.50 cents on volume of 23,308 contracts. Total open interest declined by 1,514 contracts, which relative to volume is approximately 150% above average. The July contract accounted for loss of 2,485 of open interest. As this report is being compiled on June 30 after the release of the USDA report, September KC wheat is trading 6.25 cents lower and has made a daily low of the $7.05, which is significantly above the contract low of 6.08 3/4. KC wheat remains on a short and intermediate term sell signal. Stand aside.

Live cattle:

August live cattle lost 1.625 cents on volume of 67,782 contracts. Total open interest declined by 2,645 contracts, which relative to volume is approximately 55% above average, which is healthy liquidation on the decline. The June contract accounted for loss of 1,340 and August – 5,176 of open interest. As this report is being compiled on June 30, August cattle is trading 45 points lower and has made a daily low of 1.49750 after making a daily high of 1.52 800, which is shy of the all-time high made on June 26 of 1.53025. Stand aside.

WTI crude oil:

August WTI crude oil lost 10 cents on very light holiday week volume of 273,667 contracts. Total open interest declined by 3,178 contracts, which relative to volume is approximately 50% below average. The August contract accounted for a loss of 6,323 of open interest. As this report is being compiled on June 30, August crude oil is trading 56 cents lower and has made a daily low of 104.66, which is the lowest print for the move. Since making its contract high on June 13 at 107.68, the market has been trading in a sideways to lower pattern. Additionally, the decline has been in a very orderly manner on low volatility. However, it is apparent managed money is losing its enthusiasm for WTI. The low long to short ratio supports this and the current ratio of 9.52:1 is the lowest since the COT tabulation date of April 1, 2014 when managed money was long WTI crude oil by ratio of 7.51:1.

August WTI crude oil remains on a short and intermediate term buy signal, and though the market has not had the momentum to carry it beyond the June 13 contract high. However, we think it is premature to call an end to the uptrend. We continue to recommend a stand aside posture..

Natural gas: On June 27, August natural gas generated a short and intermediate term sell signal.

August natural gas lost 3.2 cents on light volume of 163,691 contracts. Total open interest declined by 3,939 contracts, which relative to volume is average. The August contract accounted for the loss of 6064 of open interest. As this report is being compiled on June 30, August natural gas is trading 6.1 cents higher on the day.We have been skeptical of the long side of natural gas for couple of weeks, and gave our reasoning in the June 15 report when prices were significantly higher than today.

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.”

Gold:

August gold advanced $3.00 on light volume of 111,100 contracts. Total open interest increased by 1349 contracts, which relative to volume is approximately 45% below average. As this report is being compiled on June 30, August gold is trading 60 cents higher on the day and has made a daily low of 1311.00, which took out the June 27 low of 1313.20, but is above the June 26 low of 1306.80. Gold remains on a short and intermediate term buy signal. We have no recommended position in gold, but it should be traded from the long side.

Platinum:

October platinum gained $9.00 on healthy volume of 16,693 contracts. Total open interest increased by a massive 935 contracts, which relative to volume is approximately 120% above average meaning that new longs were heavily entering platinum and driving prices higher. The July contract accounted for loss of 2188 of open interest, which makes the total open interest increase much more impressive (bullish). We have no recommendation in platinum,  and it remains on a short and intermediate term buy signal.

Silver:

September silver lost 2.8 cents on volume of 71,886 contracts. Total open interest declined by 988 contracts, which relative to volume is approximately 45% less than average. The July contract accounted for loss of 7,746 of open interest and there were sufficient open interest increases in the forward months to partially offset the decline in the July contract. As this report is being compiled on  June 30, September silver is trading 8.9 cents lower and has made a daily low of 20.805, which is its lowest price since $20.76 made on June 25. If not long silver, today would be a good day to enter new bullish positions, or add to existing ones. OIA recommends using the June 25 low of 20.76 as an exit point for all positions.

Swiss franc: On June 27, the September Swiss franc generated a short-term buy signal, but remains on an intermediate term sell signal.

The September Swiss franc advanced 34 pips on volume of 28,233 contracts. Total open interest increased by 260 contracts, which relative to volume is approximately 50% below average.Open interest action in the Swiss franc has been positive and from June 19 through June 27, total open interest has increased by 2,213 contracts while the September Swiss franc gained 93 pips. This is very positive for prices moving forward, and indicates that speculative shorts are not liquidating.

As this report is being compiled on June 30, the September Swiss franc is trading 51 pips higher and has made a new high for the move at 1.1292, which is the highest print since 1.1293 made on May 12.The Swiss franc has been on an upward trajectory since June 19 and setbacks have been few. Once managed money determines the market is definitely headed higher, short covering will start to kick in which could send the franc considerably higher. The market should have a pullback, especially since it just generated a short-term buy signal. Setbacks are the opportunity to enter bullish positions.

From the June 29 Weekend Wrap:

“On Friday, the September Swiss franc closed at 1.1229, which is below the 50 day moving average of 1.1242, but above the 20 day moving average of 1.1167. The close on Friday was the highest since May 15 (1.1247). Usually, after the generation of a buy signal, the market has a tendency to pullback from 1-3 days, but in this case it may not pullback much due to the current price being sandwiched between the 20 and 50 day moving averages. The September option strike of 1.12000 priced at $1537.50 on Friday is inexpensive and we think the risk at this juncture is low. Additionally, managed money is short the Swiss franc, and the vacillation between their being net long and net short indicates the likelihood of significant short covering as the market continues to move higher.The September Swiss franc should find strong support at 1.1170, and this should be used as an exit point for bullish positions.”