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Soybeans:

January soybeans advanced 17.25 cents on volume of 171,202 contracts. Volume was the strongest since November 21 when January soybeans gained 18.50 cents on volume of 215,742 contracts and total open interest declined by 3,949 contracts. On November 25, total open interest increased by a hefty 6,438 contracts, which relative to volume is approximately 45% above average meaning that new longs were aggressively entering the market in large numbers and driving prices higher (10.54). The January 2015 through March 2016 contracts all gained open interest.

In short, the advance yesterday was solid, and as this report is being compiled on November 26, January soybeans are trading 7.00 cents lower and have made a daily low of 10.38 1/2, which is above OIA’s key pivot point for November 26 of 10.35 3/8. This increases the likelihood that January soybeans will finally generate an intermediate term buy signal. This will occur if the low the day is above OIA’s key pivot point for November 26 of 10.46 1/4.Despite the impressive performance, we remain skeptical of January soybeans’ ability to advance beyond the November 12 high of 10.86 1/4. As we have said before, new longs must be willing to enter the market at ever higher prices to keep the rally going and shorts need to continue to cover their positions. Much of the positive price action in soybeans is a result of a strong meal market and the demand for beans to meet crushing needs. There is a bottleneck transporting beans to crushers, but this will pass shortly.

Soybean meal:

January soybean meal gained $12.20 on volume of 110,456 contracts. Volume was the strongest since November 21 when January soybean meal advanced $7.90 on 126,572 contracts and total open interest declined by 4,329 contracts. On November 25, total open interest increased by 1,492 contracts, which relative to volume is approximately 45% below average. The December contract accounted for loss of 7,842 of open interest. The total open interest increase on November 25 was somewhat disappointing, especially considering the magnitude of the move.However, there were sufficient increases of open interest in the forward months to offset the decline in the December contract. As this report is being compiled on November 26, January soybean meal is trading 2.70 higher, and has made a new high for the move at 378.50, which is above yesterday’s high of 375.80. However, the December contract is trading $11.90 higher, which reinforces the idea that near-term demand for soybean meal is driving the soybean complex higher.

Corn:

March corn advanced 7.00 cents on volume of 391,855 contracts. Volume was the strongest since November 21 when March corn lost 1.00 cent on volume of 438,345 contracts and total open interest declined by 58,783 contracts. On November 25, total open interest declined by 26,549 contracts, and the large decline was due to the December contract losing 56,637 contracts of open interest as it approaches 1st notice day.

As this report is being compiled on November 26, March corn is trading 4.00 cents higher and has made a daily high of 3.92, which is the highest print since 3.94 1/4 made on November 21.Additionally, March corn has made a daily low of 3.86 1/2, which is the key pivot point for March corn on November 26. In short, it appears that corn also is headed higher along with the soybean complex and wheat. However, we do not think the move higher in corn is sustainable. If the market can move to the 4.03 level, conceivably it could touch 4.21 5/8. In summary, the extent of the rally may be another 30 cents at most. March corn remains on a short and intermediate term buy signal.

Chicago wheat:

March Chicago wheat advanced 7.75 cents on volume of 86,035 contracts. Total open interest declined by 1,641 contracts, which relative to volume is approximately 20% below average. The December contract lost 8,770 of open interest, and there were insufficient increases of open interest in the forward months to offset the decline in December. Clearly, Chicago wheat is blowing out short sellers, and once this phase of the rally is over, Chicago wheat will need new buyers to pay ever-increasing prices. We do not think this is in the cards. As this report is being compiled on November 26, March Chicago wheat is trading 3.25 cents higher and has made a new high for the move at 5.65 1/2.There is formidable resistance between OIA’s key pivot points of 5.80 1/4 and 5.92 3/4. We see the rally in wheat as temporary, and expect a resumption of the downtrend. March Chicago wheat remains on a short and intermediate term buy signal.

Kansas City wheat:  March Kansas City wheat will generate an intermediate term buy signal on November 26. It generated a short-term buy signal on November 14.

March Kansas City wheat advanced 13.00 cents on volume of 30,790 contracts. Total open interest declined by 1,389 contracts, which relative to volume is approximately 75% above average meaning that liquidation was extremely heavy on the decline. The December contract accounted for loss of 5,080 of open interest. As this report is being compiled on November 26, March Kansas City wheat is trading 5.50 higher and has made a new high for the move at 6.27 3/4, which is the highest print since 6.29 1/2 made on September 10.

WTI crude oil:

January WTI crude oil lost $1.69 on light holiday volume of 483,111 contracts.Total open interest increased by 6,815 contracts, which relative to volume is approximately 40% below average. The January contract accounted for loss of 1,234 of open interest. As this report is being compiled after the release of the EIA report, January WTI is trading 54 cents lower and has made a low of 73.30, which is slightly above the contract low of 73.22 made on November 14. Unless there is a major shock to the market due to the OPEC meeting on Thanksgiving day, we expect WTI to make new contract lows. Stand aside.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.9 million barrels from the previous week. At 383.0 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories increased by 1.8 million barrels last week, but are in the lower half of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories decreased by 1.6 million barrels last week and are near the lower limit of the average range for this time of year. Propane/propylene inventories fell 2.0 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories decreased by 4.7 million barrels last week.

Natural gas:

January natural gas advanced 9.9 cents on light holiday volume of 253,062 contracts. Total open interest increased by 3,042 contracts, which relative to volume is approximately 45% below average. The December contract lost 7,562 of open interest. As this report is being compiled on November 26, January natural gas is trading 1.2 cents lower after making a high of 4.529, which is below the high for the move of 4.689 made on November 21. We have been unimpressed with the open interest action on rallies and declines, and think it is risky to be long the market. Additionally, another potential danger sign for natural gas is that the heating oil market has been dead in the water and during the cold spell and could barely rally. As the EIA report indicates, distillate fuel inventories are near the lower limit of the average range for this time of year, and yet heating oil prices did not get a boost from cold weather. Although prices can certainly move higher, in our view they can turn on a dime, which makes it extremely risky to trade natural gas. January natural gas remains on a short and intermediate term buy signal.

Gold:

February gold advanced $1.20 on heavy volume of 360,665 contracts. Total open interest declined by a massive 51,302 contracts, which was due to the impending 1st notice day of December gold. As this report is being compiled on November 26, February gold is trading $1.20 lower on the day. Despite the move higher, gold has been unable to generate a short-term buy signal, and remains on an intermediate term sell signal. Stand aside.

Silver:

March silver advanced 17.6 cents on very heavy volume of 127,403 contracts. Total open interest declined by 7,538 contracts, which was due to the impending 1st notice day of the December contract, which lost 19,199 contracts of open interest. Although the silver prices have been acting well, open interest has been negative. However silver has been significantly outperforming gold ever since it made its contract low on November 7 ($15.085).For example from November 7 through November 25, March silver has advanced 5.88% while February gold has gained 2.06%. As a result, if silver maintains its strength, it is likely to generate a short-term buy signal before gold. For a short-term buy signal to occur, the low the day must be above OIA’s key pivot point for November 26 of $16.601.

Copper:

March copper lost 2.85 cents on heavy volume of 114,183 contracts. Total open interest increased by 3,780 contracts, which relative to volume is approximately 35% above average meaning that new short sellers were aggressively entering the market and driving prices to new low for the move (2.960). The December contract lost 8,983 of open interest, which makes the total open interest increase more impressive (bearish). As this report is being compiled on November 26, March copper has made another new low of 2.9350, which is the lowest print since 2.9160 made during the week of March 17, 2014. On November 5, copper generated a short-term sell signal and has been on an intermediate term sell signal. 

Coffee:

March coffee advanced 4.55 cents on heavier than normal volume of 21,728 contracts. Total open interest increased by a massive 2,208 contracts, which relative to volume is approximately 300% above average meaning that new longs were aggressively entering the market and driving prices higher (1.9640). As this report is being compiled on November 26, March coffee has closed at 1.9425, down fractionally from yesterday’s close. We think a short-term buy signal is inevitable, but the market may need to do some further work at the lower end of the trading range before resuming the uptrend. March coffee remains on a short and intermediate term sell signal.