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WTI crude oil:

July WTI crude oil lost $2.47 on record-setting volume of 2,303,620 contracts.  To the best of our knowledge this is the highest volume traded in the WTI crude oil contract in the history of the exchange. As high as volume was, the total open interest increase was low with a gain of just 5,063 contracts. The July contract lost 40,124 and this means there were enough open interest increases in the forward months to offset the decline in July, but just barely.

The very minor increase of total open interest tells us that short-sellers were reluctant to enter new positions at the lower end of the trading range. Additionally, total open interest didn’t decline, which tells us that those holding long positions are digging in and refusing to liquidate even as prices have moved close to a one month low.

As this report is being compiled on June 8, the July contract is trading close to unchanged on the day, but has made another new low for the move of 45.20, which takes out yesterday’s print of 45.65. As we indicated in previous notes, the July contract is headed to a test of the May 5 low of 44.13.

On June 2, OIA announced that July WTI crude oil generated a short term sell signal and was already been on an intermediate term sell signal. Stand aside.

Corn: On  June 7, July and September 2017 Chicago corn generated short and intermediate term buy signals.

July corn advanced 7.50 cents on record setting exchange volume of 1,090,830 contracts. To the best of our knowledge this is the highest volume recorded for the corn contract in the history of the exchange. Yesterday, total open interest increased by a very sizable 26,325 contracts, though this is an average increase relative to volume. The July contract lost 57,455 of open interest, which means there were more than enough open interest increases in the forward months to offset the decline in July and increase total open interest at an average rate. Yesterday’s performance was outstanding.

Yesterday’s action follows the terrific performance on June 6 when the July contract gained 4.25 cents on volume of 462,190 and total open interest increased by 17,433. The substantial increase of open interest during the past two day advance clearly indicates that short-sellers were not capitulating and may have been adding to their positions on the rally. 

Yesterday, the July contract made a high of 3.87 and this has been taken out in today’s trade with a new print of 3.91 3/4, which is the highest level since 3.98 1/4 made the week of June 27, 2016 by the July 2016 contract.

The daily and weekly continuation charts, corn are in a bullish set up. For example, the 20 day moving average stands at 3.70 7/8, 50 day 3.65 3/4, 100 day 3.65 3/4 and the 200 day of 3.54 1/4.

The 10 week moving average on the continuation chart stands at 3.68 1/8, 20 week 3.66 7/8, 50 week 3.52 5/8 and the 100 week stands at 3.64 3/8. The long term 10 and 20 month moving averages remain in a bearish set-up. The 10 month average is 3.55 1/2, 20 month 3.59 3/4.

The daily and weekly moving average set-up tells us that higher prices are more likely than lower and this is especially likely because managed money is heavily short the corn market.

The growing season is ahead and if there is a weather scare, prices could rally strongly fed by distressed short-sellers. There has been a spate of hot dry weather, but nothing serious at this juncture. Tomorrow is the USDA Supply Demand report and it is not expected to be a major market mover.

Now that corn is on short and intermediate term sell signals, we are waiting for a set-back before recommending bullish positions. A correction between 3.78 and 3.75 would be a reasonable entry point.  

AUD/CAD: On June 7, AUD/CAD generated a short term buy signal, and remains on an intermediate term sell signal, though we expect this change shortly.