Soybeans:

May soybeans advanced 2.50 cents on extremely light volume of 103,188 contracts. Volume was lighter than activity on January 6 when 107,518 contracts were traded, but is above the pre-holiday trading of December 24 when 60,604 contracts were traded. On March 25, open interest increased by 791 contracts, which relative to volume is approximately 60% below average. The May contract lost 2,612 of open interest, which makes the total open interest increased somewhat more impressive (bullish). As this report is being compiled on March 26, May soybeans are trading 4.25 cents higher on the day. Beginning with the March 23 Weekend Wrap, we suggested that if clients have bullish positions in soybeans they should consider liquidating these on rallies. We have not recommended bullish positions in soybeans, soybean meal and corn, but are suggesting this to clients who may be long. We think the March 31 planting intentions and quarterly grain stocks report will begin to weigh on the minds of market participants and this may be the catalyst for soybeans heading south. May soybeans remain on a short and intermediate term buy signal.

Soybean meal:

May soybean meal advanced $1.70 on very light volume of 44,591 contracts. Total open interest declined by a massive 2,288 contracts, which relative to volume is approximately 100% above average meaning that liquidation was extremely heavy on a minor advance. The May contract lost 3,478 of open interest. Note the difference in open interest action between soybeans and soybean meal. As this report is being compiled on March 26, May soybean meal is trading $4.10 higher on the day. Like soybeans, we suggest that bullish positions be liquidated on rallies. May soybean meal remains on a short and intermediate term buy signal.

Corn:

May corn lost 3.50 cents on volume of 157,702 contracts. Total open interest increased by 1,205 contracts, which relative to volume is approximately 55% below average. The May contract lost 2,702 of open interest, which makes the total open interest increase more impressive (bearish). This is the first time since March 17 trading that corn prices declined and open interest increased. As this report is being compiled on March 26, May corn is trading 2.25 cents lower and has made a low for the move at $4.82 1/2. May corn remains on a short and intermediate term buy signal. We recommend that bullish positions be liquidated on rallies.

Chicago wheat:

May Chicago wheat lost 6.25 cents on volume of 86,837 contracts. Total open interest increased by 270 contracts, which relative to volume is approximately 85% less than average. The May contract lost 423 of open interest. As this report is being compiled on March 26, May wheat is trading 10.75 cents lower and has made a daily low of $6.96 1/4, which is above the low of March 24 (6.87). On March 19, OIA recommended the initiation of long put positions to protect profits on long positions recommended in February 6 report. Continue to hold these positions.

Kansas City wheat:

May Kansas City wheat lost 2.75 cents on volume of 21,577 contracts. Total open interest increased by 253 contracts, which relative to volume is approximately 50% below average. The July contract lost 901 of open interest, which makes the total open interest increased more impressive (bearish). As this report is being compiled on March 26, May KC wheat is trading 14.00 cents lower on the day, but has not taken out the March 24 print of 7.68. On March 19, we recommended that clients protect their bullish positions with long puts. Continue to hold these positions.

Live cattle:

April live cattle advanced 22.5 points on volume of 58,879 contracts. Total open interest declined by 1,784 contracts, which relative to volume is approximately 20% above average, meaning that liquidation was fairly substantial on the modest advance. The April contract accounted for loss of 2,402 of open interest. As this report is being compiled on March 26, April cattle is trading 1.125 cents above yesterday’s close and has made a high of 1.46300, which is below the contract high of 1.46850 made on March 20. We think the March 20 high will be taken out and our upside target is 1.53000, which was the high print made in the February contract. Make sure protective sell stops are in place.

WTI crude oil:

May WTI crude oil lost 41 cents on volume of 403,525 contracts. Volume was the highest since March 20 when 529,376 contracts were traded and May WTI lost 27 cents while total open interest declined by 10,114 contracts. On March 25, total open interest increased by 1,871 contracts, which relative to volume is approximately 75% below average, but an increase of open interest on a price decline is bearish. The May contract lost 303 of open interest. March 25 was the first time since March 11 that WTI prices declined and open interest increased. On March 11, WTI declined by $1.09 and total open interest increased by 4,310 contracts.

As this report is being compiled on March 26, May WTI is trading 74 cents higher and has made a daily high of $100.13, which is below the high on March 25 of 100.25, and March 24 of 100.29. Remarkably, WTI has held up well on March 26 considering the increase in stocks as evidenced by the Energy Information Administration report released today. On March 12 we recommended the initiation of out of the money calls and on March 19 recommended the addition of new bearish positions. Although we do not expect the market to generate a short-term buy signal, which would reverse the March 12 sell signal, we have to be mindful that the market appears to be is well supported. On the crude oil continuation chart the 50 day moving average of 99.21 is below the 200 day moving average of 100.36. The 200 day moving average should act as considerable resistance against a move higher. Additionally, OIA’s key pivot point of $100.01 should act as a further barrier to a major advance. For the short-term sell signal to reverse, May WTI’s low for the day must be above the pivot point. We do not think this is in the cards and the lackluster volume combined with liquidation by managed money in the latest COT report indicates a certain lack of interest in crude at this juncture. May WTI remains on a short-term sell signal and an intermediate term buy signal. 

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 6.6 million barrels from the previous week. At 382.5 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 decreased by 5.1 million barrels last week, and are in the lower of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories increased by 1.6 million barrels last week but are below the lower limit of the average range for this time of year. Propane/propylene inventories fell 0.6 million barrels last week and are near the lower limit of the average range. Total commercial petroleum inventories increased by 5.5 million barrels last week.

Natural gas:

May natural gas advanced 14.2 cents on volume of 230,471 contracts. Volume was the highest since March 20 when 262,360 contracts were traded and natural gas declined by 11.5 cents while total open interest increased by 257 contracts. On March 25, total open interest increased by 4,877 contracts, which relative to volume is approximately 20% below average, but the open interest increase indicates that market participants are willing to enter new long positions on rallies. The April contract lost 8,119 of open interest, which makes the total open interest increased more impressive (bullish). On March 25, May natural gas made a high of $4.429 and as this report is being compiled on March 26, the daily high has been 4.426. May natural gas remains on a short-term sell signal, but an intermediate term buy signal. We have no recommendation.

Euro:

The June euro lost 12 pips on heavy volume of 245,712 contracts. Volume was the heaviest since March 14 when 314,870 contracts were traded and the euro advanced 45 pips while total open interest declined by 14,376 contracts. On March 25, total open interest declined by 2,621 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on March 26, the June euro is trading 31 pips lower. For the euro to resume its advance, the low for the day must first be above 1.3788 and then 1.3823. The euro remains on a short and intermediate term buy signal. We have no recommendation.

Australian dollar:

The June Australian dollar advanced 37 pips on volume of 73,855 contracts. Total open interest increased by 3,544 contracts, which relative to volume is approximately 75% above average meaning that new longs were aggressively entering the market and pushing the June Australian dollar to new highs for the move (91.23). In yesterday’s report, we recommended the initiation of bullish positions on any setback and to use 90.60 as an exit point for these positions. As this report is being compiled on March 26, the June Australian dollar is trading 65 pips higher and is made a new high for the move at 91.94. For the past 2 days, prices have advanced and open interest has increased each day. This bodes well for future advances, especially since managed money is net short according to the latest COT report. It must be emphasized that the Australian dollar is overbought relative to the 5 day moving average of 90.77 in the 20 day moving average of 89.84. We advise against chasing the market at current levels. Wait for a healthy setback before initiating bullish positions.

Platinum: On March 25, April platinum generated a short-term sell signal, but remains on an intermediate term buy signal.

Gold:

April gold advanced 20 cents on volume of 213,630 contracts. Total open interest declined by 3,654 contracts, which relative to volume is approximately 25% less than average. From March 18 through March 25, April gold has fallen each day with the exception of March 21 and March 25, but open interest has declined each day. As this report is being compiled on March 26, April gold is trading $5.50 lower and has made a new low for the move at $1300.90, which is slightly below its 50 day moving average of 1303.00. In the report of March 21, we recommended that bullish positions be liquidated and clients should move to the sidelines. It appears inevitable that gold will generate a short-term sell signal. We have no recommendation at this juncture.

S&P 500 E mini:

The June S&P 500 E mini gained 9.75 points on volume of 1,658,682 contracts. Total open interest declined by 11,015 contracts, which relative to volume is approximately 65% less than average. As this report is being compiled on March 26, the June E mini is trading 5.75 points lower after making a high of 1868.75, which is the highest price since March 21 (1876.75). Maintain out of the money calls first recommended on February 21 coupled with long puts for clients who hold long equity positions.