The USDA report has been released and will provide an analysis in tomorrow’s report.

Soybeans:

May soybeans closed unchanged on light volume of 125,687 contracts. Total open interest increased by 1,005 contracts, which relative to volume is approximately 60% below average. The May contract lost 1,653 of open interest and July -87. As this report is being compiled on March 31 after the release of the USDA report, May soybeans are trading 4.50 higher and have made a daily high of 14.66 1/2 and a low of 14.23. The high on March 31 has taken out the March 20 high of 14.56 1/2 and the low is above the print on March 26 of 14.20 3/4. Prior to the report, we were advising clients to liquidate positions and move to the sidelines. At this juncture we recommend a stand aside posture . May soybeans remain on a short and intermediate term buy signal.

Soybean meal:

May soybean meal lost $2.10 on light volume of 59,149 contracts. Total open interest declined by just 22 contracts. The May contract lost 2,594 of open interest. As this report is being compiled on March 31, May soybean meal is trading $5.20 higher and has made a new high for the move at $479.80, which took out the previous high of 475.30 made on March 27. Prior to the report, we recommended that clients liquidate all positions and suggest a stand aside posture. May soybean meal remains on a short and intermediate term buy signal.

Corn:

May corn closed unchanged on volume of 252,497 contracts. Total open interest increased by 3,859 contracts, which relative to volume is approximately 40% below average. The May contract accounted for loss of 3,964 of open interest. As this report is being compiled on March 31, May corn is trading 6.50 higher on the day. Like soybeans and soybean meal, we recommend a sideline stance. May corn remains on a short and intermediate term buy signal.

Chicago wheat:

May Chicago wheat lost 15.00 cents on volume of 93,029 contracts. Total open interest increased by 424 contracts, which is minuscule and dramatically below average. The May contract lost 4,276 of open interest. As this report is being compiled on March 31, May Chicago wheat is trading 3.00 cents lower and has made a new low for the move at  $6.76 1/2, which is the lowest price since 6.72 1/2 made on March 18. On March 19, we recommended the initiation of long puts to protect profits on bullish positions recommended on February 6. Continue to hold both positions.

Kansas City wheat:

May Kansas City wheat lost 20.25 cents on volume of 24,954 contracts. Total open interest declined by 533 contracts, which relative to volume is approximately 20% below average. The May contract lost 1,361 of open interest. As this report is being compiled on March 31, May KC wheat is trading 0.50 cents lower after having made a low of $7.48 1/4, which is its lowest print since 7.43 made on March 18. Maintain long puts recommended on March 19 coupled with bullish positions recommended on February 6.

Sugar #11:

May sugar advanced 11 points on volume of 140,067 contracts. Total open interest declined by 3,257 contracts, which relative to volume is approximately 10% less than average. May sugar made a high of 18.10, which is the highest print since 18.37 made on March 11. For the past 3 days beginning on March 26, May sugar has risen 1.01 cents however, total open interest has increased only 1,058 contracts. Interestingly, the largest advance on March 27 of 51 points resulted in a total open interest increase of only 964 contracts, which is dramatically below average. As this report is being compiled on March 31, May sugar is trading 21 points higher. On March 27, May sugar generated a short-term buy signal and remains on an intermediate term buy signal. Usually, after the generation of a buy signal, the market has a tendency to pullback from 1-3 days and we will be monitoring sugar to see how open interest reacts to the decline. At this juncture, stand aside.

Live cattle:

April live cattle advanced 25 ticks on light volume of 44,921 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 28, total open interest increased by 1,471 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 new contract high of 1.47000. During the past couple of weeks, we have noticed that volume often is below the average daily volume year to date of 58,786 contracts, even when cattle prices are advancing. This indicates a degree of skepticism by the market about cattle prices to continue moving higher. On the other hand, open interest action is terrific and indicates those who are participating are definitely bullish. Maintain bullish positions recommended in late December, however, sell stops to protect profits should be in place.

WTI crude oil:

May WTI crude oil advanced 39 cents on light volume of 343,851 contracts. Volume shrank significantly from the 456,638 contracts traded on March 27 when May WTI advanced $1.02 and total open interest increased by 11,031 contracts. On March 28, total open interest increased significantly, this time by 9,364 contracts, which relative to volume is average. The May contract gained 288 of open interest. For the past 3 days beginning on March 26 May WTI has advanced $2.48 while total open interest has increased by 31,147 contracts. The open interest increase during each of the past 3 days has been average or above average. On March 27, May WTI generated a short-term buy signal, which read reversed the short-term sell signal of March 12. In the report of March 26, we recommended that bearish positions be liquidated and clients should move to the sidelines. As this report is being compiled on March 31, May WTI is trading 24 cents lower and has not taken out the March 28 high of $102.24, the high for the move.

Natural gas:

May natural gas lost 5.3 cents on anemic volume of 138,440 contracts. Total open interest increased by a hefty 6,472 contracts, which relative to volume is approximately 75% above average meaning that new shorts were aggressively entering the market and driving prices lower. The April contract lost 10,174 of open interest, which makes the total open interest increase more impressive (bearish). As this report is being compiled on March 31, May natural gas is trading 12.9 cents lower and has made a daily low of 4.337, which is above the low for the move of 4.256 made on March 24.

From the March 26 report:

“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.”

Euro:

The June euro advanced 4 pips on volume of 167,824 contracts. Total open interest increased by 2,314 contracts, which relative to volume is approximately 45% less than average. As this report is being compiled on March 31, the June euro is trading 21 pips higher and has made a daily high of 1.3808, which is the highest print since 1.3826 made on March 26. Though, the June euro remains on a short and intermediate term buy signal, for the rally to resume with any conviction, the low for the day must first be above 1.3795 and second above 1.3825. Although the euro remains on a short and intermediate term buy signal, we would caution against being long at current levels.

British pound:

The June British pound advanced 29 pips on light volume of 66,555 contracts. Total open interest increased by 2,480 contracts, which relative to volume is approximately 50% above average meaning that new longs were entering the market and pushing prices to new highs for the move (1.6643). As this report is being compiled on March 31, the June pound has made a new high at 1.6675, which is its highest print since 1.6710 made on March 13. Since March 25, the market has rallied every day and it appears likely that a short-term buy signal will likely be generated today or tomorrow.  

Australian dollar:

The June Australian dollar lost 5 pips on light volume of 65,444 contracts. Total open interest increased by 2903 contracts, which relative to volume is approximately 75% above average meaning that new longs were heavily entering the market and driving the Aussie to new highs for the move (92.47). As this report is being compiled on March 31, the Australian dollar is trading 15 pips higher but has not taken out the March 28 high. The market is massively overbought. Stand aside.

Gold:

June gold lost 50 cents on heavy volume of 246,499 contracts. Total open interest declined by 16,864 contracts, which relative to volume is approximately 185% above average meaning that liquidation was extremely heavy as the market made new lows for the move at $1286.10. As this report is being compiled on March 31, June gold is trading $8.70 lower and has made a new low for the move at 1282.70, which is the lowest print since 1277.20 made on February 11. Remarkably, June gold has not yet generated an intermediate term sell signal. In the March 21 report, we recommended that bullish positions be liquidated. Clients should be on the sidelines.

S&P 500 E mini:

The June S&P 500 E mini gained 10.00 points on volume of 1,503,796 contracts. Total open interest increased by a minuscule 2,680 contracts. As this report is being compiled on March 31, the June E mini is trading 14.25 points higher and has made a daily high of 1868.00, which is the highest print since March 26 when it reached 1868.75.

For the S&P 500 cash index to make a new all time high, the low for the day must be above 1871.87.  Recently, we have advised clients to pare some of their long exposure via out of money calls and weight the positions more towards the bearish side. If the Dow and/or S&P 500 make a daily low above the aforementioned pivot points of 16,383.60 and 1871.87, we would reinstate more long call positions.