Soybeans:

March soybeans gained 4 cents on light holiday volume of 120,828 contracts. Open interest declined by 8,799 contracts, which in relation to volume is approximately 190% above average, meaning that liquidation was heavy. Most of the liquidation is attributable to the January contract. The first notice day is December 31, which means that most all speculators are required to liquidate January contracts. As this report is being compiled on December 31, March soybeans have made a new low for the move at $14.00 3/4, which is 44 cents above the November 16 low. Stand aside.

Soybean meal:

March soybean meal lost $1.80 on volume of 46,509 contracts. Open interest declined by 2,165 contracts, which in relation to volume is approximately 75% above average, meaning that liquidation was heavy. Like soybeans, liquidation was heavy in the January contract due to first notice day on December 31. As this report is being compiled on December 31, March soybean meal has made a new low for the move at $418.90, which is nearly $19.00 above the November 20 low. Stand aside.

Corn:

March corn gained 2.50 cents on volume of 96,362 contracts. Open interest declined by 1,113 contracts, which in relation to volume is approximately 50% less than average. As this report is being compiled on December 31 March corn has advanced 4.50 cents, and has made a low of $6.89 1/4, which is above the December 28 low of 6.88 3/4, and matches the low of 6.89 1/4 made on December 27. Stand aside.

Wheat:

March wheat gained 6.50 cents on volume of 67,639 contracts. Open interest increased by 773 contracts, which in relation to volume is approximately 50% less than average. As this report is being compiled on December 31, wheat has made a low of 7.67 3/4, which is above the low of 7.66 1/2 made on December 28, and the low for the move of 7.64 1/2 made on December 27. Stand aside.

Crude oil:

February crude oil lost 7 cents on volume of 262,511 contracts. Open interest declined by 8,692 contracts, which in relation to volume is approximately 35% above average. From December 11, when crude oil made its low of $85.76 through December 28, when crude made a high of $91.49 open interest has declined by 75,905 contracts. This is bearish open interest action relative to the price advance. Despite this, crude oil has been showing solid strength, and though some of it is likely attributable to seasonal factors, we are beginning to see signs the rally may be more than it appears. We will discuss this in greater detail in the January 1 Weekend Wrap.

Natural gas:

February natural gas gained 5.7 cents on volume of 139,090 contracts. Open interest declined by 460 contracts, which is minuscule and dramatically below average. For the past 3 days, natural gas has advanced 9.1 cents while open interest has declined by 12,141 contracts. This is bearish open interest action relative to the price advance. Stand aside.

Copper:

March copper lost 1.15 cents on volume of 30,663 contracts. Open interest declined by 1,542 contracts, which in relation to volume is  approximately 100% above average, meaning that liquidation was heavy on a small decline. On December 20, (copper generated a short-term sell signal on December 20), March copper made its low at 3.5230, and since has rallied to a high of 3.6225 on December 28. During this time, open interest has declined by 3,678 contracts. This is bearish open interest action relative to the price advance. As this report is being compiled on December 31, March copper is trading 6.05 cents higher, which may be in part due to hope there may be a short-term resolution of the fiscal cliff issue. Additionally, there have been positive reports about the Chinese economy. Please review the January 1 Weekend Wrap about the Shanghai Composite Index and ETFs that represent sectors of the economy, which are showing significant strength.

Gold:

February gold lost $7.80 on light volume of 82,929 contracts. Open interest increased by 1,808 contracts, which in relation to volume is approximately 5% less than average. As this report is being compiled on December 31, gold is trading $23.40 higher on the likelihood of a short-term deal regarding the fiscal cliff. In the January 1 Weekend Wrap, we discuss the trading activity of the gold market during December and January. Stand aside.

Silver:

March silver gained 26.5 cents on light volume of 21,544 contracts. Open interest declined by 510 contracts, which in relation to volume is average. As this report is being compiled on December 31, March silver is trading 29.9 cents higher, due to the possible short-term resolution of the fiscal cliff issue. In the January 1 Weekend Wrap we discuss trading activity in silver during December and January. Stand aside.

British pound:

The British pound gained 42 points on volume of 58,513 contracts. Open interest declined by a massive 3,727 contracts, which in relation to volume is approximately 145% above average, meaning that liquidation was heavy. For the past 5 trading sessions, open interest has declined by 18,628 contracts while the pound has lost 1.31 cents. Recent trading in the pound has purged large numbers of longs, most of whom were probably speculators who bought at the high end of the range. As this report is being compiled on December 31, the pound is trading 94 points higher. Stand aside.

Euro:

The March euro lost 18 points on volume of 132,203 contracts. Open interest increased by a minuscule 55 contracts, which is essentially an unchanged number. On December 28, the euro made a low of 1.3175, which is 5 points above the low made on December 21 of 1.3170. Thus far on December 31, the euro has made a low of 1.3181. The question is whether the euro will hold support at the 1.3170 level. Our best judgment says the euro will continue to pullback to the 1.3100-1.3150 area. The euro is overbought relative to the pound, Australian dollar and Canadian dollar. As we mentioned in the Weekend Wrap of December 23, wide swings in the euro during January are common. Additionally, a fresh crop longs have entered the market recently, which makes the euro vulnerable to further selling. However, we do not envision heavy selling because the number of new longs is relatively small.

S&P 500 E mini:

The S&P 500 E mini lost 24.00 point on light holiday volume of 1,062,992 contracts. Open interest increased by a minuscule 3,560 contracts, which is dramatically below average. As this report is being compiled on December 31, the E mini is trading 21.50 points higher, and has made a high for the day at 1413.25. Stand aside.