Soybeans:

September soybeans advanced 18.75 cents and November gained 26.50 on volume of 228,764 contracts. Total open interest increased by a hefty 8,910 contracts, which relative to volume is approximately 50% above average meaning that new longs and shorts were entering the market aggressively, but longs were moving prices higher. Making the total open interest increase more impressive was the fact that the September contract lost 1,524 of open interest. September soybeans made a new high for the move at $12.94, and as this report is being compiled on August 16 has made another new high of 12.96. September and November soybeans remain on a short and intermediate term sell signal, but conceivably the November contract could generate a short-term buy signal early next week.

Soybean meal:

September soybean meal gained $1.90 on heavy volume of 105,248 contracts. Volume was the highest since July 26 when 105,903 contracts were traded and September soybean meal closed at $404.00. On August 15, open interest increased by 3,818 contracts, which relative to volume is approximately 40% above average. The healthy increase in open interest may be accounted for by the move to a new high in the September contract of $416.30, though meal closed at $409.80. Soybean meal remains on a short and intermediate term sell signal.

Corn:

September corn gained 16.75 cents on heavy volume of 391,789 contracts. Volume was the highest since August 12 when 440,393 contracts were traded and September corn advanced 6.25 cents while open interest increased by 7,775 contracts. On August 15, open interest increased by a healthy 12,027 contracts, which relative to volume is approximately 20% above average. The total open interest increase was more impressive because the September contract lost 12,188 of open interest. Corn made a new high for the move at $4.85, and as this report is being compiled on August 16, September corn is trading 5.75 cents lower on the day. We see no reason to be involved in the corn market on either side of the trade. The market can easily move higher or lower depending upon crop conditions. Corn remains on a short and intermediate term sell signal.

Wheat:

September Chicago wheat gained 7 cents on heavy volume of 118,510 contracts. Open interest declined by 434 contracts, which relative to volume is approximately 80% less than average. The September contract accounted for loss of 6,834 of open interest. We think the Kansas City wheat contract is the one the watch, and the spread between KC and Chicago continues to widen premium to KC. Both KC and Chicago wheat remain on a short and intermediate term sell signal.

Cotton:

December cotton gained 24 points on volume of 15,177 contracts. Open interest increased by 1,717 contracts, which relative to volume is approximately 240% above average. As this report is being compiled on August 16, December cotton is trading 1.49 higher and has made a new high for the move at 93.72, which is the highest price since March 15, 2013 when cotton reached 93.93 on the continuation chart. The previous high was 94.08 on March 28, 2012. In our view, the basic driver for higher cotton prices has been declining exchange stocks, and we have seen this phenomenon before. Export sales for the 2013-2014 were abysmal at 38,500 bales, and this is significantly below the average weekly sales of 145,000 bales needed to meet the weekly USDA projection for the season. Additionally, sales thus far have been below the five-year average. We discourage initiating long positions despite the fact that cotton is on a short and intermediate term buy signal. The near term tightness could be alleviated at any time, and we suspect that cotton will catch everyone by surprise and return to the downside.

Live cattle:

October live cattle lost 7 points on volume of 31,152 contracts. Open interest declined by 114 contracts, which is minuscule and dramatically below average. We continue to wait for a pullback before recommending the initiation of long positions.

Crude oil:

September crude oil gained 48 cents on volume of 643,730 contracts. Total open interest declined by 29,601 contracts, which relative to volume is approximately 75% above average, meaning that longs and shorts were liquidating in heavy volumes as the market moved higher. This is bearish open interest action relative to the price advance, and it represents a pattern over the past several days. In the upcoming Weekend Wrap, we will explore the price and open interest dynamics regarding the recent move higher in crude. In our view, clients should avoid the long side of the market, even though WTI it remains on a short and intermediate term buy signal.

Natural gas:

September natural gas advanced 7.7 cents on volume of 348,062 contracts. Total open interest increased by 663 contracts, which is minuscule and dramatically below average. The September contract lost 15,230 of open interest. Natural gas remains on a short and intermediate term sell signal.

Gold:

December gold gained $27.30 on heavy volume of 238,770 contracts. Total open interest declined by 709 contracts, which relative to volume is approximately 85% below average. Interestingly, the December contract lost 2,647 of open interest. Since generating a buy signal on August 9, gold has advanced $48.50 while open interest has declined 2,042 contracts. This is bearish open interest action relative to the price advance. Our take on the market is that speculators do not believe the gold rally is for real, and as a result liquidation is occuring by longs and shorts. We have no idea whether the rally is the real deal, however gold remains on a short-term buy signal, and until that changes, we think that gold should be traded from the long side, however gold needs to setback before it is considered a candidate for long positions. One other point, December gold is not far away from generating an intermediate term buy signal.

Silver: On August 15, September silver generated an intermediate term buy signal and generated a short-term buy signal on August 9.

September silver gained $1.148 on heavy volume of 106,397 contracts. Volume was the highest since June 26 when 156,507 contracts were traded and September silver closed at $18.613, and made a low that day of 18.385, which was close to the low of the move. On August 15, total open interest increased only 405 contracts, which relative to volume is approximately 80% less than average. Interestingly, the September contract lost 2,586 of open interest, while the December contract gained. Since silver generated a short-term buy signal on August 9, it has risen $2.524 while open interest has declined 143 contracts. This is bearish open interest action relative to a very strong advance. Silver is massively overbought and needs to have a good 2 to 3 day correction before clients contemplate initiating long positions. Like gold, the negative open interest action on advances tells us that market participants do not believe in the rally.

Copper: On August 15, September copper generated an intermediate term buy signal and generated a short-term buy signal on August 9.

Euro:

The September euro gained 88 points on volume of 315,563 contracts. Volume was the highest since July 31 when 336,390 contracts were traded and the September euro closed at 1.3339. On August 15, open interest increased by 4,676 contracts, which relative to volume is approximately 40% below average. The euro remains on a short and intermediate term buy signal.

S&P 500 E mini:

The S&P 500 E mini lost 26.25 points on volume of 2,408,334 contracts. Open interest increased by 26,827 contracts, which relative to volume is approximately 50% less than average. We think the market is in the process of falling apart, and strongly suggest long put protection, if this is not been implemented already.