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Soybeans:

January soybeans advanced 19.50 cents on light volume of 296,824 contracts.Volume was the weakest since October 20 when soybeans lost 7.50 cents on volume of 229,361 contracts and total open interest declined by 7720 contracts. On October 31, total open interest declined by 2,552 contracts, which relative to volume is approximately 55% below average, but a total open interest decline on Friday’s price advance is bearish. The November contract accounted for loss of 8,567 of open interest, January 2015 -2,327.

As this report is being compiled on November 3, January soybeans are trading 15.25 cents lower after making a daily high of 10.47 3/4, which is below Friday’s high of 10.54. Thus far, the high for the move in January soybeans has been 10.59 1/4 made on October 30. In the weekend report, we discussed in detail our reasons for thinking that soybeans were in the process of topping.Today’s action and Friday’s volume and open interest stats only confirm our point of view. On October 24, January soybeans generated a short-term buy signal, but have been unable to make a low above the intermediate term buy signal pivot point of 10.46 1/8.

We are reluctant to recommend bearish positions because the spread between November 2014 and January 2015 have narrowed and have taken out highs made during the past year and a half. For example, as this report is being compiled on November 3, the November and January contracts are selling at even money.Going back to June 2013 the highest close of the spread occurred on June 14, 2013 when January sold for a 1.25 cent premium to the November contract. In short the November contract is exhibiting unusual strength versus January, which means there could be some major fireworks in the November contract that drive January bean prices higher.

Soybean meal:

December soybean meal advanced $9.00 on volume of 114,436 contracts. Volume was the lowest since October 24 when December meal lost $2.20 on volume of 109,593 contracts and total open interest declined by 3273 contracts. On October 31, total open interest increased by a substantial 4,524 contracts, which relative to volume is approximately 55% above average meaning that new longs were aggressively entering the market and driving prices higher (394.70), which was below the high of the move of 408.50 made on October 30.Open interest increased in the December 2014 through May 2015 contracts.

As this report is being compiled on November 3, December soybean meal is trading 14.30 lower and has made a daily low of 370.40. As we have said in previous reports, the soybean meal market is in the process of a blow off due to the very low pipeline supplies, and the need for end-users to secure inventory. However, this will pass, and like soybeans, soybean meal will turn lower again. December soybean meal remains on a short and intermediate term buy signal, and we recommend a stand aside posture.

Soybean oil:

December soybean oil advanced 49 points on volume of 110,433 contracts. Total open interest increased by 1,117 contracts, which relative to volume is approximately 50% below average, but an open interest increase for soybean oil is very positive considering the large number of managed money short sellers remaining in the market. The December contract lost 2,406 of open interest, which makes the total open interest increased more impressive (bullish). For the past 3 days beginning on October 29, soybean oil prices have advanced 2.01 cents and open interest has increased by 9101 contracts.

As this report is being compiled on November 3, December soybean oil is trading 72 points lower and has made a daily low of 34.01, which matches Friday’s low of 34.01. As we stated in the October 30 report when December soybean oil generated a short-term buy signal, the market would have a pullback lasting from 1-3 days.Normally, after the pullback, this would be the opportunity to initiate bullish positions, but we have recommended waiting until soybean oil generated an intermediate term buy signal before contemplating bullish positions.

On Friday, December soybean oil closed at OIA’s key pivot point for an intermediate term buy signal of 34.80 and the high for the day on November 3 has been 34.81.

From the October 30 report:

“Now that soybean oil is on a short-term buy signal, the market should pullback from 1-3 days and this is the opportunity to enter bullish positions. However, we suggest waiting until December soybean oil has generated an intermediate term buy signal before considering bullish positions.Also, we want to see how soybean oil trades on setbacks in the soybean in soybean meal markets. In order to generate an intermediate term buy signal, the low the day in the December contract must be above OIA’s key pivot point for October 31 of 34.80″

Chicago wheat:

December Chicago wheat lost 3.50 cents on volume of 98,263 contracts. Total open interest declined by 2,540 contracts, which relative to volume is average. The December contract accounted for loss of 4,374 of open interest. As this report is being compiled on November 3, December Chicago wheat is trading 3.50 cents higher and has made a daily high of 5.39 1/2, which is slightly above Friday’s high of 5.39, but below the high of the move of 5.45 1/2 made on October 30.

As we said in the October 30 report, if December Chicago wheat is unable to generate in intermediate term buy signal soon, it may be a candidate for bearish positions. Wheat fundamentals are terrible and exports have been disappointing to say the least. In order for December Chicago wheat to generate an intermediate term buy signal, the low the day in the December contract must be above OIA’s key pivot point for November 3 of 5.43 1/2. December Chicago wheat generated a short-term buy signal on October 17, and we think it will be very difficult for the market to generate an intermediate term buy signal. For those of you who want take a stab on the bearish side of Chicago wheat, the exit point would be when December Chicago wheat generates an intermediate term buy signal, which means the low of the day must be above the pivot point (5.43 1/2).

One note of caution: There remains a large number of managed money shorts in Chicago wheat and according to the latest COT report, managed money remains short by ratio of 1.52:1. This is down from the ratio of 2 weeks ago of 1.71:1, but represents a large group that would be forced to cover if prices moved higher.

WTI crude oil:

December WTI crude oil lost 58 cents on volume of 516,555 contracts. Total open interest increased by 6,102 contracts, which relative to volume is approximately 45% less than average. The December contract accounted for loss of 3,732 of open interest, which makes the minor open interest increase more impressive (bearish). As this report is being compiled on November 3, December WTI is trading 6 cents higher after making a daily low of 79.65, which is above Friday’s low of 79.55. Please review the November 2 Weekend Wrap for our thoughts on WTI. Stand aside.

Natural gas: On November 3, December natural gas will generate a short-term buy signal if it continues to trade above the low of OIA’s key pivot point for November 3 of 3.956.

December natural gas advanced 4.6 cents on heavy volume of 363,999 contracts.Volume was the strongest since October 9 when 365,533 contracts were traded and natural gas declined by 1.00 cent and total open interest increased by 2,636 contracts. On October 31, total open interest increased by 4,617 contracts, which relative to volume is approximately 45% below average, but the December contract lost 153 of open interest and January 2015 -654, which makes the total open interest increase more impressive (bullish).Friday was the 3rd day in a row that prices advanced along with open interest. From October 29 through October 31, December natural gas advanced 14.2 cents while total open interest increased by 9666 contracts. This is bullish open interest action relative to the price advance.

As this report is being compiled on November 3, December natural gas is trading 12.2 cents higher and has made a daily high of 4.065, which is the highest print since 4.087 made on October 6. The market gapped up at the opening on Sunday evening, and the gap between Friday’s close of 3.873 and the November 3 low of 3.989 remains intact as this report is being compiled on November 3.

The reason for the move being circulated is the prospect of colder weather. In previous reports we said natural gas needed a weather catalyst in order to move significantly  higher.The spread between February 2015 and April 2015 natural gas has widened by 7.2 cents as this report is being compiled on November 3. In short, the bull spread that we favored back in early October is beginning to work after making a low for the move of 21.9 cents premium to February 2015 on October 27. Currently, the spread is trading at 34.4 cents premium to February 2015.We will provide more guidance about how to trade natural gas once a buy signal has been generated and we can evaluate today’s volume and open interest stats.Do not chase this rally.

From the October 30 report:

“In order for December natural gas to generate a short-term buy signal, the low the day must be above OIA’s key pivot point for October 31 of $3.952. However, with a deflationary cycle gripping most commodities, natural gas prices may not rally much further unless there is a major old snap.”

Gold: We are suspending coverage in gold until we see a trading opportunity and/or a change of signal. December gold remains on a short and intermediate term sell signal.

Yen: This will be our last report on the yen until we see a trading opportunity and/or a change of signal.

The December yen lost 241 pips on heavy volume of 434,582 contracts. Volume was the strongest since October 15 when 435,124 contracts are traded and the December yen advanced 127 pips.On October 31, total open interest increased by 16,759 contracts, which relative to volume is approximately 50% above average meaning that new short sellers were aggressively entering the market in extremely heavy numbers and driving prices to new contract lows and the lowest level since May 2007. The December yen remains on a short and intermediate term sell signal.

Dollar index:

The December dollar index advanced 78.4 points on heavy volume of 66,270 contracts.Volume was the strongest since October 15 when 118,024 contracts were traded and the December dollar index closed at 85.241. As this report is being compiled on November 3, the dollar index is trading 43.4 points higher and has made a new contract high of 87.540 and has reached the highest level since June 2010 (88.800). We have no recommendation.

Coffee:

December coffee advanced 40 ticks on volume of 29,002 contracts.Total open interest declined by a massive 1,528 contracts, which relative to volume is approximately 100% above average meaning large numbers of market participants were liquidating on the minor advance.The December contract lost 1,888 of open interest, March 2015 -439. On Friday, December coffee made a new low for the move at 1.8565, which is the lowest print since 1.8520 made on September 29. As this report is being compiled on November 3, December coffee has made a new closing low at 1.8585, down 2.15 cents and the lowest close since 1.8230 made on September 25. December coffee has resisted generating an intermediate term sell signal, but it looks increasingly likely. As we have said before, exit the long July 2015-short March 2016 spread at a 3.10 cents premium to March 2016. December coffee generated a short-term sell signal on October 23.