Soybeans:

July soybeans lost 16.50 cents on volume of 160,355 contracts. Volume increased from the 98,761 contracts traded on May 13 when July soybeans advanced 18.50 cents and total open interest increased by 3,968 contracts. Additionally, volume was the highest since May 9 when 172,535 contracts were traded and July soybeans advanced 17.50 cents while total open interest increased by 773 contracts. On May 15, total open interest increased by 4,028 contracts, which relative to volume is average. However, the July contract lost 1035 of open interest, which makes the total open interest increased more impressive (bearish). As this report is being compiled on May 16, July soybeans are trading 0.50 cents higher after making a daily low of $14.61 1/2, which is slightly below yesterday’s low of 14.62 1/2. Soybeans have attempted to break below be 14.60 1/2 low made on May 13, but have been unable to do so. On May 7, July soybeans generated a short-term sell signal, and have not traded above OIA’s key pivot point, which would reverse the sell signal. As a result, July soybeans have traded sideways to lower.

There is no reason to be involved in soybeans on the long side until such time as the daily low is above Friday’s pivot point of $14.83 3/8. Remarkably, new crop November soybeans have not generated a short-term sell signal, which leads us to believe there will be a rally in old crop soybeans to new highs before the current season is over. Stand aside.

The USDA reported soybean sales of 73.55 thousand metric tons bringing total commitments season to date of 1.642.7 billion bushels versus USDA projections for the season of 1.600 billion bushels. Sales of soybeans was the highest since the week of April 3.

Soybean meal:

July soybean meal lost $5.10 on volume of 58,502 contracts. Total open interest declined by 166 contracts, which relative to volume is minuscule and dramatically below average. The July contract accounted for loss of 1,094 of open interest. After making a high of 490.00 on May 12, July soybeans have not been able to break above it. This is a further indication the market is struggling. As this report is being compiled on May 16, July soybean meal is trading 80 cents lower on the day. Like soybeans, we advise a stand aside posture for long positions until such time as the daily low in July soybean meal is above OIA’s key pivot point of 479.90.

The USDA reported soybean sales of 84.54  thousand metric tons bringing total sales to date of 9214.2 thousand metric tons versus USDA projections for the season of 10,070 thousand metric tons.

Corn: On May 15, July corn generated a short-term sell signal, but remains on an intermediate term buy signal.

On May 15, December corn generated an intermediate term sell signal after generating a short-term sell signal on May 12.

July corn lost 11.25 cents on heavier than normal volume of 251,947 contracts. Volume increased substantially from May 14 when July corn lost 7.25 cents on total volume of 195,259 contracts and total open interest increased by 8940 contracts. Additionally, volume was the highest since May 9 when July corn lost 9.00 cents on volume of 416,471 contracts and total open interest increased by 735 contracts. On May 15, total open interest declined by 8,811, which relative to volume is approximately 40% above average meaning that liquidation was substantial as July corn made a new low for the move at $4.81 3/4, which is the lowest print since $4.80 1/4 made on March 31, 2014.The July contract lost 6,673 of open interest. As this report is being compiled on May 16, July corn is trading 0.75 cents lower and has made a daily low of 4.80 1/4, the low made on March 31. Now that a short term sell signal has been generated in July corn, the market should have a countertrend rally that lasts from 1-3 days, and this would be the opportunity to initiate bearish positions in the September contract.

The USDA reported corn sales of 343 thousand metric tons bringing total commitments to 1752.4 billion bushels versus USDA projections for the season of 1.900 billion bushels.

Chicago wheat:

July Chicago wheat lost 12.00 cents on volume of 87,007 contracts. Volume shrank from the 109,424 contracts traded on May 14 when July Chicago wheat lost 19.00 cents and total open interest increased by 1,352 contracts.On May 15, total open interest declined by 2,636 contracts, which relative to volume is approximately 20% above average. The July contract lost 1,763 of open interest. As this report is being compiled on May 16, July Chicago wheat is trading 7.25 cents lower and has made a new low for the move at 6.70 1/2, which is the lowest print since April 22 of 6.69. On May 14, July Chicago wheat generated a short-term sell signal, but remarkably will not generate an intermediate term sell signal today. As matter of fact an intermediate term sell signal would not be generated until the high for the day in the July contract is below 6.56 7/8.We think that OIA’s pivot point for an intermediate term sell signal will likely provide support. Stand aside.

Kansas City wheat:

July Kansas City wheat lost 27.50 cents on volume of 23,931 contracts. Total open interest increased by 545 contracts, which relative to volume is approximately 10% below average. From May 13 through May 15, total open interest has increased by 4361 contracts while July Kansas City wheat has declined by 45.75 cents. This is clearly bearish open interest action relative to the price decline. Although, it has come close, the July contract has not yet generated a short-term sell signal and remains on an intermediate term buy signal. Stand aside.

The USDA reported sales in all wheat categories of 54.9 thousand metric tons bringing total commitments to date of 1.162.8 billion bushels versus USDA projections of 1.185 billion bushels.

Cotton:

July cotton lost 34 points on volume of 16,312 contracts. Total open interest declined by a massive 1,420 contracts, which relative to volume is approximately 360% above average meaning that liquidation was extremely heavy on a modest decline. The July contract accounted for loss of 1,930 of open interest. As this report is being compiled on May 16, July cotton is trading 56 points lower and has made a new low for the move at 89.76, which is the lowest print since 89.71 made on March 24, 2014.On May 12, July cotton generated a short-term sell signal, but has closed lower each day this week and has not had the typical 1-3 day countertrend rally, which accompanies a sell signal. This is testament to the internal weakness of the market, but a rally is certainly on the horizon, especially since the market is massively oversold relative to its 5 day moving average of 90.62 and the 20 day moving average of 92.67. However, it is not oversold relative to year to date moving average of 89.39. On May 13, OIA recommended to clients who wanted to enter bearish positions, but did not want to wait for a countertrend rally to use the May 14 high of 92.13 as an exit point for these positions. Although, the trade has worked out well thus far, a rally is likely to occur at any time.

Coffee:

July coffee gained 12.60 cents on volume of 30,064 contracts. Volume was the heaviest since May 9 when 42,466 contracts were traded and July coffee lost 11.60 cents while total open interest increased by 1487 contracts. On May 15, total open interest increased by a massive 1489 contracts, which relative to volume is approximately 100% above average meaning that new longs were piling into the market as it reached its highest level since May 9 (1.9635). On May 12, July coffee generated a short-term sell signal, and yesterday was the first countertrend rally, which has petered out on May 16. In yesterday’s report, we mentioned that we wanted to  wait one more day before making a recommendation about entering bearish positions. We expected some follow-through on yesterday’s rally, but as it turned out, July coffee was unable to rally to yesterday’s close of 1.9680 and thus far today has made a high of 1.9610. The market is extremely volatile and currently is trading 12.05 cents lower on the day. We would wait for a rally and then put on a bear put spread (buying nearby puts and selling puts that are further out of the money.

Live cattle:

August live cattle lost 57.5 points on volume of 67,820 contracts. Total open interest increased by 902 contracts, which relative to volume is approximately 45% less than average. The June contract lost 7,078 of open interest, which makes the total open interest increase more oppressive (bearish). As this report is being compiled on May 16, August cattle is trading 27.5 points higher on the day. Stand aside.

WTI crude oil:

June WTI crude oil lost 87 cents on very heavy volume of 723,803 contracts.Volume was the heaviest since April 16 when 748,831 contracts were traded and June WTI closed at $103.03. On May 15, total open interest declined by a substantial 18,913 contracts, which relative to volume is average, but a larger than normal number nonetheless. The June contract lost a massive 51,968 of open interest as market participants switch out of June into July. As this report is being compiled on May 16, July WTI is trading 59 cents higher and currently is trading at the highs of the day. On May 14, WTI crude generated a short-term buy signal, which reversed the short-term sell signal generated on April 30. As mentioned in yesterday’s report, we advised clients who were still holding short call positions to liquidate these and move to the sidelines. We are not enthusiastic about the long side of WTI. Additionally, gasoline and heating oil have not generated a short-term buy signals, which would provide support to WTI prices.

Natural gas:

June natural gas gained 10.2 cents on relatively heavy volume of 283,641 contracts. Volume was the highest since May 13 when 319,136 contracts were traded and June natural gas lost 7.6 cents while total open interest declined by 9760 contracts. On May 15, total open interest declined by 11,597 contracts, which relative to volume is approximately 55% above average meaning that liquidation was heavy on the price advance. This is bearish open interest action relative to the price advance. The June contract lost 12,247 of open interest. On May 12, June natural gas generated a short-term sell signal and the next day (May 13) generated an intermediate term sell signal. Yesterday, was the first day of a countertrend rally, which usually occurs after the generation of sell signals. However, there has been no follow through on May 16 as June natural gas is trading 3.9 cents lower. Stand aside.

British pound:

The June British pound gained 25 pips on volume of 82,843 contracts. Total open interest declined by 1337 contracts, which relative to volume is approximately 40% below average, but an open interest decline on a price advance is bearish.  During the past two days it appeared the June pound was about to generate a short-term sell signal, but as of this date, the market has managed to hold up fairly well. For the pound to resume its advance, the low of the day in the June contract must be above 1.6785. At this juncture, the pound is not massively overbought, nor oversold with the 5 day moving average at 1.6812, 20 day MA 1.6843, 50 day MA 1.6717. The moving average year to date is 1.6621. The June pound remains on a short and intermediate term buy signal.

Yen:

The June yen gained 24 pips on huge volume of 187,268 contracts. Volume was higher than trading on May 2 when 179,968 contracts are traded the daily range was 107 pips. Volume on Thursday was below trading on April 8 when 205,611 contracts changed hands and the daily range was 151 pips versus the daily range on May 15 of just 81 pips. On May 15, total open interest increased by 2,594 contracts, which relative to volume is approximately 45% less than average, but this is the first open interest increase on a price advance during the recent rally, which began on May 2. As we have pointed out before, the moving averages are in a bullish set up, and the yen looks to trade higher. On April 9, OIA announced that the June yen had generated a short and intermediate term buy signal..

Gold:

June gold lost $12.60 on healthy volume of 163,424 contracts. Total open interest declined by 5,301 contracts, which relative to volume is approximately 35% above average meaning that liquidation was fairly substantial. As this report is being compiled on May 16, June gold is trading $2.50 lower on the day. The market lacks “animal spirits.” However, the open interest action relative to price advances and declines is bullish. Stand aside.

Platinum:

July platinum lost $15.80 on volume of 12,754 contracts. Total open interest increased by 397 contracts, which relative to volume is approximately 25% above average. As this report is being compiled on May 16, July platinum is trading $2.10 lower on the day. As we have said before, we like platinum, but we do not like that gold and silver are unable to generate short-term buy signals. July platinum remains on a short and intermediate term buy signal.

S&P 500 E mini:

The June S&P 500 E mini lost 18.00 points on heavy volume of 2,251,113 contracts.Volume was the strongest since April 15 when 2,615,208 contracts were traded and the June E mini closed at 1839.50. As this report is being compiled on May 16, the June E mini is trading 1.50 lower on the day and has not taken out yesterday’s low of 1859.00. We continue to recommend put protection for those clients who hold long equity positions.