Soybeans:

July soybeans lost 19.25 and the November contract lost 8.00 cents on heavy total volume of 170,528 contracts. Volume was the highest since May 22 when July soybeans advanced 13.50 cents on volume of 229,996 contracts and total open interest increased by 6,113 contracts. On May 22, July soybeans made its contract high of 15.36 3/4. Additionally, volume was higher than May 27 when July soybeans lost 26.75 cents on volume of 145,067 contracts and total open interest declined by 5451 contracts. On June 3, total open interest declined by 4103 contracts, which relative to volume is average. The July contract lost 14,103 of open interest.

As this report is being compiled on June 4, July soybeans are trading 7.25 cents higher after making a low of 14.75 3/4, which is above yesterday’s low of 14.75. The November 2014 contract is trading down 0.50 cents.In order for July soybeans to resume its uptrend, the daily low must be above OIA’s key pivot point of $14.90 1/8. In the report of June 2, we recommended that clients purchase puts in the November 2014 contract, which will provide downside protection against weakness in old crop contracts. Yesterday, the November 2014 contract closed at $12.21 3/4, which is below its 50 day moving average. We prefer bullish soybean meal to soybeans.

Soybean meal:

July soybean meal lost $6.40 on volume of 63,403 contracts. Total open interest declined by 2,823 contracts, which relative to volume is approximately 60% above average meaning that liquidation was heavy on the decline. The July contract accounted for loss of 4,448 of open interest. As this report is being compiled on June 4, July soybean meal is trading 80 cents lower on the day after making a low of 495.50, which is below yesterday’s low of 498.10, but above the June 2 low of 494.10. We have recommended that exit points be moved up from 492.70 to slightly below 494.10. Currently the July 2014-August 2014 spread is trading at $29.10 and we recommend holding the spread first recommended in the May 20 report. Exit the spread if it dips below $23.00.

On May 27, we recommended that bullish positions be initiated in soybean meal, which could take the form of writing puts in the July contract, buying August calls, or being long July futures.

Corn:

July corn lost 7.25 cents on volume of 246,605 contracts. Volume shrank dramatically from June 2 when July corn lost 0.25 cents on volume of 327,116 contracts and total open interest increased by 5,335 contracts. Remarkably, volume was the lowest since May 28 when July corn advanced 2.75 cents on volume of 203,305 and total open interest increased by 4544 contracts.  It is somewhat surprising to see corn decline to new lows for the move ($4.56) on low volume.Yesterday’s low was the lowest print since February 18 (4.54 1/4). As this report is being compiled on June 4, July corn is trading 2.25 cents lower and has made another new low for the move at 4.55. July corn remains on a short and intermediate term sell signal, and unfortunately the market never had a rally, which would have enabled clients to initiate bearish positions. The market is massively oversold and due for a rally. Stand aside.

Kansas City wheat: On May 19, July Kansas City wheat generated a short-term sell signal and an intermediate term sell signal was generated on June 2. We are suspending reporting on KC wheat until we see a trading opportunity, and/or a change in signal.

Cotton:

July cotton gained 88 points on volume of 33,473 contracts. Volume was the highest since May 23 when July cotton lost 1.47 cents on volume of 35,385 contracts and total open interest declined by 2,702 contracts. On June 3, total open interest declined by 989 contracts, which relative to volume is approximately 20% above average meaning that liquidation was heavier than usual on a price advance. This is bearish open interest action relative to the price advance. The July contract accounted for loss of 4,933 of open interest. As this report is being compiled on June 4, July cotton is trading 1.07 cents lower. On Friday, May 23, OIA recommended the liquidation of a partial position, or as an alternate to buy calls, because we thought a countertrend rally was likely. Thus far, the rally from the low of 83.86 made on May 28 to the high of 88.60 made on June 3 has been relatively mild. Continue to hold the partial bearish position, and the long call position to offset the bearish position.

Coffee: On June 3, July coffee generated an intermediate term sell signal, after generating a short-term sell signal on May 12.

July coffee lost 1.20 cents on heavy volume of 37,067 contracts.Volume was the heaviest since May 9 when July coffee lost 11.60 cents on volume of 42,466 contracts and total open interest increased by 1,487 contracts.On June 3, total open interest declined by 826 contracts, which relative to volume is approximately 10% below average. The July contract accounted for loss of 3,215 of open interest. On June 3, July coffee made a low of 1.6735, which is the lowest print since February 20, 2014 (1.6410). As this report is being compiled on June 4, July coffee is trading 80 points lower and has made a daily low of 1.6735 matching yesterday’s low. Stand aside.

Live cattle:

August live cattle advanced 95 points on total volume of 53,630 contracts. Total open interest increased by a massive 6,434 contracts, which relative to volume is approximately 360% above average meaning that huge numbers of new longs were aggressively entering the market and driving prices to new contract highs (1.40550). As this report is being compiled on June 4, August cattle is trading 20 points lower, and has not taken out yesterday’s high. On May 29, OIA recommended the initiation of bull call spreads, and clients should continue to hold this position.

WTI crude oil:

July WTI crude oil gained 19 cents on volume of 367,799 contracts. Total open interest increased by a 10,428 contracts, which relative to volume is approximately 5% above average.Although the July contract lost 5,281 of open interest, there were open interest increases in the August 2014 through August 2015 contracts. From the time that July WTI topped out at 104.50 on May 23 through June 3, total open interest has increased by 30,168 contracts, but July WTI prices have declined by $1.69.

In summary, the shorts are in control and are keeping a lid on prices.We encourage clients to read or re-read the full report on WTI in the June 1 Weekend Wrap. July WTI remains on a short and intermediate term buy signal, therefore we are unable to recommend bearish positions, but we think the path of least resistance ultimately is lower. As we pointed out in the June 1 report, the market remains highly vulnerable to the downside,  especially because managed money is heavily long WTI. The current ratio(12.16:1) is the highest since the COT tabulation date of March 11, 2014 when managed money was long WTI crude oil by ratio of 12.49:1.

From the June 1 Weekend Wrap:

“Managed money has gotten very bullish on WTI crude oil, because oil has been trading near the highs going back to early March. For example the first major high of 2014 occurred on March 3 when April crude oil made a high of $105.22 . The secondary high occurred on April 16 when the June contract made a high of 104.99 . The third high for the year occurred on May 23 at 104.50 and again on May 27 when July WTI tested 104.50, but was unable to break above it. With managed money significantly long WTI, it remains vulnerable to a sharp downside move.”

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.4 million barrels from the previous week. At 389.5 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 0.2 million barrels last week, and are in the middle of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 2.0 million barrels last week but are below the lower limit of the average range for this time of year. Propane/propylene inventories rose 3.7 million barrels last week and are in the middle of the average range. Total commercial petroleum inventories increased by 8.8 million barrels last week.

Natural gas:

July natural gas advanced 1.7 cents on light volume of 173,872 contracts. Total open interest increased by 3,453 contracts, which relative to volume is approximately 20% below average. The July contract accounted for loss of 3,497 of open interest. On June 2 and 3, open interest increased as prices advanced. The back-to-back open interest increase along with prices is bullish, however, natural gas continues to be on a short and intermediate term sell signal.For July natural gas to generate a short-term buy signal, the daily low must be above OIA’s key pivot point of $4.638. Until then, stand aside.

Euro:

The June euro advanced 28 pips on volume of 173,626 contracts. Total open interest declined by 4,735 contracts, which relative to volume is approximately average.The relative heavy liquidation on the modest advance is testament to the nervousness of the market as it approaches the June 5 meeting of the ECB. We strongly advise clients to be out of the market and on the sidelines prior to the announcement by the European central bank. The June euro remains on a short and intermediate term sell signal.

Platinum:

July platinum lost $3.20 on volume of 9,069 contracts. Total open interest declined by a massive 727 contracts, which relative to volume is approximately 230% above average meaning that liquidation was extremely heavy on the decline. On June 3, July platinum made a new low for the move at 1428.10, which is the lowest print since 1422.20 made on May 12. As this report is being compiled on June 4, July platinum has made another new low at $1421.40, but is currently trading $4.40 above yesterday’s close. July platinum has not yet generated a short-term sell signal, but we think this is imminent.

Copper:

July copper lost 3.35 cents on volume of 48,413 contracts. Total open interest declined by a hefty 3,216 contracts, which relative to volume is approximately 160% above average meaning that liquidation was extremely heavy on the decline. As this report is being compiled on June 4, July copper is trading 3.45 cents lower and has made a new low for the move at $3.0845, which is the lowest print since 3.0840 made on May 12.

We have reprinted part of the May 18 report on copper and stated at the time: “In short, we see nothing compelling about being long copper. Until the July contract trades above OIA’s pivot point, copper will trade sideways to lower. A market that is trading near its year to date moving average is nothing to get excited about. In short, copper is trading within a normal range considering price and time frame”

After the May 18 report, July copper never traded above OIA’s key pivot point and traded sideways to lower as we had forecast.

From the May 18 Weekend Wrap:

“The rally in July copper began in earnest on May 8, and through May 15, total open interest has increased by 7,666 contracts and during this time rallied 11.20 cents. This is a healthy open interest increase relative to the advance. As the extract from the May 12 report shows, OIA stated that in order for July copper to generate an intermediate term buy signal, it had to make a low above 3.1670. After making a new high for the move on May 14 of 3.1780, the July contract has been unable to make a low above OIA’s key pivot point.We cannot determine with any degree of certainty whether copper has the wherewithal to continue its move higher, but the high of May 14 was the highest print since March 7, 2014 (3.2160).”

“Examining the moving averages, we find that copper currently is trading (Friday’s close 3.1470) slightly below the 100 day moving average of $3.1514 and slightly above the year to date moving average (93 trading days) of 3.1383. It is overbought relative to the 20 day moving average of 3.0796 and the 50 day moving average of 3.0303 However, the 50 day moving average continues to trade below the 200 day moving average of 3.2184, which is a bearish moving average set up.In short, we see nothing compelling about being long copper. Until the July contract trades above OIA’s pivot point, copper will trade sideways to lower. A market that is trading near its year to date moving average is nothing to get excited about. In short, copper is trading within a normal range considering price and time frame.”

From the May 12 report:

“On April 24, July copper generated a short-term buy signal, and as of May 13 remains on an intermediate term sell signal. For July copper to generate an intermediate term buy signal, the low the day must be above $3.1670.”