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Soybeans:

November soybeans advanced 30.00 cents on heavier than normal volume of 237,345 contracts.Volume was the strongest since September 30 when November soybeans lost 10.25 cents on volume of 275,459 contracts and total open interest declined by 5,435 contracts. On October 6, total open interest declined by 1,146 contracts, which relative to volume is approximately 75% below average. The November contract accounted for loss of 9,936 of open interest. Yesterday, November soybeans made a new high for the move at 9.43, and as this report is being compiled on October 7, November soybeans have made another new high at 9.55, which takes out the previous high print of 9.54 3/4 made on September 22.

The rally in soybeans is occurring just before the release of the USDA report on October 10, and we suspect this report will be the catalyst for the market turning lower once again. Since making its contract low of 9.04 on October 1, the market has rallied 51 cents through the October 7 high. We think the rally can continue for another day or two primarily based upon continued short covering.Conceivably, soybeans could continue rallying up to OIA’s key pivot point of the pivot point for October 7 of 9.73 1/4. For November beans to generate a short-term buy signal, a low the day must be above this pivot point. Stand aside.

Soybean meal:

December soybean meal advanced $10.10 on volume of 80,385 contracts. Total open interest increased by a hefty 3,909 contracts, which relative to volume is approximately 75% above average meaning that aggressive new longs were entering the market in heavy numbers and driving prices to a new high for the move of 309.40.The October contract accounted for loss of 435 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on October 7, December soybean meal is rallying, currently up 6.70 and is made another new high of 316.80, which is the highest print since 320.20 made on September 19.For December soybean meal to generate a short-term buy signal, the low the day must be above OIA’s key pivot point for October 7 of $325.00. Stand aside.

Soybean oil:

December soybean oil advanced 1.03 cents on volume of 82,126 contracts. Total open interest increased by a substantial 3,935 contracts, which relative to volume is approximately 70% above average meaning that new aggressive longs were entering the market in heavy numbers and driving prices to a new high for the move (33.80), which is the highest print since 33.83 made on September 16.The October contract accounted for loss of 531 of open interest, which makes the total open interest increase more impressive (bullish).

Yesterday’s increase of open interest on a price advance was the second in a row, the first being on October 1 when December soybean oil advanced 43 points on volume of 78,108 contracts and total open interest increased by 3,765 contracts. As this report is being compiled on October 7, December soybean oil is trading 21 points lower and has made a daily low of 33.04, which is below OIA’s key pivot point for October 7 of 33.08. We think it is important to note the soybean products gained open interest while soybeans lost open interest in yesterday’s trading.

Corn: December corn will generate a short-term buy signal if the low the day is above OIA’s key pivot point for October 7 of 3.37 3/4.

December corn advanced 9.25 cents on surprisingly light volume of 194,489 contracts. Volume was the highest since October 2 when December corn advanced 1.50 cents on volume of 198,882 contracts and total open interest increased by 2,708 contracts.. Although yesterday’s volume was disappointing, the open interest action was bullish with a 5,373 contract increase, which relative to volume is average. As this report is being compiled on October 7, December corn is trading 7.50 cents higher and is made a new high for the move at 3.42 1/4, which is the highest print since 3.44 1/4 made on September 17.The relatively heavy increase of open interest on yesterday’s price advance did not shake out many short sellers, and the market may continue to rally until the October 10 report.At this juncture, we think corn has the best chance of having made a seasonal low. Stand aside.

Chicago wheat: December Chicago wheat will generate a short-term buy signal, if the low for the day is above OIA’s key pivot point for October 7 of 5.11 3/4.

December Chicago wheat advanced 5.75 cents on light volume of 62,196 contracts. Total open interest increased by a massive 3,277 contracts, which relative to volume is approximately 105% above average Meaning that aggressive new longs were entering the market in heavy numbers and driving prices higher (4.94 3/4). The March 2015 contract lost 885 of open interest, which makes the total open interest increase more impressive (bullish). The massive increase of open interest on Monday is a possible sign of danger to anyone short the market because it indicates they may be digging in and refusing to liquidate as the market moves higher.

Keep in mind, that managed money is short Chicago wheat by a ratio of 1.77:1 according to the most recent COT report. This group of traders is usually wrong at major turning points As this report is being compiled on October 7, December Chicago wheat is trading 14.75 cents higher and has made a daily high of 5.09 1/2, which is the highest print since 5.09 1/4 made on September 12.

WTI crude oil:

November WTI crude oil advanced 60 cents on volume of 554,905 contracts.Total open interest increased only 3154 contracts, which relative to volume is approximately 70% below average. The November contract lost 8,981 of open interest, which makes the total open interest increase potentially bullish. However, on October 7, November WTI is trading $1.33 lower and has made a daily low of 88.92, which is above yesterday’s low of 88.76 and the low for the move of 88.18 made on October 2. November WTI remains on a short and intermediate term sell signal. Stand aside.

Natural gas:

November natural gas lost 14.1 cents on low volume of 203,791 contracts. Volume declined from October 3 when November natural gas advanced 10.7 cents on volume of 215,411 contracts and total open interest increased by 4,992 contracts. On October 6, total open interest increased by 403 contracts, which is minuscule and dramatically below average. The November contract accounted for loss of 2,396 of open interest. Yesterday, November natural gas made a low of 3.887, and this has been taken out on October 7 (3.866). As this report is being compiled on October 7, November natural gas is trading 5.8 cents higher, and as a consequence will not generate a short-term sell signal.

On October 2, we recommended the initiation of new bull call spreads, and that the October 2 low of 3.908 should be used as an exit point.If the spread has not been liquidated continue to hold it. Additionally, we recommend initiating bull spreads in futures: buying February 2015 and selling April or May 2015, which we strongly favor for its significant profit potential. As this report is being compiled on October 7, the February 2015-May 2015 spread has widened out by another 2.9 cents.The spread will tend to narrow on declines and this will be the opportunity to initiate it.

Dollar index:

The December dollar index lost 77.9 points on volume of 43,869 contracts. Total open interest increased by 1,151 contracts, which relative to volume is average. The open interest increase yesterday is bearish, and we already know that managed money is net short the dollar index according to the latest COT report. We think it is likely that the dollar index will continue to pullback, but this is not going to last very long in our view. In the days ahead will be looking for an opportunity to participate in a continued upward move in the index. For now, stand aside.

Cotton: December cotton will generate a short-term buy signal, if the low the day is above OIA’s key pivot point for October 7 of 64.33.

December cotton advanced 1.91 cents on heavy volume of 31,042 contracts.Volume was the strongest since September 11 when December cotton advanced 95 points on volume of 31,703 contracts and the December contract closed at 68.09. On October 7, total open interest declined by 808 contracts, which relative to volume is average. Keep in mind that according to the latest COT report, managed money is short by ratio of 1.12:1, which was a reversal from the previous week when  they were long by a ratio of 1.15:1. As mentioned earlier, managed money tends to be wrong at major turning points, and although fundamentals do not support a major move higher the market may continue to climb and blowout the new short sellers, especially with the USDA report on October 10. As this report is being compiled on October 7, December cotton is trading 60 points higher and has made a daily high of 65.29, which takes out the previous high of 65.12 made on September 19.Stand aside.

Sugar #11: March 2015 sugar will generate a short-term buy signal, if the low the day is above OIA’s key pivot point for October 7 of 16.95.

March 2015 sugar advanced 54 points on light volume of 86,930 contracts.Volume was the weakest since October 3 when March 2015 sugar advanced 39 points on volume of 54,985 contracts and total open interest increased by 2,093 contracts. On October 6, total open interest declined by a massive 9,246 contracts, which relative to volume is approximately 320% above average meaning that liquidation was off the charts heavy. Keep in mind that managed money assumed the highest net short position since the beginning of the bear market in the latest COT report and were short by a ratio of 1.30:1, which was up from the previous week of 1.19:1. Yesterday, there is a 6 point gap between the high on October 3 and the low October 6.Undoubtedly, the dry weather in Brazil, which is drastically affecting the coffee crop is having a psychological impact on sugar. Although fundamentals for sugar are very good, this is not mean the market cannot continue to move higher. Stand aside.

Cocoa:

December cocoa advanced $23.00 on light volume of 12,891 contracts.Volume was the weakest since August 26 when 12,231 contracts were traded and December cocoa closed at 3,216. As this report is being compiled on October 7, December cocoa has closed at 3,051, down 28.00, and it appears to be headed to the low for the move made on September 11 of 3,019. December cocoa generated a short and intermediate term sell signal on October 2. Stand aside.

Coffee:

December coffee advanced an astounding 14.30 cents on volume of 35,376 contracts. While volume was certainly above average, it was unable to surpass that of October 2 when December coffee advanced 8.20 cents on volume of 42,359 contracts and total open interest increased by 2,167 contracts. On October 6, open interest increased by a disappointing 450 contracts, which relative to volume is approximately 45% less than average. The December contract accounted for loss of 299 of open interest, which makes the total open interest increase more impressive (bullish).

Relative to the advance, volume was unimpressive and the open interest increase was most definitely a disappointment . However, this is to be expected now that December coffee prices are at nosebleed levels, and market participants are leery about getting on board at the highest prices in years.On October 1, December coffee generated a short and intermediate term buy signal, and we have been cautioning clients not to chase the rally because the pullback could be sizable. As this report is being compiled on October 7, December coffee has closed 4.45 cents lower at 2.1635.We think a pullback to the 5 day moving average of 2.1050 is likely. However, we think the best way to trade coffee is through bull spread: buy July 2015 and sell March 2016. On October 7, the spread has narrowed 1.30 cents, which is to be expected when coffee pulls back.