Soybeans:
September soybeans gained 7.00 cents and the new crop November gained 10.50 on volume of 189,554 contracts. Volume increased approximately 50,000 contracts from August 29 when soybeans gained 30.75 and open interest declined by 1,098 contracts. On August 30, open interest increased by 6,374 contracts, which in relation to volume approximately 15% above average. This is a terrific performance considering that open interest in September soybeans lost 4,530 contracts. There was enough buying in the forward contracts to offset that open interest decline. September soybeans reached a new high of $17.80 3/4, which surpassed the July 20 high made in August soybeans of $17.77 3/4. However, September soybeans closed 10.50 off the high at $17.70 1/4. The November contract reached a new high of $17.71 1/4, and closed at $17.63 1/2. As indicated in yesterday’s report, export sales have been phenomenal and over 55% of the crop has been sold, despite the fact that the harvest hasn’t begun. Although the market will have setbacks, these may be shallow due to the very tight supply and the outsized demand. August 31 is first notice day, which means that speculators can no longer trade this contract. Beginning September 4, the November contract will be the new lead month.
Soybean meal:
October soybean meal gained $4.80 on volume of 87,686 contracts. Volume increased approximately 19,000 contracts from August 29 when soybean meal gained $8.40 and open interest increased by 345 contracts. On August 30, open interest increased by 1,679 contracts, which in relation to volume is approximately 30% below average. Although the open interest increase was not as strong as soybeans, the open interest decline in September soybean meal was greater because of the smaller number of outstanding open interest. September open interest declined by 4,923 contracts, and therefore it took substantial new buying to overcome the September decline.
Corn:
December corn lost 5.00 cents on volume of 219,939 contracts. Volume declined by approximately 46,000 contracts from August 29 when corn advanced 18.00 cents and open interest declined by 11,524 contracts. On August 30, open interest declined by 13,235 contracts, which in relation to volume is approximately 200% above average. Since August 22, open interest has declined 7 consecutive days and totals 71,670 contracts while corn has declined by 30.25 cents in this period. The market looks tired and is likely to go lower especially when the harvest begins to pick up.
Wheat:
December wheat lost 2.75 cents on volume of 87,686 contracts. Open interest declined by 1,249 contracts, which in relation to volume is nearly 50% less than average. On August 31, the Russian agricultural ministry disclosed that an export ban was not being contemplated. As a result wheat is trading 13.50 lower. Continue to stand aside and look to implement bullish positions in early September.
Crude oil:
October crude oil lost 87.00 cents on volume of 400,126 contracts. Open interest declined by 5,339 contracts, which in relation to volume is approximately 50% less than average. Although the Federal Reserve announced on August 31 that there is no quantitative easing on the table, crude oil is trading $1.76 higher on what appears to be a “risk on” environment. If the Iranian situation worsens, crude oil will likely move sharply higher. For now, stand aside.
Heating oil:
October heating oil, lost 1.09 cents on volume of 141,646 contracts. Volume increased approximately 25,000 contracts from August 29 when heating oil lost .0061 and open interest increased 6,420. On August 30, open interest increased by 4,030 contracts, which relative to volume is average. There is no real pattern to changes in open interest, and therefore it is difficult to assess the strength of an upside move or a pullback. The market remains on a short-term buy signal, which was generated on August 6 and an intermediate term buy signal, which was generated on August 8.
Gasoline:
October gasoline lost .0088 on volume of 124,531 contracts. Open interest declined by 96 contracts. Stand aside.
Copper:
December copper lost .0020 on volume of 67,719 contracts. Volume declined approximately 10,000 contracts from August 29 when copper lost 2.00 cents and open interest declined by 1,418 contracts. On August 30, open interest declined by 5,237 contracts, which relative to volume is nearly 300% above average. Though copper generated a short-term buy signal on August 23, the market has not been acting well. From August 23 through August 30 copper has declined by 5.15 cents. The weakness in copper is magnified by the action on August 31. Gold is trading over $29.00 higher, silver is trading nearly $1.00 higher, while equities are on the positive side, but copper is trading fractionally higher.
Gold:
December gold lost $5.90 on volume of 102,696 contracts. Volume declined approximately 24,000 contracts from August 29 when gold declined $6.70 and open interest declined by 3,786 contracts. On August 30, open interest declined by 1,748 contracts, which relative to volume is approximately 30% below average. The open interest action in gold has been somewhat schizophrenic, but the market clearly wants to move higher, and is trading sharply higher on August 31. It is apparent that the speculative community has not bought into gold, but this is likely to occur after the Labor Day holiday.
Silver:
December silver lost 47.6 cents on volume of 64,548 contracts. Volume declined approximately 18,000 contracts from August 29 when gold lost 3.8 cents and open interest declined by 2,848 contracts. On August 31, open interest declined by 2,006 contracts, which relative to volume is slightly above average. It is positive that open interest declined on Thursday’s pullback, and that volume shrank considerably on the biggest decline since August 2 when silver declined by 54.00 cents on volume of 49,438 contracts while open interest increased by 515 contracts and silver closed at $26.995. From August 24 through August 30, open interest has declined for five consecutive days and now totals 12,573 contracts. During the five-day period, silver prices have declined by 9.5 cents. The open interest action has been terrible, yet silver prices have acted well. It will be interesting to see in the COT report (released August 31) whether it is commercials or speculators that are liquidating.
Euro:
The September Euro lost. 0020 points on volume of 184,591 contracts. Open interest declined by 38 contracts. We have been cautioning readers not to short the Euro. As this report is being composed on August 31, the Euro has reached a new high for the move at 1.2640, which is the highest price since 1.2682 was made on July 2. Continue to stand aside.
10 Year Treasury Notes:
The September 10 year treasury note gained 11 points on heavy volume of 1,941,865 contracts. Volume was down 646,592 contracts from August 29 when notes declined by 3.5 points and open interest increased by 31,418 contracts. On August 30, open interest declined by 18,100 contracts, which relative to volume is more than 60% below average. As this report is being composed on August 31, September notes are trading 12 points higher. Frankly the behavior of notes is a surprise considering that the message from the Federal Reserve lacked any specifics about quantitative easing. As indicated in yesterday’s report, for a short-term buy signal to be generated, the low of the day must be no less than 134-00. Since the low in notes on August 31 is 133-29, a short-term buy signal will not be generated today. Beginning with the August 31 report, the December contract will be the new lead month.
S&P 500 E mini:
The September S&P 500 E mini lost 10.25 points on light volume of 1,230,463 contracts. Volume increased by approximately 268,000 contracts from August 29 when the S&P 500 E mini closed 0.25 points higher and open interest increased by 25,491 contracts. On August 30, open interest increased by 9,238 contracts, which is approximately 60% below average. Remarkably, on August 31, the S&P 500 E mini and many other markets are acting positively. As this report is being compiled on August 31, the E mini is trading 6.75 points higher. As indicated before, long put protection should be in place to protect any outstanding long positions investors have in equities.
