On March 25, with some exceptions, commodities are holding up fairly well and refusing to break lower. Some of these include WTI crude oil, gasoline and heating oil, soybeans and soybean meal, wheat and corn. However, do not take comfort from this, because the support can vanish quickly.

Soybeans:

May soybeans advanced 16.75 cents on volume of 149,760 contracts. Volume declined from the 151,039 contracts traded on March 21 when May soybeans lost 25.00 cents and total open interest declined by 8,922 contracts. Additionally, volume was the lowest since March 17 when 114,106 contracts were traded and May soybeans advanced 3.25 cents while total open interest declined by 5,353 contracts. On March 24, total open interest declined by 4,024 contracts, which relative to volume is average. The May contract lost 5,238 of open interest.

The action on March 24 is a repeat performance of previous sessions when soybeans advanced and total open interest declined. On March 20, May soybeans advanced 2.50 cents and open interest declined 6,582 contracts. On March 19, May soybeans advanced 13.00 cents while total open interest declined by 13,205 contracts. On March 18, May soybeans advanced 26.50 cents and total open interest declined by 3,206 contracts. In short we are seeing a pattern of liquidation on advances, which is bearish. We have not recommended long positions, but if clients are long soybeans, we suggest these be liquidated. Based upon open interest action on advances, market participants have little appetite for the long side of beans. Soybeans remain on a short and intermediate term buy signal.

Soybean meal:

May soybean meal advanced $6.10 on volume of 53,400 contracts. Total open interest declined by 2,341 contracts, which relative to volume is approximately 60% above average meaning liquidation was substantial on the advance. The May contract lost 2,303 of open interest and July -812. Like soybeans, though we have not recommended long positions, if clients are long, we suggest these positions be liquidated. Soybean meal remains on a short and intermediate term buy signal.

Corn:

May corn advanced 11.00 cents on volume of 199,502 contracts. Volume was the heaviest since March 19 when 204,733 contracts were traded and May corn lost 1.50 cents while total open interest declined by 674 contracts. On March 24, total open interest increased by a substantial 9,309 contracts, which relative to volume is approximately 75% above average meaning that new longs were heavily entering the market and driving prices higher ($4.91). As this report is being compiled on March 25, May corn is trading 4.00 cents lower. Yesterday, the market closed at 4.90 and from last evening’s opening through today, the high for the day remains 4.90. This indicates a lack of follow-through and internal weakness. Like soybeans and soybean meal, though we have not recommended long positions in corn, if long, we advise liquidating positions. Corn remains on a short and intermediate term buy signal.

Chicago wheat:

May Chicago wheat advanced 21.25 cents on volume of 114,214 contracts. Volume was the highest since March 20 when 177,414 contracts were traded and May Chicago wheat lost 12.00 cents while total open interest increased by 6,806 contracts. On March 24, total open interest increased by 2,483 contracts, which relative to volume is approximately 20% below average. The July contract lost 519 of open interest. As this report is being compiled on March 25, May Chicago wheat is trading 6.00 cents lower and has not taken out yesterday’s high of $7.18 1/4. On March 19, we recommended the initiation of long puts to protect profits in  bullish positions recommended in the February 6 report. Continue to hold these positions. May Chicago wheat remains on a short and intermediate term buy signal.

Kansas City wheat:

May Kansas City wheat advanced 23.25 cents on volume of 20,371 contracts. Total open interest increased by 495 contracts, which relative to volume is average. The July contract lost 309 of open interest. As this report is being compiled on March 25, May KC wheat is trading 3.50 lower and has not taken out yesterday’s high of 7.97 1/4. As recommended in Chicago wheat, maintain long puts recommended on March 19 to protect profits on bullish positions recommended in the February 6 report. May KC wheat remains on a short and intermediate term buy signal.

Live cattle:

April live cattle gained 15 points on volume of 53,198 contracts. Total open interest increased by 644 contracts, which relative to volume is approximately 45% less than average. The April contract lost 3,298 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on March 25, April cattle is trading 57.5 points lower and is currently trading on the lows of the day. After making its contract high of 1.46850 on March 20, the market  sold off and has not had the momentum to break above this high. Although we don’t think the move is over, clients should exercise caution with respect to profits on positions. Sell stops should be in place in order to protect profits.

WTI crude oil:

May WTI crude oil advanced 14 cents on extremely low volume of 291,684 contracts. Volume was the lowest since December 27 when 288,558 contracts were traded and May WTI crude oil closed at $99.18. On March 24, total open interest declined by 191 contracts. The April contract accounted for loss of 500 of open interest. As this report is being compiled on March 25, May WTI is trading 19 cents higher and has made a high for the day of $100.25, which is below yesterdays high of 100.29. Since generating a short-term sell signal on March 12, May WTI has been trading in a sideways pattern, and we expect this to be resolved to the downside this week. Maintain the short call position recommended on March 12 and the additional bearish positions recommended on March 19. For the short-term trend to reverse to a buy signal, the low for the day in the May contract must be above $100.01.

Natural gas:

May natural gas lost 2.5 cents on volume of 206,398 contracts. Total open interest declined by a massive 25,475 contracts, which relative to volume is approximately 360% above average meaning that liquidation was extremely heavy as May natural gas made a new low for the move at $4.256, which is the lowest print since $4.217 made on January 28. As this report is being compiled on March 25, May natural gas is trading 12.1 cents higher on the day. On March 12, natural gas generated a short-term sell signal, and continues to be on an intermediate term buy signal. We have no recommendation.

Euro:

The June euro advanced 45 pips on volume of 192,523 contracts. Volume was the heaviest since March 20 when 209,515 contracts were traded and the June euro lost 49 pips while total open interest declined by 119 contracts. On March 24, total open interest increased by 3,495 contracts, which relative to volume is approximately 25% less than average. As this report is being compiled on March 25, the June euro is trading 22 pips lower and has made a new low for the move at 1.3747, which matches the 1.3747 low made on March 20. As we said in yesterday’s report, for the euro to resume its uptrend, it first must make a daily low above 1.3784 and then make a daily low above 1.3821. The June euro remains on a short and intermediate term buy signal. We have no recommendation.

Australian dollar:

The June Australian dollar advanced 41 pips on volume of 83,769 contracts. Total open interest increased by 1,855 contracts, which relative to volume is approximately 10% below average, but this is the first recent open interest increase seen on a price advance. As we stated in yesterday’s report, a move to the 91.00 area would constitute a major breakout, and as this report is being compiled on March 25, the June Australian dollar is trading 46 pips higher and has made a new high for the move at 91.23, which takes out the 91.10 print made on November 22, 2013. On February 7, the Australian dollar generated a short-term buy signal and on March 7 generated an intermediate term buy signal. From February 7 through March 24, the June Australian dollar is gained 1.9 cents and from March 7 through March 24 has gained 69 pips. We recommend buying setbacks and using the exit point of 90.60 to close out bullish positions.

Gold:

April gold lost $24.80 on very heavy volume of 238,240 contracts. Volume was the highest since March 12 when 270,209 contracts were traded and April gold closed at $1370.50. On March 24, total open interest declined by 5,569 contracts, which relative to volume is approximately 10% below average. From March 18 through March 24, open interest has declined each day along with gold prices. This is healthy, especially considering the number of new entrants into the market. Yesterday, we recommended liquidating bullish positions and moving to the sidelines. We were concerned that platinum was about to generate a short-term sell signal and silver, an intermediate term sell signal. As it stands on March 25, it appears that April will in fact generate a short-term sell signal and May silver generated an intermediate term sell signal on March 24. As this report is being compiled, April gold is trading 20 cents lower on the day and has made a new low for the move at $1306.00.

Silver: On March 24, May silver generated an intermediate term sell signal after generating a short-term sell signal on March 20. This will be our last report on silver until we see a trading opportunity.

S&P 500 E mini:

The June S&P 500 E mini lost 7.50 points on volume of 1,837,270 contracts. Total open interest declined by 1,065,976 contracts, which is due to the expiration of the March contract. As this report is being compiled on March 25, the June E mini is trading 9.75 points higher. Maintain long out of the money calls coupled with long puts if holding long equity positions.