For Bloomberg access: {OIAR }

Soybeans:

November soybeans lost 16.75 cents on volume of 153,566 contracts. Volume declined somewhat from September 3 when November soybeans lost 12.00 cents on volume of 158,975 contracts and total open interest increased by 5,453 contracts. On September 4, total open interest increased by 6,215 contracts, which relative to volume is approximately 55% above average meaning that new short sellers were aggressively entering the market and driving prices to a new contract low (10.01 1/4). The September contract accounted for loss of 296 of open interest. As this report is being compiled on September 5, November soybeans are trading 8.50 higher.

It is inevitable that November soybeans will trade below the much watched $10.00 level and our downside target is the June 8, 2010 low of $8.96 and the October 2, 2009 low of 8.90. This is not to say that soybeans will definitely attain those lows, but with excellent crop conditions and the possibility of very large crop, the aforementioned lows cannot be ruled out. Additionally, there is a bearish pall over the entire commodity complex and the cash dollar index is trading at the highest level since July 8, 2013, which will continue to exert pressure on the grain complex. Stand aside unless short from higher levels.

The USDA reported cancellations, which resulted in declining sales for the most recent reporting week of totaling 87.67 thousand metric tons. This brings total exports to 1.688 billion bushels versus USDA projections for the season, which ended on August 31 of 1.640 billion bushels. This is the last report of the 2013-2014 season.

Corn:

December corn lost 5.50 cents on volume of 239,802 contracts. Volume declined from September 3 when December corn lost 11.75 on volume of 252,119 contracts and total open interest exploded higher by 14,213 contracts. On September 4, total open interest increased by 8,200 contracts, which relative to volume is approximately 40% above average meaning that new short sellers were aggressively entering the market and driving prices to a new contract low (3.43 3/4). The September contract lost 1,821 of open interest, December -4781, which makes the total open interest increase much more impressive (bearish). As this report is being compiled on September 5, December corn is trading 5.50 higher and has not taken out yesterday’s contract low. Stand aside unless short from higher levels.

USDA reported that there were cancellations that resulted in a decline of sales totaling 7.5 thousand metric tons, which brings total exports to 1.915.2 billion bushels versus USDA projections for the season, which ended on August 31 of 1.920 billion bushels.

Chicago wheat:

December Chicago wheat lost 5.50 cents on volume of 70,783 contracts. Total open interest increased by 1,021 contracts, which relative to volume is approximately 40% below average. The September contract lost 1,003 of open interest, December -259, which makes the total open interest increase more impressive (bearish). As this report is being compiled on September 5, December Chicago wheat is trading 4.75 cents higher on the day. Stand aside. We think it is potentially dangerous to be short wheat when Ukraine is in turmoil.

Kansas City wheat:

December Kansas City wheat advanced 3.50 cents on total volume of 16,071 contracts. Total open interest increased by a massive 1,872 contracts, which relative to volume is approximately 360% above average, which is off the charts. The December 2014 through December 2015 contracts all gained open interest. The activity on September 4 is very interesting, and conceivably may indicate a turnaround is coming in KC wheat. As this report is being compiled on September 5, December Kansas City wheat is trading 8.75 cents higher on the day. Stand aside.

The USDA reported dismal sales in all wheat categories of 168.8  thousand metric tons , bringing total commitments to 420  million bushels versus USDA projections for the season, which ends on May 31, 2015 of 925 million bushels.

Live cattle:

December live cattle advanced 50 points on huge volume of 129,713 contracts.Volume traded was the highest of 2014. On September 4, total open interest declined by 6,843 contracts, which relative to volume is approximately 100% above average meaning that both longs and shorts were liquidating as prices moved in a 4.225 cent range. The October contract accounted for loss of 10,466 of open interest. We consider the open interest action to be very negative and this accompanied by massive volume may indicate that December live cattle is near a top or temporary top. In any event, we strongly suggest that clients do not trade cattle at this juncture.

Lean hogs:

December lean hogs lost 65 points on volume of 74,237 contracts.Volume was the strongest since July 9 when 78,610 contracts were traded and December hogs closed at 1.05450. On September 4, total open interest declined by 3,714 contracts, which relative to volume is approximately 100% above average meaning liquidation was extremely heavy on the decline. As this report is being compiled on September 5, December hogs are trading up the 3.00 cent limit. December hogs generated a short term buy signal on September 2, and yesterday was the second day of the pullback. In the report of September 3, we incorrectly advised waiting another day to initiate bullish positions, and unfortunately on September 5 the market got away from us.

From the September 3 report:

“December hogs generated a short-term buy signal on September 2, and after the generation of a buy signal, the market has a tendency to pullback from 1-3 days. September 4 is the second day of the pullback and we recommend waiting one more day before making a decision whether to enter bullish positions.”

WTI crude oil:

October WTI crude oil lost $1.09 on volume of 508,778 contracts. Total open interest declined by 13,537 contracts, which relative to volume is average. The October contract accounted for loss of 13,454 of open interest. As this report is being compiled on September 5, October WTI is trading $1.14 lower and has made a daily low of 92.86, which is 36 cents above the low for the move of 92.50 made on August 21. October WTI remains on a short and intermediate term sell signal. Stand aside.

Natural gas:

October natural gas lost 2.8 cents on volume of 252,536 contracts. Total open interest increased by 3,131 contracts, which relative to volume is approximately 45% below average. The October contract accounted for loss of 4,532 of open interest, which makes the total open interest increased more impressive (bearish). As this report is being compiled on September 5, October natural gas is trading 2.9 cents lower and has made a new low for the move at 3.784, which takes out yesterday’s low.October natural gas generated a short-term sell signal on September 3, which reversed the short-term buy signal of August 28. October natural gas remains on an intermediate term sell signal as well. It appears natural gas is going to test the contract low of $3.740 made July 28.

Gold:

December gold lost $3.80 on volume of 164,891 contracts. Volume was the highest since September 2 when December gold lost 22.40 on volume of 205,782 contracts and total open interest increased by 6,400 contracts. On September 4, total open interest increased by a massive 8,588 contracts, which relative to volume is approximately 110% above average, Meaning that new short sellers were heavily entering the gold market and driving prices to a new low for the move (1261.30). From a price and open interest point of view, gold has been acting very bearishly for the past 3 trading sessions. On September 3, gold advanced 5.30, but total open interest declined 2,992 contracts, which is bearish. As this report is being compiled on September 5, December gold is trading 50 cents lower and has made a new low for the move at 1258.00, which is the lowest print since June 10 (1252.80). December gold remains on a short and intermediate term sell signal. Stand aside.

Silver:

December silver lost 5.1 cents on volume of 47,492 contracts. Total open interest increased by 3,432 contracts, which relative to volume is approximately 185% above average meaning new short sellers were aggressively entering the market in heavy numbers and driving prices to a new low for the move (19.045). The September contract accounted for loss of 143 of open interest. As this report is being compiled on September 5, December silver is trading unchanged, but has made a new other new low for the move at 19.020, which is the lowest print since June 6 (19.000). December silver remains on a short and intermediate term sell signal. Stand aside.

Dollar index:

The September dollar index advanced 94.6 points on very heavy volume of 48,354 contracts.Volume was the strongest since June 5 when 57,901 contracts were traded and the September dollar index closed at 80.513. On September 4, total open interest declined by 1,086 contracts, which relative to volume is approximately 10% below average. On July 16, OIA announced that the dollar index generated a short and intermediate term buy signal, and remarkably since then managed money has continued to be net short through the most recent COT report when managed money was short by a ratio of 1.32:1. The dollar index may not reach a top, or temporary top until managed money assumes a net long position.

Euro:

The September euro lost 2.08 cents on extremely heavy volume of 483,032 contracts.Volume was the strongest since June 5 when 527,863 contracts were traded and the September euro closed at 1.3660. On September 4, total open interest increased by a substantial 14,312 contracts, which relative to volume is approximately 20% above average. The September euro made a new low for the move at 1.2921 low, which is 88 pips from its contract low of 1.2833. We recommend against new bearish positions at current levels.

British pound:

The September British pound lost 1.22 cents on volume of 146,462 contracts.Volume was the strongest since September 2 when 155,724 contracts were traded after losing 89 pips while total open interest increased by 4,853 contracts and the September pound closed at 1.6472. The September pound made a new low for the move at 1.6329 and this has been taken out on September 5 (1.6275). However, the September pound is quite a distance from its contract low of 1.4845. We recommend against entering new bearish positions at current levels.

Yen:

September yen lost 36 pips on heavy volume of 172,571 contracts.Volume was the strongest since September 2 when the September yen lost 93 pips on volume of 185,217 contracts and total open interest increased by 4,532 contracts. On September 4, total open interest increased by 2,843 contracts, which relative to volume is approximately 35% less than average. The September yen made a new contract low at .9492, and as this report is being compiled on September 5, the September yen has made another new contract low at .9461. Stand aside.

10 year Treasury Note:

The December 10 year Treasury Note lost 8 points on volume of 1,772,607 contracts. Total open interest declined by 32,734 contracts, which relative to volume is approximately 25% below average.  As this report is being compiled after the release of the employment report, the December note is trading 9 points higher on the day after making a daily high of 125-215. If the December note is to generate a new short-term sell signal, the high of the day must be below OIA’s key pivot point of 124-306 and if the uptrend is to continue, the December note must make a low above OIA’s key pivot point of 125-144.

Coffee:

December coffee advanced 15 points on volume of 20,031 contracts. Total open interest increased by 895 contracts, which relative to volume is approximately 75% above average meaning there was a battle between longs and shorts, but longs were able to move coffee only fractionally higher. The December contract lost 412 of open interest, which makes the total open interest increase neutral. As this report is being compiled on September 5, December coffee has closed at 1.9805 down 4.40 cents. Use the September 4 low of 1.9530 as an exit point for bullish positions.