Soybeans: On June 6, July soybeans generated a short-term sell signal and remains on an intermediate term buy signal.

On June 6, November soybeans generated a short-term sell signal and remains on an intermediate term buy signal.

July soybeans lost 3.50 cents and new crop November gained 8.25 on total volume of 157,665 contracts. Total open interest declined by 5,740 contracts, which relative to volume is approximately 45% above average meaning that liquidation was heavy on the modest decline. The July contract accounted for loss of 15,999 of open interest and the new crop November contract gained 8,335 of open interest. As this report is being compiled on June 9, November soybeans are trading 7.00 cents higher while the November contract is up 5.00 cents. With the July and November contracts on short-term sell signals, the market should rally from 1-3 days, however as we said in the June 8 Weekend Wrap, we think it is unwise to initiate bearish positions in old crop soybeans. In the June 2 report, we recommended the initiation of put positions in the November 2014 contract and this should continue to be held. Stand aside in the July contract.

Soybean meal:

July soybean meal lost $3.00 on volume of 71,690 contracts. Total open interest declined by 2,250, which relative to volume is approximately 20% above average. The July contract accounted for loss of 7,842 of open interest. As this report is being compiled on June 9, July soybean meal is trading $1.00 lower after making a new low for the move at 480.00, which is the lowest print since $477.40 made on May 19. Soybean meal has yet to generate a short-term sell signal, and this is testament to the longer term strength of the market. We can envision soybean meal testing its contract high of 509.40 made on June 2. In the report of May 30, OIA recommended that exit points for bullish positions be moved up to 494.10, and on June 5, the market broke through this support, and clients should be out of the market and 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.

Corn:

July corn advanced 10.00 cents on very heavy volume of 362,423 contracts.Volume was the heaviest since May 9 when July corn lost 9.00 cents on volume of 416,471 contracts and total open interest increased by 735 contracts. On June 6 total open interest increased by a massive 14,748 contracts, which relative to volume is approximately 55% above average meaning that aggressive new longs were entering the market and pushing prices higher. The heavy volume and increase of open interest indicates to OIA that those who are inclined toward bullish positions in corn cannot wait to get on board for a possible new rally. Unfortunately for them, Friday’s rally was a one-act play and as this report is being compiled on June 9, July corn is trading 12.00 cents lower and has made a new low for the move at 4.45 1/2. Corn remains on a short and intermediate term sell signal. Stand aside.

Chicago wheat:

July Chicago wheat advanced 12.50 cents on fairly heavy volume of 128,044 contracts. volume was the heaviest since May 22 when July Chicago wheat lost 5.00 cents on volume of 129,407 contracts and total open interest increased by 5,071 contracts. On June 6, total open interest increased by 4,909 contracts, which relative to volume is approximately 50% above average meaning that new longs were aggressively entering the market and driving prices higher. Much like corn, the entry of new long positions was premature and as this report is being compiled on June 9, July Chicago wheat is trading 9.25 cents lower and has made a daily low of 6.07 1/2, which is above the low for the move of 6.03 made on June 6. July Chicago wheat remains on a short and intermediate term sell signal. Stand aside.

Kansas City wheat:

July Kansas City wheat advanced 21.50 on huge volume of 36,954 contracts. During the past 2 days, volume has been the highest since April 14 when 37,131 contracts were traded and July KC wheat closed at $7.48 1/4. On June 6, total open interest increased by a massive 1478 contracts, which relative to volume is approximately 55% above average meaning that new longs were aggressively entering the market and driving prices to the highest level since May 29 (7.40). As this report is being compiled on June 9, July KC wheat is trading 2.50 lower, but has taken out yesterday’s high of 7.37 3/4 with another new high of 7.45, which is the highest print since May 27 of 7.47. July Kansas City wheat remains on a short and intermediate term sell signal. Stand aside.

Cotton:

July cotton lost 72 points on volume of 32,425 contracts. Volume was the highest since June 3 when July cotton advanced 88 points on volume of 33,473 contracts and total open interest declined by 989 contracts. On June 6, total open interest declined by a massive 2,841 contracts, which relative to volume is approximately 250% above average meaning that liquidation was severe on the decline. The cut off date for tabulation of the COT report was June 3 and since then June 4-June 6, July cotton prices have declined by 2.58 cents while total open interest has declined by 6,823 contracts. Undoubtedly, the number of managed money traders holding long positions will be significantly reduced in the next report. Continue to hold bearish positions coupled with long calls to offset any potential short covering rally. Do not enter new bearish positions at current prices. Cotton remains on a short and intermediate term sell signal.

Live cattle:

August live cattle lost 2.5 points on heavy volume of 68,718 contracts. volume was the highest since May 19 when live cattle advanced 2.175 cents on volume of 78,577 contracts and total open interest increased by 10,329 contracts. On June 6, total open interest declined 3,559 contracts, which relative to volume is 100% above average meaning that liquidation was extremely heavy considering (1) the narrow range day, (2) a move to new contract highs and (3) a nearly unchanged close. Not only did the June contract lose 5,623 of open interest, which is expected since it nears expiration, but the August contract lost 366 of open interest as well. It appears that liquidation was garden-variety profit taking by longs and liquidation by shorts as prices moved to new contract highs. As this report is being compiled on June 9, August cattle is trading 1.25 cents higher and has made a new contract high of 1.43200. Continue to hold the bull call spread originally recommended in the May 29 report.

Lean hogs: On June 6, July lean hogs generated a short-term buy signal and remains on an intermediate term buy signal.

July lean hogs advanced 2.80 cents on heavy volume of 59,071. Volume was the strongest since May 14 when 59,264 contracts were traded and July hogs closed at 1.2690. On June 6, total open interest declined by 2,857 contracts, which relative to volume is approximately 90% above average meaning that liquidation was extremely heavy on the largest advance since April 23 when July hogs closed up the 3 cent limit. Not only did the June contract lose open interest, which is to be expected because it is due to expire shortly, but the July contract lost 2,245 of open interest, which indicates that market participants long from higher levels, were trying to recoup losses/profits.As this report is being compiled on June 9, July hogs are trading 70 points higher and has made another new high for the move at 1.2645. Although hogs is not a market we like to trade, if you are so inclined, wait for a pullback before considering bullish positions.

WTI crude oil:

July WTI crude oil gained 18 cents on volume of 452,986 contracts. Total open interest increased by 7,613 contracts, which relative to volume is approximately 30% below average. As this report is being compiled on June 9, July WTI is trading $1.44 higher on the day on low volume.We have not seen any news that accounts for the move, and though July WTI remains on a short and intermediate term buy signal, we see no reason to be involved in the market. We much prefer the long side of natural gas. Another concern is that managed money is long WTI crude oil by a stratospheric 13.54:1..The current ratio is the highest since the March 4, 2014 COT tabulation date when managed money was long WTI crude oil by ratio of 14.98:1.

Natural gas:  On June 6, July natural gas generated a short-term buy signal and remains on an intermediate term buy signal.

July natural gas advanced 9 ticks on volume of 276,366 contracts. Total open interest increased by 6,813 contracts, which relative to volume is average. Friday’s open interest increase along with price is the 5th day in a row this has occurred. As prices have advanced during the past 5 days there has not been a day that open interest declined. This would indicate that shorts were liquidating and longs were 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. Now that natural gas has generated a short-term buy signal, we are looking for a pullback lasting from 1-3 days and this is the opportunity to initiate bullish positions.

Copper: On June 6, July copper generated a short-term sell signal and remains on an intermediate term sell signal.

July copper lost 3.95 cents on heavy volume of 106,078 contracts.Volume was the highest since March 19 when 118,915 contracts were traded and July copper closed at $2.9820. On June 6, total open interest declined by 2,179 contracts, which relative to volume is approximately 20% below average. The July contract lost 7,531 of open interest and there were open interest increases in the September 2014 through July 2015 contracts. We have been telling clients for the past couple weeks the copper market looked like it was set up to decline and decline it has. We think there is much more on the downside, however copper is  notoriously volatile, and unfortunately the options market is illiquid making it very difficult to trade. One way of trading copper is through the ETN JJC. It tracks copper fairly well and during the 2nd quarter through June 6,  JJC advanced 1.33% while July copper advanced 1.21%. On a year to date basis, it under performs with a loss of 10.04% versus July copper -9.28%.

Platinum:

July platinum gained $7.90 on huge volume of 20,998 contracts.Volume was the highest since March 27 when 31,627 contracts were traded and July platinum closed at 1398.40. On June 6, total open interest declined only 23 contracts. The July contract lost 5,190 of open interest and October gained 5,167. As this report is being compiled on June 9, July platinum is trading $1.80 lower. As of the latest COT report, managed money was long platinum by a ratio of 18.17:1, which at the very least is the highest reading of 2014. Even as prices moved sharply lower from the high of 1497.80 on May 22, managed money increased their long position. 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. With the ratio at a stratospheric level, we recommend against bullish positions. Stand aside.

Euro: 

The June euro lost 11 pips on volume of 220,984 contracts. Total open interest increased by 941 contracts, which relative to volume is approximately 70% below average. As this report is being compiled on June 9, the June euro is trading 60 pips lower and has made a low of 1.3582, which is the lowest print since June 5 (1.3502). The euro remains on a short and intermediate term sell signal. We have no recommendation.

Australian dollar: The June Australian dollar generated a short-term buy signal, and remains on an intermediate term buy signal.

The Australian dollar advanced 20 pips on volume of 77,023 contracts. Total open interest declined by 1,335 contracts, which relative to volume is approximately 25% less than average. As this report is being compiled on June 9, the June Australian dollar is trading 11 pips higher and has made a new high for the move at 93.59, which is 4 pips above Friday’s high. After the generation of a short-term sell signal, the market usually pulls back, from 1 to 3 days. In this case, the Australian dollar it is overbought relative to its 20 day moving average of 92.85 and the 50 day moving average of 92.81.Wait for a pullback before initiating bullish positions.