We will provide an analysis of the crop production and supply demand in tomorrow’s report.

Soybeans:

September soybeans lost 9.25 cents on volume of 109,009 contracts. Total open interest increased by 7,026 contracts, which relative to volume is approximately 145% above average, meaning that new longs and shorts were aggressively entering the market and shorts were driving prices lower. The August contract lost 398 of open interest. As this report is being compiled on August 12, September soybeans are trading 23.75 cents higher and have made a new high for the move at $12.58 1/4. Soybeans remain on a short and intermediate term sell signal.

Soybean meal:

September soybean meal lost $2.00 on volume of 56,255 contracts. Total open interest increased by 1,678 contracts, which relative to volume is approximately 20% above average. The August contract lost 634 of open interest. As this report is being compiled on August 12, September soybean meal is trading $5.80 higher and has made a new high for the move at $408.00. Soybean meal remains on a short and intermediate term sell signal.

Corn:

September corn lost 7.75 cents on volume of 275,664 contracts. Total open interest increased by 2,186 contracts, which relative to volume is approximately 55% less than average. The September contract lost 18,642 of open interest. As this report is being compiled on August 12, corn is trading 4.25 cents higher and has made a new high for the move at $4.80. Corn remains on a short and intermediate term sell signal.

Wheat:

September Chicago wheat lost 7.75 3/4 cents on extremely heavy volume of 183,614 contracts. Volume was the highest since June 24 190,017 contracts were traded and September wheat closed at $6.87 3/4. On August 9, total open interest increased by 7,332 contracts, which relative to volume is approximately 55% above average meaning that new shorts were in control and driving prices lower. The September contract lost 4,994 of open interest and it made a new low at $6.30 1/2. Wheat remains on a short and intermediate term sell signal.

Cotton:

December cotton lost 32 points on volume of 17,358 contracts. Open interest increased by a massive 2,319 contracts, which relative to volume is approximately 390% above average, meaning that both longs and shorts were very aggressive, but the shorts had the edge. As this report is being compiled on August 12, December cotton is trading 54 points higher and has made a new high at 90.17. On August 7, December cotton generated a short and intermediate term buy signal.

From the August 8 report:

“On June 14, 2013 December cotton made a high of 89.56 and the same day, cotton made a high of 92.58 on the continuation chart. On March 15, 2013, cotton made a high of 93.93 on the continuation chart. We are not convinced  the rally is for real, and although cotton generated a short and intermediate term buy signal on August 7, we advise against chasing the market higher.”

Live cattle:

October live cattle lost 20 points on volume of 44,654 contracts. Total open interest increased by 749 contracts, which relative to volume is approximately 35% less than average.. The August contract lost 1,121 of open interest. On August 8, October cattle generated a short and intermediate term buy signal, which reversed the sell signals of August 5 and 6. Unfortunately, we cannot recommend the initiation of bullish positions at current levels because the market has not had a pullback, which is required according to our protocol. The market is overbought, and we suggest that clients stand aside.

Crude oil:

September crude oil gained $2.57 on volume of 690,133 contracts. Remarkably, volume was 4, 000 contracts fewer than trading on August 8 when September crude lost 97 cents and open interest increased by 8,285 contracts. On August 9, open interest increased by 25,893 contracts, which relative to volume is approximately 50% above average, meaning that new longs were entering the market aggressively and pushing prices higher. The September contract lost 15,864 of open interest, which makes the total increase much more impressive. 

It is troubling to see volume lower than the previous day when the market had a minor decline. Although the open interest build on August 9 is very constructive, we think this is a matter of Johnny-come-lately’s entering the market on what may have appeared to be a reversal from the previous couple of days downtrend. The market looks tired to us at current levels, and a reversal to $103.00 would signal a likelihood of a break below 102.00, which would confirm the downtrend. WTI remains on a short and intermediate term buy signal.

Natural gas:

 September natural gas lost 6.7 cents on volume of 428,675 contracts. Open interest increased by 4,880 contracts, which relative to volume is approximately 50% below average. The September contract lost 26,376 of open interest. Although natural gas remains on a short and intermediate term sell signal, as we said in the August 8 report, there is a good chance that natural gas put in a bottom at $3.129 on August 8. As this report is being compiled on August 12, natural gas is trading 8.9 cents higher.

Copper: On August 9, September copper generated a short-term buy signal, but remains on an intermediate term sell signal.

Silver: On August 9, September silver generated a short-term buy signal, but remains on an intermediate term sell signal.

Gold: On August 9, December gold generated a short-term buy signal, but remains on an intermediate term sell signal.

Platinum: On August 9, October platinum generated a short-term buy signal, but remains on an intermediate term sell signal.

Euro:

The September euro lost 49 points on volume of 143,418 contracts. Open interest declined by 3,562, which relative to volume is average. Since generating a short and intermediate term buy signal on July 22, the euro has not had a pullback, and this is a good enough reason to be on the sidelines.

S&P 500 E mini:

The September S&P 500 E mini lost 7.50 points on volume of 1,665,997 contracts. Volume was the highest since July 31 when 1,984,484 contracts were traded and the E mini declined 4.25 points while open interest increased 15,400 contracts. On August 9, open interest increased by 3,427 contracts, which is minor and dramatically below average. We continue to encourage the initiation of put protection, especially for those who long equity positions.