The March 31 planting intentions and grain stocks report will be released at 11:00 CDT.

Soybeans:

May soybeans advanced 12.00 cents on light volume of 120,993 contracts. Volume was significantly below the 149,760 contracts traded on March 24 when May soybeans advanced 16.75 cents and total open interest declined by 4,024 contracts. On March 26, total open interest increased by 2,990 contracts, which relative to volume is average. The May contract lost 931 of open interest, which makes the total open interest increased more impressive (bullish). On March 26, May soybeans made a high of 14.41 3/4, which is shy of the high made on March 20 of 14.56 1/2. As this report is being compiled on March 27, May soybeans have made a daily high of 14.50 1/2, and is currently trading unchanged on the day. We been advising the liquidation of bullish positions on any rally, however, this is not an offset to a bullish recommendation.

The USDA announced that 11.88 thousand metric tons (tmt) had been sold, which brings total commitments to 1.633 billion bushels (bb) versus USDA projections for the entire season of 1.530 bb. This week’s sale was one of the lowest of the season, which began on September 1

Soybean meal:

May soybean meal advanced $5.40 on volume of 56,617 contracts. Total open interest increased by 1,891 contracts, which relative to volume is approximately 30% above average meaning that new longs were fairly aggressively entering the market and driving prices to a daily high of $469.80. The May contract gained 351 of open interest. As this report is being compiled on March 27, May soybean meal has made a new high for the move at 475.30, which takes out the previous high of 471.80 made on March 20. Currently, May soybean meal is trading $1.70 higher on the day, which is approximately 4.00 from the daily high. Like soybeans, we recommend the liquidation of bullish positions.

The USDA reported that 158.54 tmt had been sold, which brings total commitments to 8203.33 tmt versus USDA projections for the season of 9888 tmt. Meal sales was the lowest since the week of February 20.

Corn:

May corn lost 2.00 cents on volume of 149,394 contracts. Total open interest declined by 4,340 contracts, which relative to volume is approximately 20% above average. The May contract accounted for loss of 8,740 of open interest. As this report is being compiled on March 27, May corn is trading 5.00 cents higher and has made a daily high of 4.92 3/4, which is the May contract’s highest price since 4.93 1/4 made on March 13. We continue to recommend that clients liquidate bullish positions in corn. We have not previously recommended bullish positions to offset this recommendation, but are concerned about the upcoming March 31 USDA report. In addition, managed money is stratospherically long corn and corn’s performance for the past couple of weeks has been dismal..

The USDA reported that 1408.3 tmt of corn had been sold, which brings total commitments to 1.589.4 bb versus USDA projections for the entire season of 1.625 bb. This week’s sale was the largest since the week of February 27.

Chicago wheat:

May Chicago wheat lost 11.50 cents on volume of 98,140 contracts. Volume increased from the 86,837 contracts traded on March 25 when May Chicago wheat lost 6.25 cents and total open interest increased by 270 contracts. On March 26, total open interest declined by 2,264 contracts, which relative to volume is approximately 10% below average. The May contract accounted for loss of 3,737 of open interest. As this report is being compiled on March 27, May wheat is trading 11.25 cents higher on the day. Maintain bullish positions recommended on February 6 and long puts recommended on March 19. These positions can be held into the report

Kansas City wheat:

May Kansas City wheat lost 20.25 cents on heavy volume of 29,127 contracts. Volume was the highest since March 20 when 33,625 contracts were traded and May KC wheat lost 6.25 cents while open interest increased by 1,290 contracts. On March 26, total open interest declined by a massive 1,970 contracts, which relative to volume is approximately 160% above average meaning that liquidation was extremely heavy on the decline. As this report is being compiled on March 27, May KC wheat is trading 13.75 cents higher. Maintain bullish positions recommended on February 6 and long puts recommended on March 19. These positions can be held into the report. 

The USDA reported that sales of wheat in all categories totaled 400.5 tmt, which brings total commitments to 1.099.2 bb versus USDA projections for the entire season of 1.175 bb. Season to date, wheat is experiencing the best year since  2010-2011, which was the best year since 2007-2008.

Live cattle:

April live cattle advanced 1.425 cents on surprisingly light volume of 47,841 contracts. Volume was the lightest since March 19 when 42,064 contracts were traded and April cattle advanced 42.5 points while total open interest increased by 1,236 contracts. On March 26, total open interest increased by a heavy 2,957 contracts, which relative to volume is approximately 140% above average, meaning that new longs were aggressively entering the market and driving prices higher (1.46300). The April contract lost 2,129 of open interest, which makes the total open interest increased much more impressive (bullish). As this report is being compiled on March 27, April cattle is trading 57.5 points higher and is making new highs as this report is being written on March 27. Maintain bullish positions recommended in late December and keep protective sell stops in place. We think the market is going significantly higher and our target is 1.53000, which was the high for the February 2014 contract.

 WTI crude oil: OIA recommends that bearish positions recommended on March 12 and 19 be liquidated.

May WTI crude oil advanced $1.07 on volume of 433,991 contracts. Volume was the highest since March 20 when 529,376 contracts were traded and WTI crude oil lost 27 cents while total open interest declined 10,114 contracts. On March 26, total open interest increased by a very healthy 10,752 contracts, which relative to volume is average. The May contract lost 2,617 of open interest, which makes the total open interest increase more impressive (bullish).

As this report is being compiled on March 27, May WTI is trading $1.25 higher and has made a daily high of 101.70, which is the highest price since March 10 when the May contract printed $102.25. In yesterday’s afternoon report and in the special bulletin written during the evening of March 26, we mentioned that for WTI to continue its advance, it would have to make a low for the day above $100.01. On March 27 the low has been 100.03, which means that unless the market reverses dramatically, May WTI will generate a short-term buy signal on March 27. The action of yesterday and today is an example of how fundamentals can look terrible, but the market inexplicably advances. Our discipline is technical analysis, and we do not fight the tape. If the buy signal is generated today, there should be a pullback lasting from 1-3 days, which is the opportunity to initiate bullish positions. However, keep in mind that fundamentals are bearish and they may reassert themselves at any time.

Natural gas:

May natural gas lost 1.9 cents on volume of 203,082 contracts. Total open interest declined by 2,195 contracts, which relative to volume is approximately 50% below average. The April contract lost 10,738 of open interest. As this report is being compiled on March 27, May natural gas is trading 7.4 cents higher and has made a new high for the move at $4.500. The market may struggle to move significantly above $4.544, and though the market has rallied nearly 25 cents from the low, May natural gas remains on a short-term sell signal, but an intermediate term buy signal. We are not terribly bearish on natural gas, and think the massive stock drawdown during the past couple of months fundamentally changed the natural gas market. There will be some terrific opportunities on the long side once the summer season begins.

The Energy Information Administration announced that working gas in storage was 896 Bcf as of Friday, March 21, 2014, according to EIA estimates. This represents a net decline of 57 Bcf from the previous week. Stocks were 899 Bcf less than last year at this time and 926 Bcf below the 5-year average of 1,822 Bcf. In the East Region, stocks were 419 Bcf below the 5-year average following net withdrawals of 39 Bcf. Stocks in the Producing Region were 378 Bcf below the 5-year average of 754 Bcf after a net withdrawal of 15 Bcf. Stocks in the West Region were 129 Bcf below the 5-year average after a net drawdown of 3 Bcf. At 896 Bcf, total working gas is below the 5-year historical range.

Euro:

The June euro lost 36 pips on volume of 144,553 contracts. Total open interest declined by 1,487 contracts, which relative to volume is approximately 50% less than average. As this report is being compiled on March 27, the June euro is trading 47 pips lower and has made a new low for the move at 1.3727, which is the lowest print since 1.3722 made on March 6. Since the report of March 21, we have been warning clients that the euro was not going to resume its uptrend until it made daily lows above to key pivot points. This never occurred, and it appears that the June euro is on the verge of generating a short-term sell signal. What makes this especially significant is that managed money is heavily long the euro (3.10:1), which will provide fuel for the downside move once the sell signal is generated.

From the March 21 report:

“For the uptrend to resume, the low for the day must be above 1.3784 and after this the next hurdle is a daily low above 1.3821. The euro remains on a short and intermediate term buy signal. We have no recommendation.”

British pound:

The June British pound advanced 44 pips on volume of 74,536 contracts. Total open interest increased by 3,380 contracts, which relative to volume is approximately 75% above average meaning that new longs were aggressively entering the market and driving prices higher (1.6587). As this report is being compiled on March 27, the June British pound is trading 45 pips higher and has made a new high for the move at 1.6638, which is the highest print since 1.6644 made on March 19. On March 19, the pound generated a short-term sell signal, and we will be carefully monitoring the market to see if this is about to reverse, or whether there is an opportunity on the bearish side. According to the latest COT report, which was released last Friday, leveraged funds are long the pound by ratio of 4.70:1, which is the highest ratio we have seen in at least a couple of months. We have no recommendation as yet.

Australian dollar:

The June Australian dollar advanced 63 pips on heavy volume of 98,378 contracts. Total open interest increased by a massive 6,048 contracts, which relative to volume is approximately 140% above average meaning that new longs were aggressively entering the market and driving prices to new highs (91.94). As this report is being compiled on March 27, the Australian dollar is trading 30 pips higher and has made a new high for the move at 92.23. As we said yesterday, do not chase the market because it is massively overbought and is well overdue for correction, especially since open interest has increased for the past 3 days along with prices. The Australian dollar remains on a short and intermediate term buy signal.

Gold: On March 26, April gold generated a short-term sell signal, but remains on an intermediate term buy signal.

April gold lost $8.00 on heavy volume of 216,703 contracts. Total open interest declined by 2,158 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on March 27, April gold is trading $9.60 lower and has made a new low for the move at $1291.20, which is its lowest print since 1286.20 on February 13. On March 21, we advised clients to liquidate their bullish positions in gold and move to the sidelines. A healthy profit was made by clients who got on board this trade when we recommended it on February 6 through March 21.

S&P 500 E mini:

The June S&P 500 E mini lost 16.75 points on volume of 1,901,580 contracts. Total open interest increased by 10,447 contracts, which relative to volume is approximately 70% below average, but an open interest increase on a price decline is bearish. We think the market may be rolling over and year to date through March 26, the Russell 2000, NASDAQ 100 Dow Jones Industrial Average and the New York Composite Index are trading lower for the year. The one exception is the S&P 500 cash index, which through March 26 has advanced 0.23%. Clients may want to make adjustments to the number of out of the money calls versus the number of long puts to skew more to the bearish side. This is for clients who hold long equity positions.