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Soybeans:

January soybeans advanced 15.75 cents on light volume of 136,264 contracts.Volume was the weakest since September 18 when 124,826 contracts were traded and January soybeans closed at 9.79 1/2. Additionally, volume was below that of November 19 when January soybeans lost 18.50 cents on volume of 155,210 contracts and total open interest declined by 2,222 contracts.

On November 20, total open interest increased by a massive 6,514 contracts, which relative to volume is approximately 75% above average meaning that new longs were entering the market and driving prices higher (10.22 1/4). The January 2015 through November 2015 contracts all gained open interest. As this report is being compiled on November 21, January soybeans are trading 17.50 cents higher after making a high of 10.40, which is the highest print since 10.42 made on November 18.

January soybeans will generate a short-term sell signal if the high of the day is below OIA’s key pivot point for November 21 of 10.04 3/8. The rally will resume if January soybeans makes a low for the day above OIA’s key pivot point of 10.33 3/4. Additionally, January soybeans must be able to generate an intermediate term buy signal, which will occur if the low for the day is above OIA’s key pivot point for November 21 of 10.46 1/4. In short, January soybeans has 2 major obstacles to overcome in order for the rally to continue. In our view, the inability of January soybeans to generate an intermediate term buy signal after bottoming on October 1 confirms this is a rally in a bear market. During this time, corn, Chicago wheat and soybean meal have generated intermediate term buy signals.

Soybean meal:

January soybean meal advanced $3.20 on volume of 111,664 contracts. Total open interest declined by 1,977 contracts, which relative to volume is approximately 25% less than average. The December contract accounted for loss of 8,939 of open interest. After topping on October 29, at $22.60 premium to December 2014, the December 2014-January 2015 soybean meal spread narrowed to 11.50 premium to December 2014 on November 20.This is potentially bearish if the spread continues to narrow. In order for January soybean meal to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for November 21 of $351.90. January soybean meal remains on a short and intermediate term buy signal.

Corn:

March corn advanced 10.25 cents on heavy volume of 430,589 contracts. Volume increased from November 19 when March corn lost 9.00 cents on volume of 403,153 contracts and total open interest declined by 2,666 contracts. On November 20, total open interest declined by 2,319 contracts, which relative to volume is approximately 70% below average. The December contract lost 40,744 of open interest, which makes the minor decline of total open interest bullish. In short, there were sufficient open interest increases in the forward months to offset most of the decline in December. As this report is being compiled on November 21, March corn is trading 1.50 cents higher after making a high of 3.94 1/4, which is the highest print since 3.96 1/2 made on November 17. In order for the rally in corn to continue, the March contract must make a low above OIA’s key pivot point for November 21 of 3.86 1/4. If March corn is unable to accomplish this, it will trade sideways to lower. March corn remains on a short and intermediate term buy signal.

Chicago wheat:

March Chicago wheat advanced 11.50 cents on volume of 120,131 contracts. Total open interest declined by 3,380 contracts, which relative to volume is average. The December contract accounted for loss of 10,825 of open interest. As this report is being compiled on November 21, March Chicago wheat is trading 3.25 cents higher and has made a daily high of 5.60. Additionally, the daily low has been 5.47 1/2, which is above OIA’s key pivot point for November 21 of 5.43 1/2. This means the rally is likely to continue and we expect a test of the November 14 high of 5.67 1/2. December Chicago wheat has been remarkably strong in the face of unimpressive exports stats. However, we see this rally as a squeeze play on short sellers. In the upcoming Weekend Wrap, we will have a better idea of how many players have been blown out of the market.

WTI crude oil:

January WTI crude oil advanced $1.35 on very light volume of 491,994 contracts.Volume was the weakest since October 28 when 393,356 contracts were traded and January WTI closed at $81.12. On November 20, total open interest declined by a massive 22,579 contracts, which relative to volume is approximately 75% above average meaning that liquidation was extremely heavy on the advance. This is clearly bearish open interest action relative to the price advance. Additionally, the December contract lost 21,071 of open interest and the total open interest decline was greater than the loss in the December contract. As this report is being compiled on November 21, January WTI is trading 6 cents lower after making a high of 77.83, which is the highest print since 77.92 made on November 12. WTI is extremely weak, and it continues the pattern of one-day rallies followed by declines. We see lower prices ahead and new contract lows.

Natural gas:

January natural gas advanced 13.3 cents on very heavy volume of 638,618 contracts. Volume was the strongest since November 6 when natural gas advanced 21.0 cents on volume of 646,234 contracts and total open interest increased by a massive 30,084 contracts. On November 20, total open interest declined by 2,247 contracts, which relative to volume is approximately 85% below average. The December contract lost 13,221 of open interest. November 20 was the 2nd day in a row that natural gas prices advanced and total open interest declined.This is clearly bearish.

As we stated in yesterday’s report: “It appears the extreme weather in the East and Midwest has been discounted by the market, and it may become risky to remain long at current levels. This is not to say that natural gas cannot move higher, but it may have already seen the high on November 10 when the December contract printed 4.544.”

As this report is being compiled on November 21, January natural gas has made a new high for the move of 4.689, but has reversed sharply and is trading 21.1 cents lower on the day. Another factor supporting lower natural gas prices is the abysmal performance of heating oil during the recent period of extreme cold weather. In short, heating oil has traded sideways to lower and has not had the strength to move higher during the cold spell.

Gold:

December gold lost $3.00 on volume of 227,000 contracts. Total open interest increased by 8,492 contracts, which relative to volume is approximately 45% above average, meaning there was a battle between longs and shorts and the shorts had the edge in yesterday’s trading. The December contract accounted for loss of 13,838 of open interest, which makes the total open interest increase potentially bullish. As this report is being compiled on November 21, December gold is trading $6.90 higher and has made a new high for the move at 1207.60, which is the highest print since $1216.50 made on October 30.In order for December gold to generate a short-term buy signal, the low the day must be above OIA’s key pivot point for November 21 of $1201.30. Taking into account the average true range over the past 21 days has been $20.20, a move to at least 1221.50 would be likely if a short-term buy signal were to be generated (1201.30 + 20.20 = 1221.50).

Also favoring a continued move higher in gold is that silver and platinum have come back from the dead and are trading higher on the day as well. This is the best indication the move in gold may be the real deal. Additionally, the dollar index is sharply higher (due to the sharply lower euro) and this is another indication the worst of the carnage in precious metals may be at an end.

Coffee:

March coffee lost 10.25 cents on surprisingly light volume of 22,167 contracts. Volume was the weakest since October 29 when 20,558 contracts were traded and March coffee closed at 1.9395. Also, volume declined from November 19 when March coffee advanced 6.20 cents on volume of 23,381 contracts and total open interest declined by 157 contracts. On November 20, total open interest declined by 923 contracts, which relative to volume is approximately 60% above average, meaning that liquidation was heavy on the decline. The December contract lost 504 of open interest, March 2015 -911. As this report is being compiled on November 21, March coffee has closed at 1.9070, up 1.85 cents.March coffee remains on a short and intermediate term sell signal. Stand aside.

We think coffee prices will eventually move higher, but at this juncture the market is trading sideways to lower. March coffee will generate a short-term buy signal if the low the day is above OIA’s key pivot point for November 21 of 1.9730.