Soybeans:

July soybeans lost 22 cents and the November contract declined 6.75 on total volume of 193,520 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 June 5, open interest declined only 2,331 contracts, which relative to volume is approximately 45% less than average. The July contract accounted for loss of 14,697 of open interest. Open interest in the November contract increased by 9,492 and this is bearish. The minor decline of total open interest is indicative of market participants who are refusing to liquidate. As this report is being compiled on June 6, July soybeans are trading 3.25 cents lower and trading on the lows of the day while the November contract is trading 1.00 cent higher. Both July and November soybeans will generate a short-term sell signal on June 6. In the report of June 2, OIA recommended buying puts in the November contract and this position is profitable. Continue to hold it. Do not trade soybeans from the long side.

Soybean meal:

July soybean meal lost $5.90 on volume of 75,200 contracts. Total open interest declined only 165 contracts, which is minuscule and dramatically below average. The July contract accounted for loss of 5,019 contracts. The loss of open interest in the July contract was offset by open interest increases in the August 2014 through January 2015 contracts. However, the open interest increases in the forward months are bearish. As this report is being compiled on June 6, July soybeans are trading $3.80 lower on the low of the day. Yesterday, clients should have exited bullish positions in July soybean meal at approximately 494.10 and should be on the sidelines. Continue to hold the long July 2014 short August 2014 spread and exit the position if it dips below $23.00 premium to July. Neither old crop July, nor new crop December soybean meal will generate a short-term sell signal on June 6 . This is testament to the very strong performance of the commodity, and a rally attempt to the old high of $509.40 cannot be ruled out.

Corn:

July corn lost 7.25 cents on volume of 268,354 contracts. Volume was the highest since June 2 when July corn lost 0.25 cents on volume of 327,116 contracts and total open interest increased by 5,335 contracts. On June 5, total open interest increased by a hefty 8,314 contracts, which relative to volume is approximately 20% above average. The July contract accounted for loss of 13,995 of open interest, which makes the total open interest increase much more impressive (bearish). Yesterday, July corn made a new low at $4.48 1/2, and this has been taken out on June 6 (4.47), which is the lowest print since 4.45 3/4 made on February 4, 2014. Currently, as this report is being compiled, July corn is rallying and trading 7.50 cents higher on the day. July corn remains on a short and intermediate term sell signal. Stand aside.

 Cotton:

July cotton lost 58 points on volume of 24,441 contracts. Total open interest declined by a massive 2,752 contracts, which relative to volume is approximately 325% above average meaning that liquidation was off the charts heavy. The July contract lost 3,578 of open interest. For the past 3 days beginning on June 3 through June 5, total open interest has declined by 4971 contracts and cotton prices have lost 98 points, 2 points shy of 1.00 cent. As this report is being compiled on June 6, July cotton is trading 40 points lower and has made a daily low of 85.03, which is above the low for the move of 83.86 made on May 28. Continue to hold bearish positions, but they should be offset by some long calls in the event of a significant rally, which could occur at any time.

Live cattle:

August live cattle advanced 1.15 cents on volume of 54,657 contracts. Total open interest increased by a massive 5971 contracts, which relative to volume is approximately 310% above average meaning that massive numbers of new longs were entering the market and driving prices to new contract highs (1.41575). The June contract accounted for loss of 1,598 of open interest, which makes the total open interest increase much more oppressive (bullish). As this report is being compiled on June 6, August cattle has made a new contract high at 1.42000. In the May 29 report, OIA recommended that clients initiate bull call spreads after August cattle traded above OIA’s key pivot point of 1.37690. Continue to hold this position.

WTI crude oil:

July WTI crude oil lost 16 cents on volume of 437,503 contracts. Total open interest increased by only 171 contracts, which is minuscule and dramatically below average. The July contract lost 11,358 of open interest, but this was offset by open interest increases in the August 2014 through May 2015 contracts. As this report is being compiled on June 6, July WTI is trading 20 cents higher on the day.There are many reasons not be long WTI, and we covered some of these in the June 1 Weekend Wrap. However, it now appears likely that July gasoline is on the verge of generating a short-term sell signal and Brent crude oil will generate a short-term sell signal if the high for the day is below OIA’s key pivot point of $107.98. July heating oil remains on a short and intermediate term sell signal. In short there are sectors within the crude oil complex that are clearly breaking down. Although WTI crude oil remains on a short and intermediate term buy signal, we strongly advise that the long side of this market be avoided.

Natural gas: July natural gas will generate a short-term buy signal on June 6.

July natural gas advanced 6.1 cents on heavy volume of 303,543 contracts.Volume was the heaviest since May 22 when natural gas lost 12.1 cents on volume of 378,764 contracts and total open interest declined by 11,104 contracts. On June 5, total open interest increased by a massive 12,328 contracts, which relative to volume is approximately 55% above average, meaning that new longs were aggressively bidding prices higher and pushing the July contract to a high of $4.723, which is the highest print since 4.766 made on May 8.

Yesterday’s open interest increase along with price is the 4th day in a row that this has occurred. Interestingly, as prices have risen recently there has not been a day that open interest declined, which would be indicative of shorts throwing in the towel and longs taking profits. According to the COT report, which was released last Friday, managed money was long natural gas by a ratio of 1.39:1, which is the lowest reading since early December 2013. In short, there are significant numbers of managed money shorts who will have to cover as prices move higher. However, do not enter new long positions at current prices. July natural gas is overbought relative to its 20 day moving average of 4.521 and the 50 day moving average of 4.604. Additionally, after the generation of a buy signal, the market has a tendency to pullback from 1-3 days, and this is the opportunity to initiate bullish positions.

Copper: July copper will generate a short-term sell signal on June 6 and remains on an intermediate term sell signal.

July copper lost 25 points on volume of 63,190 contracts. Total open interest declined by 606 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on June 6, July copper is trading 2.70 cents lower and has made a new low for the move at $3.0260. Stand aside.

From the June 1 Weekend Wrap:

“In short, copper has been experiencing a rally in a bear market. Adding further credence to this is the bearish moving average set up, which shows the 20 day moving average of 3.1229 below the 100 day moving average of 3.1332. Additionally, the 50 day moving average of 3.0625 is below the 100 and 200 day (3.2133) moving averages. With managed money significantly long copper, once the market generates a short-term sell signal, there will be plenty of fuel to fund a further downside move. Although OIA has been bearish on copper, a short-term buy signal was generated on April 24.”

Platinum:

July platinum gained $11.20 on volume of 12,191 contracts. Total open interest declined by 336 contracts, which relative to volume is average.For the past 4 trading sessions beginning on June 2  through June 5, July platinum has lost $9.10, and open interest has declined by a massive 2,775 contracts. Managed money was long platinum by a ratio of 14.95:1 in the latest COT report, which explains the massive decline of open interest as prices moved sharply lower from the high of 1497.80 on May 22. For July platinum to resume its uptrend in earnest, the low of the day must be above OIA’s key pivot point of 1458.30. Stand aside.

Euro:

The June euro advanced 59 pips on extraordinarily heavy volume of 527,863 contracts.Volume was the heaviest since March 13, 2014 when 562,086 contracts were traded and the March euro closed at 1.3859. On June 5, total open interest increased by 4,961 contracts, which relative to volume is approximately 50% below average.After the release of the decision by the ECB, the euro made a huge volume spike low at 1.3502. To put the move in context, consider during the 15 minute period of the move to new lows, 78,899 contracts changed hands, which is almost 15% of total volume traded in yesterday’s session.

The market then rallied to a high of 1.3671 and closed higher on the day. As this report is being compiled on June 6, the June euro is trading 19 pips lower and has made a high of 1.3677, which is just a mere 6 pips higher than yesterday.Yesterday’s action and the lack of follow-through on June 6 must be disappointing to euro bulls. The euro remains on a short and intermediate term sell signal , but we do not think it is wise to enter bearish positions at this juncture. The low made in yesterday’s trading may represent a significant point of support. We much prefer to wait for a further rally before considering bearish positions.

British pound:

The June British pound advanced 72 pips on heavy volume of 135,043 contracts. volume was the heaviest since March 13 when 230,069 contracts were traded and the March pound closed at 1.6615. On June 5, total open interest increased by 5,802 contracts, which relative to volume is approximately 55% above average meaning that new aggressive longs were entering the market and pushing prices higher.Yesterday, the June pound made a high of 1.6825, and this has been taken out on June 6 (1.6847). On May 29, the June British pound generated a short-term sell signal, but remains on an intermediate term buy signal. We recommend a stand aside posture because open interest action was very strong yesterday and conceivably the short-term sell signal could reverse.

Australian dollar:  The June Australian dollar will generate a short-term buy signal on June 6, which reverses the short-term sell signal generated on May 20. It remains on an intermediate term buy signal.

The June Australian dollar advanced 62 pips on volume of 92,123 contracts.Volume was the highest since May 2 when 92,977 contracts were traded and the June Australian dollar closed at 92.40. On June 5, total open interest increased by a massive 8360 contracts, which relative to volume is approximately 250% above average meaning that aggressive new longs were heavily entering the market and driving prices to new highs for the move (93.42), which is the highest print since 93.51 made on May 19.Wait for the Australian dollar to pullback before initiating new bullish positions now that it has generated a short-term buy signal.