May soybeans gained 2 cents on volume of 284,799 contracts. Volume increased by approximately 27,000 contracts from February 20 when soybeans gained 12.50 cents on volume of 257,783 contracts and open interest declined by 9101 contracts. On February 21, total open interest declined by 5,845 contracts, which in relation to volume is approximately 20% less than average. The March contract accounted for loss of 22,308 contracts. On February 21, soybeans made a new high for the move at 1476.00, however on February 22, May soybeans have made another new high at $14.97. This is the highest price since November 1 when may soybeans reached $14.99. Although open interest has been declining, this can be attributed to liquidation in the March contract. The export sales number released by the USDA was disappointing and due to cancellations, sales declined by 119.53 thousand tons. May soybeans are massively overbought relative to the 50 day moving average on the continuation chart of $14.45 and the 50 day moving average on the March contract of 14.38. As this report is being compiled on February 22, May soybeans are trading 3.50 cents lower. It is possible that soybeans will generate in intermediate term buy signal early next week.
May soybean meal declined by $2.80 on volume of 96,690 contracts. Volume declined approximately 3000 contracts from February 20 when soybean meal advanced $8.30 and open interest declined by 1271 contracts. On February 21, total open interest increased by 8 contracts. The March contract accounted for loss of 7043 of open interest, but there was sufficient buying in the back months to give soybean meal a positive open interest number. The USDA reported soybean meal sales at 236.13 thousand tons, which is the highest sale number in 5 weeks. It appears that strength has returned to soybean meal as we believed it would. As this report is being compiled, the May contract has made a new high for the move at 443.90, which is the highest price since December 17, 2012 when it made a high of $445.00. The high on February 22 represents a massively overbought condition relative to its 50 day moving average of $424.60 on the continuation chart and 418.10 on the May chart.
March soybean oil lost 72 points on volume of 124,415 contracts. Open interest declined by 1,379 contracts, which in relation to volume is approximately 45% less than average. The March contract accounted for loss of 10,677 of open interest. The USDA said that 28.87 thousand tons of soybean oil was sold, which is the highest number in 7 weeks. Given the recent strength of soybean meal and soybeans, the performance of soybean oil has been a disappointment. As we mentioned yesterday, stops for the March contract should have been placed at 51.13 which was the February 14 low. As this report is being compiled, May soybean oil is trading 84 points lower. All clients should be out of long positions and standing aside.
May corn lost 10.75 cents on heavier than normal volume of 333,311 contracts. Volume was the highest since February 13 when 438,086 contracts were traded and open interest increased by 6,017 contracts while March corn declined by 0.75 cents. On February 21, open interest declined by 3,848 contracts, which in relation to volume is approximately 50% less than average. The March contract lost a massive 27,957 of open interest. The spread between March and May corn widened to 5.25 cents, which is the highest since October 22 when the spread closed at 6.00 cents and March corn closed at $7.59 1/4. Corn remains on a short and intermediate term sell signal, but as we have said before, due to the widening of the spreads we suggest that clients refrain from implementing short positions.
May wheat lost 21.25 cents on heavy volume of 186,356 contracts. Volume was the highest since January 11 when 190,768 contracts were traded and May wheat closed at $7.62. On February 21, open interest declined by 7,252 contracts, which in relation to volume is approximately 50% above average. The March contract accounted for loss of 20,831 of open interest. Export sales were robust coming in at 699.3 thousand tons, which is the highest number in 8 weeks Although, wheat is on a short and intermediate term sell signal, we want to point out that on February 21, the open interest decline was the largest since January 11 when it decreased by 7,620 contracts while volume on the 21st was the highest since January 11 as well. We bring this up because bottoms are sometimes made on heavy volume and massive declines of open interest. Stand aside.
April crude oil lost $2.38 on volume of 589,107 contracts. Surprisingly open interest increased by 3,561 contracts, which in relation to volume is approximately 70% below average. We find it astounding that for the past 2 days crude oil has declined by $4.26 while open interest has declined only 2,523 contracts. Also, volume of 589,107 contracts was only slightly higher than volume on February 19 of 575,423 contracts when crude oil gained 69 cents and open interest declined 13,344 contracts. The lack of liquidation when speculators are heavily long crude oil is a sign that crude oil has much farther to go on the downside. Additionally, it is highly likely that crude oil will generate a short-term sell signal on February 22. We will be discussing the technical situation in crude oil in the upcoming Weekend Wrap.
Copper: On February 21, copper generated a short and intermediate term sell signal.
May copper lost 5.55 cents on very heavy volume of 128,326 contracts. Volume was higher than April 10, 2012 when 127,276 contracts were traded and May copper closed at $3.6910. In short, volume was the highest in at least one year. On February 21, open interest declined by a massive 6,568 contracts, which in relation to volume is approximately 100% above average. For the past 3 sessions, beginning on February 9, open interest has declined by 11,585 contracts while copper has declined 18.45 cents. The market is now approaching the 200 day moving average of $3.51. Before implementing short positions, wait for a rally to the $3.62-3.64 area.
April gold gained 60 cents on fairly heavy volume of 237,117 contracts. Open interest increased by 62 contracts. Gold remains on a short and intermediate term sell signal.
April platinum declined $27.10 on extremely heavy volume of 25,732 contracts. Volume exceeded the trading on February 20 when 24,464 contracts changed hands and open interest declined by 3,131 contracts while April platinum declined $50.40. On February 21, open interest declined 1,121 contracts, which in relation to volume is approximately 70% above average. The market made a new low for the move at $15 99.00, which is the lowest price for April platinum since January 10. It was on January 11, that platinum generated a short and intermediate term buy signal. However, it is more than likely platinum will generate a short-term sell signal on February 22. In the upcoming Weekend Wrap we will perform a price and open interest analysis in order to give our clients a better idea of how much more downside there is left in platinum.
March silver gained 7.7 cents on heavy volume of 105,376 contracts. Volume declined approximately 32,000 contracts from February 20 when silver lost 80 cents on volume of 137,829 contracts and open interest declined 466 contracts. On February 21, open interest increased by 1,548 contracts, which in relation to volume is approximately 35% less than average. February 21 is the 4th day in a row that open interest increases/decreases for gold and silver have been moderate. There seems to be great reluctance on the part of market participants to make commitments to the long or short side. Possibly, a temporary bottom is in the making with the low on February 20 of $28.255, February 21, 28.290 and the low on February 22 is 28.335.
The March euro declined 1.15 cents on heavy volume of 370,071 contracts. Volume was the highest since February 7 when 452,064 contracts were traded and the euro declined 1.22 cents while open interest declined by 4,615 contracts. On February 21, open interest declined by a very light 148 contracts, which is dramatically below average. On November 22, the euro has made another new low at 1.3147. We are in a period of dollar strength, and it is difficult to determine how long this will last. The euro remains on a short and intermediate term buy signal, however we recommend a stand aside position until we see that the market has turned.
S&P 500 E mini:
The S&P 500 E mini lost 6.00 points on heavy volume of 2,528,606 contracts. Volume was slightly higher than December 19 when 2,519,571 contracts were traded and the E mini closed at 1433.00. We continue to think the market is going lower and the heavy volume of the last 2 days when the market declines is an indication that market participants run for the exits as soon as the market trades lower. We will discuss the E mini in greater detail in the upcoming Weekend Wrap.