Soybeans:

July soybeans advanced 20.25 cents on heavier than normal volume of 171,747 contracts. Volume was the highest since May 9 when July soybeans advanced 17.50 cents on volume of 172,535 contracts and total open interest increased by 773 contracts. On May 19, total open interest increased by a massive 8,687 contracts, which relative to volume is approximately 100% above average. Surprisingly, the July contract gained open interest of 1,221, which has rarely been the case. For example, on May 9, the May and July contracts lost a total of 3435 of open interest. Yesterday, open interest increased in the July 2014 through March 2016 contracts.

In short the open interest increases seen on May 19 were broad-based and accompanied by healthy volume. As this report is being compiled on May 20, July soybeans are trading 4.00 cents lower and have made a new high for the move at $15.01. Unfortunately, July soybeans will not generate a short-term buy signal, which would reverse the short-term sell signal generated on May 7 because the low on May 20 (14.73 1/4) is below OIA’s key pivot point of $14.84 1/8.The strength of soybeans has been impressive considering the dismal performance of corn and wheat, and we think that contract highs in the July and August contracts are possible.We have no recommendation at this juncture.

Soybean meal:

July soybean meal advanced $10.30 on volume of 66,852 contracts. Total open interest increased by 3,163 contracts, which relative to volume is approximately 80% above average meaning that new longs were aggressively entering the market and driving prices to new contract highs ($494.90) the July contract had a massive increase of 3,707 of open interest. As this report is being compiled on May 20, July soybean meal is trading $3.40 lower, but has made a new contract high of 499.10, which is shy of the contract high made in the May 2014 contract of 504.00. The meal market is very strong and has held up incredibly well compared to soybeans and certainly the rest of the grain complex. Today, July soybean meal has made a daily low above traded above OIA’s key pivot point of 480.80. This means that the rally is likely to resume in earnest and that setbacks should be bought.The all-time high for soybean meal occurred on August 30, 2012 when the high print was $550.50 and the secondary high occurred on July 12, 2013 when soybean meal made a high of 544.00. It appears reasonable that soybean meal could test those highs.We have no recommendation at this juncture.

Corn:

July corn lost 6.25 cents on volume of 198,916 contracts. Volume was the highest since May 15 when July corn lost 11.25 cents on volume of 251,947 contracts and total open interest declined by 8,011 contracts. On May 19, total open interest declined by a massive 11,280 contracts, which relative to volume is approximately 135% above average, meaning that liquidation was extremely heavy on the decline to new lows for the move. The July contract lost 12,626 of open interest. As this report is being compiled on May 20, July corn is trading 1.50 cents lower and has made another new low for the move at 4.74 1/4. For the past 3 days beginning on May 15, open interest has declined each day for a total of 32,939 contracts while July corn lost 18.25 cents. On May 15, July corn generated a short-term sell signal, and it is apparent speculators are running for the exits. In order for July corn to generate an intermediate term sell signal, the high of the day must be below OIA’s key pivot point of 4.75  3/4. The high on May 20 is 4.81 1/4. Since the generation of the short term sell signal, the market has not had a countertrend rally, which would enable clients to initiate bearish positions. As a result, we cannot recommend bearish positions at this juncture.

Chicago wheat:

July Chicago wheat gained 0.25 cents on very heavy volume of 118,223 contracts. Volume was the heaviest since May 9 when July Chicago wheat lost 12.75 cents on volume of 119,014 contracts and total open interest increased by 4,842 contracts.On May 19, total open interest increased by a massive 7026 contracts, which relative to volume is approximately 140% above average meaning that large numbers of new short sellers were entering the market and driving prices to new lows for the move ($6.62 3/4), which is the lowest print since 6.57 1/2 made on March 12, 2014. It should be noted the open interest increase on May 19 was the largest since the beginning of the slide in Chicago wheat prices on May 9. This may indicate that wheat has reached a temporary bottom. We are waiting for a countertrend rally before recommending bearish positions. July Chicago wheat generated a short-term sell signal on May 14 and has not yet generated an intermediate term sell signal. We have no recommendation at this juncture.

Kansas City wheat: On May 19, July Kansas City wheat generated a short-term sell signal, but remains on an intermediate term buy signal.

July Kansas City wheat advanced 1.00 cent on light volume of 16,738 contracts. Total open interest declined by a massive 1,677 contracts, which relative to volume is approximately 300% above average meaning that liquidation was extremely heavy as July Kansas City wheat traded to its lowest level (7.59) since April 24 (7.45 1/2).The July contract lost 2,285 of open interest. As this report is being compiled on May 20, July KC wheat is trading 5.75 cents higher and has made a daily high of 7.85 3/4.As is usually the case after the generation of a sell signal, the market has a tendency to have a countertrend rally that lasts from 1-3 days. According to OIA protocols this is the opportunity to initiate bearish positions, however in the case of Kansas City wheat, we think that bearish positions should be initiated in Chicago wheat (once Chicago wheat has had a countertrend rally) due to the very tight supplies of KC wheat.

Cotton:

July cotton lost 67 points on volume of 17,424 contracts. Total open interest increased by 233 contracts, which relative to volume is approximately 45% less than average. However, the July contract lost 424 of open interest, which makes the total open interest increased more impressive (bearish). As this report is being compiled on May 20, cotton is trading 31 points lower and has made a new low for the move at 88.71, which is the lowest print since March 12, 2014 (88.78). From May 9 through May 19, cotton has closed lower every day, and has not had its usual countertrend rally after generating a sell signal on May 12.If clients did not initiate bearish positions per the May 13 report, we advise a stand aside posture. The market is overdue for a countertrend rally. For July cotton to generate an intermediate term sell signal, the high of the day must be below OIA’s key pivot point of 89.08.

From the May 13 report:

“For clients who are looking to initiate bearish positions but are not willing to wait for more of a rally, today’s high of 92.13 is a reasonable exit point for bearish positions. There is support between 89.71 (March 24 low) -90.02 (April 11 low), which if broken, will bring on the classical bar charting guys who will begin piling in on the short side. July cotton is trading below its 50 day moving average of 92.02 and the 20 day moving average of 92.91.”

Coffee:

July coffee lost 1.55 cents on volume of 13,318 contracts. Total open interest declined by 719 contracts, which relative to volume is approximately 110% above average meaning that liquidation was extremely heavy on the modest decline. As this report is being compiled on May 20, July coffee is trading 1.15 cents higher on the day, but has made a new low for the move at 1.8005. July coffee generated a short-term sell signal on May 12th, but remains on an intermediate term buy signal. We have no recommendation.

 Live cattle:

August live cattle advanced 2.175 cents on heavy volume of 78,577 contracts. Volume was the highest since May 13 when 87,675 contracts were traded and August cattle declined 22.5 points while open interest increased by 2107 contracts. On May 19, total open interest increased by a massive 10,329 contracts, which relative to volume is approximately 390% above average meaning that new longs were heavily entering new positions and driving prices to new contract highs (1.40775). As this report is being compiled on May 20, August cattle is trading 75 points lower on the day. Continue to stand aside.

WTI crude oil:

July WTI crude oil advanced 53 cents on volume of 536,844 contracts. Total open interest declined by 8,803 contracts, which relative to volume is approximately 35% less than average. The June contract accounted for loss of 45,087 of open interest. As this report is being compiled on May 20, July WTI is trading unchanged on the day and has made a daily high of 102.44, which is 5 cents shy of yesterday’s high (102.49). As we have said before, we see no compelling reason to be involved in the market.

Gasoline: On May 19, July gasoline generated a short-term buy signal and remains on an intermediate term buy signal.

Natural gas:

June natural gas advanced 5.7 cents on light volume of 189,481 contracts. Total open interest declined by 1,538 contracts, which relative to volume is approximately 55% below average. The June contract lost 10,027 of open interest. As this report is being compiled on May 20, June natural gas is trading 7.2 cents higher and has made a new high for the move at 4.570, which is the highest print since 4.598 made on May 9.The bull spread (long June 2014-short September 2014) continues to widen, which bodes well for natural gas prices going forward. June natural gas remains on a short and intermediate term sell signal. Stand aside.

British pound:

The June British pound lost 3 pips on volume of 53,516 contracts.Total open interest increased by 3,165 contracts, which relative to volume is approximately 140% above average meaning that longs and shorts engaged in a battle and neither side was able to move the market significantly in either direction. As we said in yesterday’s report, the market may stall at OIA’s key pivot point of 1.6861. If the June pound is able to make a low above the pivot point, it is possible that new contract highs may be seen.

Yen:

The June yen advanced 19 pips on volume of 115,702 contracts. Total open interest increased by healthy 2960 contracts, which relative to volume is average. The yen is experiencing open interest increases as prices advance, and this definitely has not been the norm probably because leveraged funds are massively short the yen by a ratio of 3.03:1. Yesterday, the yen reached its highest level since .9923 made on February 5, 2014. It appears the June yen wants to break decisively above multi month resistance at approximately the.9880 level. As this report is being compiled on May 20, the June yen is trading 4 pips higher, but has not taken out yesterday’s high. The June yen remains on a short and intermediate term buy signal.

Copper:

July copper advanced 2.00 cents on volume of 39,832 contracts. Total open interest increased by 863 contracts, which relative to volume is approximately 15% less than average. The market made a high at $3.1840 On heavy volume per the 15 minute chart and sold off from the high to close in the mid range. July copper should experience resistance at OIA’s key pivot point of 3.1673, and at yesterday’s high of 3.1840, and the 200 day moving average of 3.2178. July copper generated a short-term buy signal on April 24, 2014, but remains on an intermediate term sell signal.

From the May 18 Weekend Wrap:

“In short, we see nothing compelling about being long copper. Until the July contract trades above OIA’s pivot point, copper will trade sideways to lower. A market that is trading near its year to date moving average is nothing to get excited about. In short, copper is trading within a normal range considering price and time frame.”

Platinum:

July platinum gained $4.10 on volume of 9,449 contracts. Total open interest increased only 46 contracts. As this report is being compiled on May 20, July platinum is trading $2.10 lower. We have no recommendation at this juncture.

S&P 500 E mini:

The June S&P 500 E mini gained 7.50 points on light volume of 1,039,474 contracts. Total open interest increased by 7,503 contracts, which relative to volume is approximately 65% below average. As this report is being compiled on May 20, the June E mini is trading 15.25 points lower and has made a low for the day at 1864.75. Continue to hold long puts to protect long equity positions.