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Soybeans:

January soybeans lost 7.50 cents on volume of 229,361 contracts. Total open interest declined by 7,720 contracts, which relative to volume is approximately 35% above average meaning that liquidation was heavier than normal. The November contract accounted for loss of 13,812 of open interest. As this report is being compiled on October 21, January soybeans are trading 16.25 cents higher after making a daily high of 9.74, which is the highest print since 9.80 1/2 made on October 17.We continue to recommend writing out of the money calls in January soybeans, but clients should exit the position if the daily low in the January contract is above 9.77 3/8, which would trigger a short-term buy signal. We don’t think this is in the cards, especially because soybeans are being harvested and this will tend to pressure prices.

Soybean meal:

December soybean meal lost $1.10 on volume of 56,527 contracts. Total open interest declined by 1,258 contracts, which relative to volume is approximately 10% below average. The December contract accounted for loss of 3,210 of open interest. As this report is being compiled on October 21, December soybean meal is trading sharply higher, up $9.30,+ 2.82% versus January soybeans, which are up 1.44%.December soybean meal has made a new high for the move at 344.40, which is the highest print since 344.20 made on September 9 Additionally, the front month contracts are widening against distant contracts, which is bullish. On October 16, December soybean meal generated a short-term buy signal, and for it to generate an intermediate term buy signal, the low the day must be above OIA’s key pivot point for October 21 of 338.20. If the market is unable to make a low above the intermediate term pivot point, this may be the extent of the rally.As indicated previously, the relatively poor performance of soybeans will continue to weigh on meal prices.

Corn:

December corn advanced 0.25 cent on volume of 204,161 contracts. Total open interest increased by a massive 12,135 contracts, which relative to volume is approximately 140% above average meaning a battle ensued between longs and shorts and neither side was able to move the market much by the close. There were open interest increases in the December 2014 through September 2015 contracts. On October 21, December corn is trading 4.75 cents higher and has made a daily high of 3.58 3/4, which  takes out the previous high for the move of 3.58 1/4 made on October 15. On October 9, December corn generated a short-term buy signal, but remains on an intermediate term sell signal.Previously, we recommended writing out of the money calls in December corn on any sizable rally, but to exit the position if December corn makes a low above OIA’s key pivot point for October 21 of 3.49 5/8.

Chicago wheat:

December Chicago wheat lost 2.50 cents on volume of 58,146 contracts. Total open interest declined by only 211 contracts. The December contract accounted for loss of 2,875 of open interest. On October 17, December Chicago wheat generated a short-term buy signal, and yesterday the market had a one day pullback and made a low at 5.07 1/4.We thought we would see more of a pullback , however, on October 21 the market is trading 1.66% higher, + 8.50 cents and has made a high of 523 3/4, which takes out the previous high print of 5.22 1/4 made on October 17.Chicago wheat has been acting surprisingly well, and on October 21 is significantly outperforming Kansas City wheat.Our preference on the bullish side is biased towards Kansas City wheat due to its more favorable fundamentals.In order for December Chicago wheat to continue its advance, it must make a low above OIA’s key pivot point for October 21 of 5.28 5/8. If it is unable to do so, that may be the extent of the rally, at least for now.

Kansas City wheat:

December Kansas City wheat lost 0.75 cent on light volume of 16,468 contracts. Total open interest increased by 544 contracts, which relative to volume is approximately 35% above average meaning a battle ensued between longs and shorts and neither side was able to move the market much by the close. The December contract accounted for loss of 710 of open interest. Yesterday, the December 2014-may 2015 spread narrowed by 0.75  cents. As this report is being compiled on October 21, December Kansas City wheat is trading 4.50 cents higher, or + 0.75%. On October 17, December Kansas City wheat generated a short-term buy signal, but remains on an intermediate term sell signal.The bull spread: Long December 2014 short May or July 2015 spread is narrowing on October 21, but as long as wheat continues to work its way higher, the spread should widen.

WTI crude oil:

December WTI crude oil lost 15 cents on volume of 594,776 contracts. Total open interest declined by 22,088 contracts, which relative to volume is approximately 45% above average meaning that liquidation was heavy on the modest decline.The November contract accounted for loss of 28,673 of open interest. As this report is being compiled on October 21, December WTI is trading 11 cents higher and has made a daily high of 83.26, which is below the high of 83.74 made on October 17. December WTI remains on a short and intermediate term sell signal. Stand aside.

Natural gas: 

November natural gas lost 9.6 cents on volume of 223,169 contracts. Total open interest increased by 1,983 contracts, which relative to volume is approximately 55% below average. The November contract accounted for loss of 5,412 of open interest,which makes the total open interest increase more impressive (bearish). For the past 2 days, natural gas prices have declined and open interest has increased indicating that market participants are becoming increasingly bearish. We think this may be premature as winter approaches, and if temperatures drop precipitously, the market could turn around on a dime.As this report is being compiled on October 21, November natural gas is trading 7 ticks lower after making a daily low of 3.631, which is the lowest print since the week of November 18, 2013 when the December 2013 contract made a low of 3.545. Stand aside.

Gold: December gold has made a daily low above OIA’s key pivot point for October 21 of  $1,238.00, and therefore will generate a short-term buy signal if the market continues to trade above the pivot point.

December gold advanced $5.70 on light volume of 100,759 contracts. Total open interest increased by a substantial 3,683 contracts, which relative to volume is approximately 40% above average meaning that aggressive new longs were entering the market in substantial numbers and driving prices higher (1249.30), which is the highest print since 1250.30 made on October 15, which until today was the high for the move.

On October 21, December gold is trading $6.60 higher and has made a daily high of 1255.60, which is the highest print since 1258.50 made on September 10. Once a buy signal is generated, the next point of resistance is OIA’s key pivot point of 1259.70. In order for the rally to continue, the low the day must be above this pivot point. Also, once the buy signal is generated, the market should pullback from 1-3 days, and this is the opportunity to initiate bullish positions. Our main concern about gold is that platinum and silver remain on short and intermediate term sell signals. Preferably, we want to see more strength in these two metals before we can become raging bulls in gold.

Cocoa:

December cocoa advanced $2.00 on volume of 16,966 contracts. Total open interest declined again, this time by a massive 1289 contracts, which relative to volume is approximately 215% above average meaning liquidation was extremely heavy again even though prices traded in a relatively narrow range and closed only fractionally higher. The December contract lost 1,352 of open interest, March 2015 -172. The long March 2015-short December 2015 cocoa spread narrowed by $3.00. As this report is being compiled on October 21, December cocoa has closed at 3,110, down $10.00.

We continue to recommend the long March 2015 -short December 2015 cocoa futures spread and call options in March cocoa.December and March cocoa remain on a short and intermediate term sell signal, and the basis of the trade is the potential spread of the Ebola virus to the Ivory Coast and Ghana and its potential negative impact on cocoa distribution.

Coffee:

December coffee lost 11.25 cents on fairly heavy volume of 26,481 contracts. Volume was the highest since October 8 when December coffee lost 1.90 cents on volume of 29,898 contracts and total open interest increased by 2,081 contracts. On October 20, open interest declined only 452 contracts, which relative to volume is approximately 25% less than average. The December contract accounted for loss of 2,991 of open interest, and there were open interest increases in the forward months to offset a sizable portion of the loss in December.

As this report is being compiled on October 21, December coffee has made a new low for the move at 1.9180, which is the lowest print since 1.8855 made on September 30.Undoubtedly, there are significant numbers of market participants that have losses in coffee, and we expect on any rally, holders of losing positions will be looking to liquidate, which will cap advances, at least temporarily.We remain bullish coffee longer-term, and recommend that the long July 2015-short March 2016 futures spread continued to be held. In order for December coffee to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point for October 21 of 1.9900

 S&P 500 E mini:

The December S&P 500 E mini advanced 19.00 points on volume of 1,656,326 contracts. Total open interest declined by 20,034 contracts, which relative to volume is approximately 45% less than average, but an open interest decline on a price advance is bearish. Additionally, on October 17 when the E mini advanced 30.50 points on volume of 2,585,457 contracts, total open interest declined by 2,240 contracts, which again is bearish.

As this report is being compiled on October 21, the E mini is trading 29.50 points higher on the day. In order for the December E mini to generate a short-term buy signal the low the day must be above OIA’s key pivot point of 1950.65 and for an intermediate term buy signal to be generated, the low the day must be above OIA’s key pivot point for October 21 of 1943.90. In short, the earliest that buy signals could be generated would be tomorrow.