The exchange did not delineate the volume and open interest stats for December 21 versus December 24 for the grain complex, which traded in a truncated session on Friday. We are presenting the information provided by the exchange, and if they issue a revision, we will update our reports as well.
Soybeans:
March soybeans gained 6.25 cents on volume of 49,346 contracts. Open interest declined by 5,258 contracts, which in relation to volume is approximately 320% above average. Over 7,000 contracts were liquidated in the January contract, which accounted for the extremely high decline of open interest. As this report is being compiled on December 26, March soybeans are trading 18.25 cents lower, and looks to retest the November 16 low of $13.56. US soybeans are priced higher than Brazil’s or Argentina’s, and combined with the ever-increasing estimate of the harvest, will continue to pressure the bean complex. Stand aside.
Soybean meal:
March soybean meal gained $1.20 on very light holiday volume of 13,460 contracts. Open interest declined by 1,932 contracts, which in relation to volume is approximately 475% above average. The loss of open interest in the January contract accounted for the very heavy decline. As this report is being compiled on December 26, March soybean meal is trading $6.20 lower. Stand aside.
Corn:
March corn gained 2.25 cents on volume of 33,519 contracts. Open interest increased by 168 contracts, which is approximately 65% below average. As this report is being compiled on December 26, March corn is trading 11.25 cents lower. Stand aside.
Wheat:
March wheat gained 1.75 cents on volume of 50,829 contracts. Open interest increased by 807 contracts, which in relation to volume is approximately 30% less than average. Wheat is beginning to get priced competitively on the world market, and this may begin to produce higher export sales. As this report is being compiled, March wheat is trading 18.75 cents lower, and has made a new low for the move at $7.74 1/4. Stand aside.
Crude oil:
February crude oil lost 5 cents on volume of 77,204 contracts. Open interest declined by 1,413 contracts, which in relation to volume is approximately 5% below average. Although we are not terribly bullish on crude oil, we have warned clients to stand aside because on a seasonal basis crude oil tends to rally into the early part of January. As this report is being compiled on December 26, crude oil is trading $2.23 higher. Stand aside.
Natural gas:
February natural gas lost 10.4 cents on volume of 130,624 contracts. Open interest increased by 3,779 contracts, which in relation to volume is average. Stand aside.
Copper:
March copper declined by 2.10 cents on volume of 15,763 contracts. Open interest increased on the decline by 446 contracts, which in relation to volume is average. On December 21, copper rallied 3.10 cents and open interest declined by 2,093 contracts. In other words, during the past 2 days, copper has been acting in a bearish fashion with respect to price and open interest. As this report is being compiled on December 26, March copper is trading 5.30 cents higher. On March 20, copper generated a short-term sell signal, but as of December 26 will not generate an intermediate term sell signal. Stand aside.
Gold:
February gold declined by 60 cents on volume of 49,510 contracts. Open interest increased by 1,050 contracts, which in relation to volume is approximately 5% below average. Although gold is now on a short and intermediate term sell signal, which means that it should be traded from the short side, we discourage this with prices at current levels. Continue to stand aside.
Silver:
March silver lost 30.6 cents on volume of 14,127 contracts. Open interest increased by 134 contracts, which in relation to volume is approximately 50% less than average. Silver is on a short and intermediate term sell signal, but we discourage clients from entering positions on the short side at current prices. In the upcoming Weekend Wrap, we will discuss the December and first quarter history of the precious metals during 2010 in 2011. Stand aside.
British pound:
The March British pound lost 25 points on volume of 35,346 contracts. Open interest declined by a massive 4,353 contracts, which in relation to volume is approximately 390% above average, meaning that liquidation was extraordinarily heavy. This was the second day in a row that open interest decline relative to volume was off the charts. In our view, this reflects liquidation by managed money longs who were piling in at the top of the market. Stand aside.
Euro:
The March euro gained 14 points on volume of 59,460 contracts. Open interest increased by 1,467 contracts, which in relation to volume is average. The market continues to have a firm undertone, but if the fiscal cliff issue continues to worsen, it could possibly spark liquidation across the board. Make sure stops are in place and if stopped out, there will be another opportunity to re-enter the market. We think the euro is going considerably higher. In the December 23 Weekend Wrap, we discussed the large swings in the euro during December and January of 2010 and 2011. It is likely that volatility will remain elevated during January 2013 as well.
S&P 500 E mini:
The S&P 500 E mini lost 6.25 points on volume of 318,670 contracts. Total open interest declined by 735,949 contracts, which was the result of a 746,250 contract decline in the December contract. Open interest in the March contract increased by 9,858 contracts, which in relation to March volume of 318,126 contracts is approximately 20% above average, meaning that shorts were more aggressive than usual on the price decline. Stand aside.
