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This report is being compiled after the release of the USDA report.We will provide an update on the report in the upcoming Weekend Wrap.

Soybeans:

November soybeans advanced 7.00 cents on volume of 231,580 contracts.Total open interest increased by 4,306 contracts, which relative to volume is approximately 20% below average. The November contract lost 12,062 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on October 10 after the release of the USDA report, November soybeans are trading 0.50 cents higher and have made a daily low of 9.21 1/4, which is below yesterday’s low of 9.32 1/2. November soybeans have made a daily high of 9.51 1/4, which is the highest print since 9.55 made on October 7.November soybeans made its contract low at 9.04 on October 1.November  soybeans remain on a short and intermediate term sell signal. We see no reason to be involved in the market.

Soybean oil:

December soybean oil lost 1 point on volume of 85,975 contracts. Total open interest increased by 2,198 contracts, which relative to volume is average. The October contract lost 400 of open interest, December 2014 -4281. As this report is being compiled after the release of USDA report, December soybean oil is trading down 23 points and has made a daily low of 32.15, which is the lowest print since 31.75 made on September 29.The May 2015-December 2015 spread has narrowed 3 points thus far in today’s trading. We continue to like the spread and think it is a lower risk way of positioning the portfolio for a move higher during the next couple of months. The Malaysian palm oil market continues to show strength and from its low on September 2 through October 9 December palm oil has advanced 12.42%.

Corn: On October 9, December corn generated a short-term buy signal, but remains on an intermediate term sell signal.

December corn advanced 1.50 cents on healthy volume of 269,526 contracts. Volume increased substantially from October 8 when December corn gained 2.75 cents on volume of 201,721 contracts and total open interest increased by 7,324 contracts.On October 9, total open interest increased by 1,044 contracts, which relative to volume is approximately 80% below average. The December contract accounted for loss of 2,921 of open interest, which makes the minor increase of open interest more impressive (bullish).For the past 4 days beginning on October 6, December corn has advanced each day bringing the total increase to 21.50 cents while open interest has increased each day and totals 18,208 contracts. This is very positive price and open interest action.

As this report is being compiled after the release of the USDA report, December corn is trading 5.25 cents lower after making a daily high of 3.48 1/2, which is slightly above yesterday’s high of 3.48. Typically, after the generation of a buy signal, the market has a tendency to pullback from 1-3 days and this is the opportunity to enter bullish positions if you are so inclined.However, in order for December corn to continue its advance, it must close above OIA’s key pivot point of 3.48 7/8, and then make a daily low above this pivot point.For the short-term buy signal to reverse, the high of the day must be below OIA’s key pivot point of 3.31 7/8. At this juncture, we advise a stand aside posture.

Chicago wheat:

December Chicago wheat lost 14.50 cents on volume of 93,530 contracts. Total open interest increased by 1,368 contracts, which relative to volume is approximately 40 percent below average. The December contract lost 2,528 of open interest, March 2015 -2, May 2015-1363. The December 2015 contract gained 5,056 of open interest, which explains why total open interest increased.As this report is being compiled on October 10, after the release of the USDA report, December Chicago wheat is trading 5.75 cents higher and has made a daily high of 5.08 1/2, which is slightly above yesterdays high of 5.08 1/4.December Chicago wheat remains on a short and intermediate term sell signal. Stand aside.

WTI crude oil:

November WTI crude oil lost $1.54 on heavy volume of 768,424 contracts. Volume declined from October 8 when November WTI lost $1.54 on volume of 841,744 contracts and total open interest increased by 6,723 contracts. On October 9, open interest increased again, this time by 11,268 contracts, which relative to volume is approximately 40 percent below average. The November contract accounted for loss of 14,818 contracts, which makes the total open interest increase more impressive (bearish). 

For the past 3 days, beginning on October 7, November WTI has lost $4.57 while total open interest has increased each day and totals 18,442 contracts. This is a very light open interest increase considering the magnitude of the decline. Although prices have fallen precipitously during the past couple of months, market participants have not increased their bearishness significantly, which is usually the case when a market falls by a significant amount. As this report is being compiled on October 10, November WTI is trading 32 cents higher after being sharply lower beginning in yesterday’s evening session and has made a low of 83.59, which is the lowest print since the week of July 9, 2012 when the August 2012 contract made a low of 83.65. Stand aside.

Natural gas: November natural gas will generate a short-term sell signal on October 10 and has been on an intermediate term sell signal.

November natural gas lost 1.00 cent on heavy volume of 365,533 contracts. Volume increased from October 8 when November natural gas lost 10.2 cents on volume of 312,263 contracts and total open interest declined by 431 contracts. On October 9, total open interest increased by 2,636 contracts, which relative to volume is approximately 60% below average. However, the November contract lost 15,622 of open interest which makes the total open interest increase more impressive (bearish).

As this report is being compiled on October 10, November natural gas is trading 4 ticks higher and has made a daily low at 3.833, which is above yesterday’s low of 3.815. Though the performance of natural gas has been disappointing, it is difficult to get terribly bearish at current levels especially with winter approaching. The February 2015-May 2015 spread has narrowed 1 tick in today’s trading.We continue to like the spread, however it may narrow somewhat now that November natural gas has generated a short-term sell signal. 

Gold:

December gold advanced $19.30 on volume of 171,353 contracts.Total open interest increased by 2920 contracts, which relative to volume is approximately 25% less than average. Yesterday, December gold made a high of 1234.00, which is the highest print since September 23 (1237.00). As this report is being compiled on October 10, December gold is trading $3.40 lower on the day. December gold remains on a short and intermediate term sell signal. Stand aside.

Silver:

December silver advanced 35.4 cents on volume of 55,511 contracts. Total open interest declined by 1,150 contracts, which relative to volume is approximately 20% below average. Yesterday, December silver made a high of 17.72, which is the highest print since 17.725 made on September 26. On October 10, December silver is trading 10.3 cents lower on the day. December silver remains on a short and intermediate term sell signal. Stand aside.

Cocoa: For December cocoa to generate a short-term buy signal, the low the day must be above OIA’s key pivot point for October 10 of 3,205. For December cocoa to generate an intermediate term buy signal, the low the day must be above OIA’s key pivot point for October 10 of 3,160.

December cocoa advanced $19.00 on volume of 16,863 contracts. Total open interest declined by 234 contracts, which relative to volume is approximately 40% less than average. The December contract accounted for loss of 1,013 of open interest.For the past 7 days, open interest has declined every day bringing the 7 day total decline to 15,059 contracts while December cocoa lost 243.00. As we said yesterday, the amount of liquidation has been significant, and puts cocoa on much stronger footing.Additionally, market participants have not been willing to bet on lower cocoa prices and the lack of open interest increases on price declines confirms this.

As this report is being compiled after the close of the cocoa market, December cocoa has advanced $100.00 to close at 3157, which is the highest close since 3,172 on October 1.In yesterday’s report, we recommended a bull spread in futures: long March 2015 cocoa short December 2015. On October 10, the spread has widened $27.00.We recommended March 2015 because the December 2014 contract expires next month, and cocoa tends to peak seasonally in early spring.

From the October 8 report:

“Clients should take a look at cocoa spreads: buying March 2015 futures and selling December 2015 futures.The low for the spread occurred on September 15 with March 2015 cocoa selling at a $20.00 premium to December 2015.”

“Yesterday, the spread closed at 48.00 premium to March 2015 and the high for the spread occurred on September 24 ($93.00) premium to March 2015. Although we do not discount the spread narrowing somewhat more, we think most of the major damage has already occurred, especially because of massive liquidation during the course of several days.”

Coffee:

December coffee advanced 7.20 cents on volume of 19,401 contracts. Volume shrank considerably from October 8 when December closed 1.90 cents lower on volume of 29,898 contracts and total open interest increased by 2,081 contracts. On October 9, total open interest increased by 1,567 contracts, which relative to volume is approximately 230% above average meaning that new longs were aggressively entering coffee in heavy numbers and driving prices higher (2.2240). We are disappointed by the volume in yesterday’s advance, and remarkably, volume was the lowest since September 29 when December coffee advanced 5.20 cents on volume of 15,068 contracts and total open interest increased by 527 contracts.

As this report is being compiled on October 10, December coffee has closed 1.25 cents lower on the day and the long July 2015-short March 2016 spread has widened 15 points.We continue to like the spread and think it is a lower risk way of participating in what we think will be one of the major coffee bull markets.