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Soybeans:

November soybeans advanced 3.50 cents on volume of 197,221 contracts. Volume declined from September 30 when November soybeans lost 10.25 cents on volume of 275,459 contracts and total open interest declined by 5,435 contracts. However, volume was slightly above that traded on September 29 when November soybeans advanced 13.25 cents on volume of 190,011 contracts and total open interest increased by a substantial 10,803 contracts. On October 1, total open interest declined by 2,480 contracts, which relative to volume is approximately 45% less than average. The November contract accounted for loss of 9,590 of open interest. As this report is being compiled on October 2, November soybeans are trading 8.50 higher and has made a daily high of 9.25 1/2, which is above yesterday’s high of 9.19 3/4, but below the September 30 high of 9.30. Stand aside.

The USDA reported sales of 869.12 thousand metric tons, which is the lowest weekly sale since the beginning of the season on September 1. This brings total commitments season to date of 1.061.9 billion bushels versus USDA projections for the season, which ends on August 31, 2015 of 1.700 billion bushels.

Soybean oil:

December soybean oil advanced 43 points on volume of 78,108 contracts. Total open interest increased by 3,765 contracts, which relative to volume is approximately 75% above average meaning that heavy numbers of new longs were entering the market and driving prices to a high of 33.10, which is the highest print since 33.18 made on September 25. The October contract lost 738 of open interest, August 2015 -51. Other than August 2015, there were open interest increases in December 2014 through March 2016 contracts.The open interest increase on October 1 was the first we’ve seen on a price advance since September 24 when December soybean oil advanced 40 points on volume of 77,032 contracts and total open interest increased by a minor 368. As this report is being compiled on October 2, December soybean oil is trading down 13 points. December soybean oil remains on a short and intermediate term sell signal. Stand aside.

The USDA reported cancellations totaling -3.39 thousand metric tons. This brings total commitments to date of 828.02 thousand metric tons versus USDA projections for the season, which ended on September 30 of 861.8 tmt. Total sales for the 2013-2014 season were disappointing and the second worst going back to 2009-2010. The worst occurred during 2011-2012.

Corn:

December corn gained 0.50 cents on volume of 171,350 contracts. Volume fell significantly from September 30 when December corn lost 5.00 cents on volume of 258,156 contracts and total open interest increased by 3,814 contracts. On October 1, total open interest increased by 2,219 contracts, which relative to volume is approximately 45% less than average.The December contract accounted for loss of 4,925 of open interest. Yesterday, December corn made a new contract low at 3.18 1/4, and as this report is being compiled on October 2 has not taken out yesterday’s low.Stand aside.

The USDA reported sales of 638 thousand metric tons bringing total commitments to date of 571.4 million bushels versus USDA projections for the season, which ends on August 31, 2015 of 1.750  billion bushels.This week’s sales were below the previous high thus far in the season of 836.4 thousand metric tons made last week.

Chicago wheat:

December Chicago wheat advanced 1.25 cents on volume of 68,096 contracts. Total open interest increased by 1,835 contracts, which relative to volume is average.The December contract accounted for loss of 387 of open interest. Yesterday, Chicago wheat made a high of 4.84, which was the highest print since 4.84 1/2 made on September 24. As this report is being compiled on October 2, December Chicago wheat has made another new high for the move at 4.89 3/4, which takes out the previous high print of 4.88 1/4 made on September 19.Stand aside.

The USDA reported sales of 741 thousand metric tons, which is the 2nd highest of the season, which began on June 1. To date, 498.5 million bushels have been committed versus 900 million bushels projected by the USDA for the season, which ends on May 31, 2015.

Live cattle:

December live cattle advanced 2.425 cents on heavy volume of 82,258 contracts. Volume was the strongest since September 10 when live cattle lost 17.5 points on volume of 97,757 contracts and total open interest increased by 8,319 contracts. On September 10, December cattle closed at 1.62100. On October 1, total open interest increased by 3,604 contracts, which relative to volume is approximately 70% above average meaning that heavy numbers of new longs were entering the market and driving prices to an all-time high (1.66175).

As this report is being compiled on October 2, December live cattle has made another new all-time high 1.66950. As stated previously, we have no idea how high this market can go, but recommend against out right long positions. If you’re inclined to trade futures, we recommend doing it through bull spreads: buying December 2014 and selling February 2015 or April 2015. The market is massively overbought, however markets can remain overbought for extended periods of time.

WTI crude oil:

November WTI crude oil lost 43 cents on heavy volume of 803,148 contracts. Although volume was strong, it was significantly below that of September 30 when November WTI lost $3.41 on volume of 873,849 contracts and total open interest increased only 7180 contracts. On October 1, total open interest increased substantially, this time by 15,756 contracts, which relative to volume is approximately 20% below average. This is the largest open interest increase on a price decline that we have seen since the beginning of the bear market bear market that began on June 26.

In yesterday’s report for September 30, we mentioned that open interest was increasing by a minor amount on downside moves, which indicated that market participants were not willing to bet on lower prices. However, the open interest increase for trading on October 1 appears to signal that market participants are getting bearish at the very bottom of the move. As this report is being compiled on October 2, November WTI is trading 29 cents lower and has made a daily low of 88.18, which occurred between the hours of 4:40- 4:45 a.m. CDT.In yesterday’s report, we mentioned that November WTI would resume its downtrend if the high of the day was below our 2 pivot points of 92.33 and 91.55. The high thus far for October 2 has been 91.38. November WTI remains on a short and intermediate term sell signal. Stand aside.

From the September 30 report:

“With the massive downside move yesterday, we expected either a significant build of open interest or a significant decline. The minor increase indicates that market participants are not willing to bet on lower prices in significant numbers.During the course of the bear market in WTI, we have continued to point out the refusal of market participants to enter bearish positions as prices move lower. The action yesterday puts a fine point on this.”

Natural gas:

November natural gas lost 9.8 cents on volume of 249,888 contracts. Volume shrank from September 30 when November natural gas lost 3.3 cents on volume of 276,910 contracts and total open interest declined by 4,287 contracts. On October 1, November natural gas lost 6,681 of open interest, which relative to volume is approximately average. Open interest declining on a price decline is positive, and as this report is being compiled on October 2, November natural gas is trading 8.9 cents lower after the release of the Energy Information Administration report, which showed an injection of 112 Bcf, one of the largest of the past several weeks.Natural gas continues its range bound trading, and we don’t think it begins moving significantly higher until the US begins to experience colder weather. November natural gas would generate a short-term sell signal if the high of the day is below OIA’s key pivot point of 3.927. Maintain bull spreads

The Energy Information Administration announced that working gas in storage was 3,100 Bcf as of Friday, September 26, 2014, according to EIA estimates. This represents a net increase of 112 Bcf from the previous week. Stocks were 373 Bcf less than last year at this time and 399 Bcf below the 5-year average of 3,499 Bcf. In the East Region, stocks were 172 Bcf below the 5-year average following net injections of 68 Bcf. Stocks in the Producing Region were 183 Bcf below the 5-year average of 1,116 Bcf after a net injection of 36 Bcf. Stocks in the West Region were 44 Bcf below the 5-year average after a net addition of 8 Bcf. At 3,100 Bcf, total working gas is below the 5-year historical range.

10 Treasury Note:

The December 10 year Treasury Note advanced 28 points on heavy volume of 1,964,045 contracts.Volume was the strongest since August 28 when 2,881,309 contracts were traded and the December note closed at 125-270. On October 1, total open interest increased only 30,277 contracts, which relative to volume is approximately 40% less than average, which is very surprising considering the volume and the magnitude of the move couple with the sharp decline in equities. As this report is being compiled on October 2, the December note is trading down 1 point. Remarkably, the December note still remains on a short and intermediate term sell signal. Although the market has rallied against the backdrop of declining equity prices, the unimpressive open interest increases signal there is a lack of enthusiasm for higher note prices. Stand aside.

Cocoa: December cocoa will generate a short and intermediate term sell signal on October 2.

December cocoa lost $128.00 on very heavy volume of 43,525 contracts.Volume was the strongest since July 23 when 70,628 contracts were traded and December cocoa closed at 3,131. On October 1, total open interest declined by a massive 4,731 contracts, which relative to volume is approximately 320% above average meaning that liquidation was massive on heavy volume.The massive decline of open interest during yesterday’s collapse is healthy, and as this report is being compiled on October 2, December cocoa has closed $82.00 lower and made a new low for the move of 3,080, which is the lowest print since 3,071 made on September 17. Although, we do not think the bull move in cocoa is over, the market needs to shed the speculative longs built up during the rally. Stand aside.

From the September 30 report:

“In order for December cocoa to resume its uptrend, the low the day must be above OIA’s key pivot point for October 1 of 3,248. A short-term sell signal will be generated if the high for the day is below OIA’s key pivot point for October 1 of 3,183. In tomorrow’s report, it will be important to see open interest decline for the trading activity of today. “

Coffee: On October 1, December coffee generated a short and intermediate term buy signal

December coffee advanced 7.05 cents on heavy volume of 28,097 contracts.Volume was the strongest since August 21 when 35,047 contracts were traded and December coffee closed at 1.8895. On October 1, total open interest increased by a massive 2,918 contracts, which relative to volume is approximately 305% above average meaning that new longs were aggressively entering the coffee market in heavy numbers and driving prices to a new high for the move (2.0185).As this report is being compiled on October 2, December coffee is closed at 2.0860, up 8.20 cents and has made a new high for the move at 2.1375, which Takes out the previous two-month high print of 2.0995 made on September 2.. Do not chase this market higher because a reversal becomes increasingly likely due to the significant overbought condition. Usually, after the generation of buy signals, the market has a tendency to pullback from 1-3 days, and this is the opportunity to initiate bullish positions.