For Bloomberg access:{OIAR<GO>}

Soybeans:

November soybeans advanced 1.75 cents on light volume of 126,666 contracts. Total open interest increased by 5,703 contracts, which relative to volume is approximately 75% above average meaning a battle ensued between longs and shorts and longs were able to move November soybeans just fractionally higher. The November contract gained 1,023 of open interest. For two out of the past 3 trading sessions, total open interest has increased on price advances. On September 15, November soybeans advanced 4.25 cents while total open interest increased by 13,499 contracts. Based upon the fact that commercial interests are net long soybeans, we suspect they were on the buy side of activity on September 15 and 17. As this report is being compiled on September 18, November soybeans are trading 9.00 cents lower and have made a low of 9.70 3/4, which is above the contract low of 9.69 1/2 made on September 11.

Export sales were off the charts with total sales coming in at 1 466.08 thousand metric tons, which brings total commitments to date of 935.7 million bushels versus USDA projections for the season, which ends on August 31, 2015 of 1.7 billion bushels. In short, 55% of the crop has already been committed. In the most recent week, China was the big buyer. At some point, the market will begin to pay attention to this, but at this juncture it appears the ever larger crop is weighing on prices. Stand aside.

Soybean oil:

December soybean oil advanced 55 points on light volume of 63,552 contracts. Volume fell from September 16 when December soybean oil lost 47 points on volume of 87,613 contracts and total open interest increased by 10 contracts. Additionally, volume was dramatically below that of September 15 when December soybean oil advanced 70 points on volume of 118,922 contracts and total open interest declined by 4.027 contracts. On September 17, total open interest declined by 595 contracts, which relative to volume is approximately 45% below average. The October contract accounted for loss of 1532 of open interest and there was insufficient open interest increases in the forward months to offset the decline in October. As this report is being compiled on September 18, December soybean oil is trading 38 points lower, and has made a daily low of 32.81, which is below OIA’s key pivot point for September 18 of 33.09. For December soybean oil to generate a short-term buy signal, the low the day must be above the pivot point. Stand aside.

The USDA reported sales of 10.72 thousand metric tons bringing total commitments to date of 825.58 thousand metric tons versus USDA projections for the season of 861.8 thousand metric tons.

Corn:

December corn lost 2.00 cents on light volume of 121,158 contracts. Volume fell precipitously from September 16 when December corn advanced 0.75 cents on volume of 220,948 contracts and total open interest increased by 4,770 contracts. On September 17, total open interest declined by 3,412 contracts, which relative to volume is average. As this report is being compiled on September 18, December corn is trading 2.50 cents lower and has made a daily low of 3.38, which is above December corn’s contract low of 3.35 3/4. With the size of the corn crop growing day by day, there is no compelling reason to approach this market from the long side. December corn remains on a short and intermediate term sell signal.

The USDA reported sales of 659.7 thousand metric tons, which brings total commitments season to date of 513.3 million bushels versus USDA projections for the season, which ends on August 31, 2015 of 1.750 billion bushels.

Chicago wheat:

December Chicago wheat advanced 3.00 cents on very light volume of 45,781 contracts.Total open interest declined by 1,105 contracts, which relative to volume is average. There were open interest declines across the board from December 2014 through December 2015. As this report is being compiled on September 18, December Chicago wheat is trading 8.25 cents lower and has made another new contract low at 4.87 3/4, which takes out the previous contract low of 4.91 made on September 16. There are large global surpluses of wheat, and with the rising dollar, US wheat is not competitive. Stand aside.

The USDA reported sales in all wheat categories of 314.5 thousand metric tons, bringing total commitments to date of 457.1 million bushels versus USDA projections of 900 million bushels.

Kansas City wheat:

December Kansas City wheat lost 1.00 cent on light volume of 12,267 contracts. Total open interest increased by a massive 727 contracts, which relative to volume is approximately 140% above average meaning that aggressive new short sellers were entering the market and driving December Kansas City wheat prices to a new contract low of 5.79. As this report is being compiled on September 18, December Kansas City wheat is trading 10.25 cents lower and has made a new contract low of 5.69. As we pointed out in past reports, Kansas City wheat has had a surplus of speculative longs, and this group is getting blown out of the market. December Kansas City wheat remains on a short and intermediate term sell signal. Stand aside.

Lean hogs: On September 17, December lean hogs generated an intermediate term sell signal, but remains on a short-term buy signal.

December lean hogs lost 2.025 cents on volume of 46,383 contracts. Total open interest increased by a hefty 2,182 contracts, which relative to volume is approximately 75% above average meaning that new short sellers were aggressively and heavily entering the market and driving prices to new lows for the move (92.925), which is the lowest print since September 4 (91.150). The October contract lost 2,328 of open interest, which makes the total open interest increase more impressive (bearish). As this report is being compiled on September 18, December hogs are trading 55 points lower but have made a new low for the move at 90.900, which is the lowest print since August 29 (90.825). Stand aside.

WTI crude oil:

October WTI crude oil lost 46 cents on heavy volume of 667,486 contracts. Total open interest declined by 20,954 contracts, which relative to volume is approximately 20% above average. The October contract accounted for loss of 34,490 of open interest. As this report is being compiled on September 18, October WTI is trading $1.05 lower and is made a daily low of 92.85, which is the lowest print since 92.46 made on September 16. As we have pointed out in the past, there has been an absence of open interest increases on price declines. In our view, it indicates that market participants are not very bearish, even though they are liquidating as prices move lower.October WTI remains on a short and intermediate term sell signal. Stand aside.

From the September 14 Weekend Wrap:

“Additionally, open interest action from the August 8 high of 97.35 through the September 11 low of 89.56 (basis the November contract) is positive. For example, from August 8 through September 11, November WTI prices fell $4.56 while total open interest declined by 24,494 contracts. This is healthy and when prices are declining. In short, WTI prices have been declining due to liquidation, not from new short sellers.”

Natural gas: On September 17, October natural gas generated a short-term buy signal, but remains on an intermediate term sell signal.

October natural gas advanced 1.8 cents on volume of 255,450 contracts. Volume was the lowest since September 12 when October natural gas advanced 3.4 cents on volume of 249,985 contracts and total open interest increased by 6,382 contracts.On September 17, total open interest declined by 2,518 contracts, which relative to volume is approximately 50% below average. The October contract accounted for loss of 8,077 of open interest. The volume and open interest action yesterday was disappointing, especially because October natural gas made a new high for the move. As this report is being compiled on September 18 after the release of the Energy Information Administration report on natural gas storage, October natural gas is trading 9.9 cents lower and has made a daily low of 3.897.

The market is conforming to the typical pattern after the release of storage data. Today’s range (high – low) has been 13.0 cents versus the average range for the previous 4 weeks of 13.3 cents.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. The only question remaining is whether natural gas is going to deviate from its typical pattern of generating a buy signal, and then attempting to test the low end of the trading range. As we said yesterday, if clients are inclined to enter bullish positions, we recommend an option bull call spread.

From the September 16 report:

“We did some research on market action during the previous 4 EIA reports, and they show that the average range (daily high minus daily low) for the past 4 reports have been 13.3 cents while the average close has shown a decline of 1.2 cents. The biggest gain occurred on Thursday August 21 when natural gas advanced 7.00 cents and the biggest decline occurred last week (September 11) with a loss of 13.1 cents. The big range day occurred on August 21 of 15.8 cents and a close second was the range on September 11 of 15.4 cents.”

The Energy Information Administration announced that working gas in storage was 2,891 Bcf as of Friday, September 12, 2014, according to EIA estimates. This represents a net increase of 90 Bcf from the previous week. Stocks were 401 Bcf less than last year at this time and 444 Bcf below the 5-year average of 3,335 Bcf. In the East Region, stocks were 205 Bcf below the 5-year average following net injections of 58 Bcf. Stocks in the Producing Region were 201 Bcf below the 5-year average of 1,067 Bcf after a net injection of 25 Bcf. Stocks in the West Region were 37 Bcf below the 5-year average after a net addition of 7 Bcf. At 2,891 Bcf, total working gas is below the 5-year historical range.

Currencies: Although there were some major moves in currencies yesterday, the September contracts are expiring. As a result, the open interest stats reflected liquidation in the September contract makes the data unusable.

Dollar index: On July 16, the dollar index generated a short and intermediate term buy signal.

The December dollar index advanced 25.5 points on heavy volume of 66,696 contracts.Volume was the heaviest since September 11 when 82,080 contracts were traded and total open interest increased by 12,546 while the dollar index advanced 11 points. On September 17, total open interest increased by 3,622 contracts, which relative to volume is approximately 115% above average meaning that new longs were entering the market and driving prices to new contract high (84.860). As this report is being compiled on September 18, the dollar index is trading 10 points lower on the day after making a new contract high of 84.900.The market is massively overbought and due for a significant correction, but it can stay overbought for extended period of time.

 10 year Treasury Notes:

The December Treasury Note lost 5.5 points on volume of 1,690,272 contracts. Total open interest declined by 19,366 contracts, which relative to volume is approximately 45% below average. The December note made a new low for the move at 123-260, which is the lowest print since August 1 (123-185).As this report is being compiled on September 18, the December note has made another new low at 123-180 and is trading 11 points lower. Remarkably, the major stock indices continue to climb higher, even as interest rates continue to ratchet higher. However, we are doubtful of a sustained rally at this juncture and think the major indices are vulnerable to a severe correction.

Cotton:

December cotton advanced 13 points on very light volume of 10,330 contracts. Total open interest increased by a massive 722 contracts, which relative to volume is approximately 185% above average meaning a battle ensued between longs and shorts and longs were able to move cotton only fractionally higher. As this report is being compiled on September 18, December cotton is trading 80 points lower and has made a new low for the move at 64.67, which is the lowest print since September 9 (64.43).

We said in the September 15 report that December cotton had to make a low above OIA’s key pivot point in order for the uptrend to resume, and the market has been unable to do this. As a result, we have recommended a stand aside posture.It now appears likely that December cotton may be on the verge of generating a short-term sell signal, which would reverse the short-term buy signal generated on August 22. In order for a short-term sell signal to be generated, the high for the day must be below OIA’s key pivot point of 64.67. December cotton remains on a short-term buy signal, but an intermediate term sell signal. Stand aside.

From the September 15 report:

“As this report is being compiled on September 16, December cotton is trading 34 points lower and has made a daily low of 65.26, which takes out the most recent previous low of 65.33 made on September 10.For December cotton to resume its uptrend, the low the day must be above OIA’s key pivot point of 65.93. December cotton remains on a short-term buy signal, but an intermediate term sell signal. Continue to stand aside.”

Cocoa: December cocoa will generate an intermediate term buy signal on September 18.

December cocoa advanced $83.00 on heavy volume of 33,642 contracts.Volume was the strongest since September 2 when December cocoa lost $64.00 on volume of 34,123 contracts. On September 17, total open interest increased by a massive 2,656 contracts, which relative to volume is approximately 220% above average meaning that new longs were aggressively and heavily entering the market and driving prices to a new high for the move (3,165), which is the highest print since September 3 (3,165).

As this report is being compiled on September 18, December cocoa has closed at 3,192, up $39.00.Yesterday, we expressed our thoughts about the possibility of cocoa reversing its sell signal, and the intermediate term buy signal generated on September 18 provides further credence that cocoa may be on its way to test the August 27 high of 3,300.In order for December Cocoa to generate a short-term buy signal, the low the day must be above OIA’s key pivot point of 3,178. Stand aside.

From the September 16 report:

“Now that cocoa has blown out large numbers of market participants, it will be interesting to see whether today’s rally was powered higher by new buyers. If this is the case, December cocoa may have the potential to reverse the sell signals.Remember, during cocoa’s decline from September 5, it never experienced a day in which there was an open interest increase.We interpret this as confirmation that market participants as a whole are not sufficiently bearish.”

Coffee:

December coffee lost 40 points on very light volume of 10,143 contracts. Total open interest declined by 199 contracts, which relative to volume is approximately 20% below average. The December contract accounted for loss of 653 of open interest. As this report is being compiled on September 18, December coffee is trading 1.65 cents lower and has made a daily low of 1.8085, which is the lowest print since 1.8085 made on September 16.December coffee generated a short-term sell signal on September 11, but has not been able to generate an intermediate term sell signal. This will occur, if the high for the day is below OIA key pivot point of 1.8170. Stand aside.