Soybeans:

September soybeans gained 0.75 cents on extremely low volume of 115,459 contracts. Total open interest increased by 1,581 contracts, which relative to volume is approximately 40% less than average. The August contract lost 1,463 of open interest. Export sales totaled 78.54 thousand tons and total commitments to date are 1362.8 million bushels versus the USDA projection of 1330 mb. As this report is being compiled on August 1, September soybeans have made another new low at $12.31. Soybeans remain on a short and intermediate term sell signal. Do not chase the market lower, because it could rally at any time, especially since managed money is getting increasingly net short, and the growing season is still ahead of us. 

Soybean meal:

September soybean meal lost $1.20 on very low volume of 47,290 contracts. Open interest declined by a massive 4,635 contracts, which relative to volume is approximately 275% above average meaning that liquidation was extraordinarily heavy. The August contract lost 1,869 of open interest. Export sales for the recent reporting week came in at 11.10 thousand tons and total commitments to date are 9719.9 thousand tons versus USDA projections of 9526 thousand tons and 2 months remain in the current crop year. As this report is being compiled on August 1, September soybean meal is trading $5.10 lower. Despite this, soybean meal remains on a short and intermediate term buy signal.

Corn:

September corn advanced 3.50 cents on volume of 231,907 contracts. Volume was the highest since July 25 when 318,155 contracts were traded and September corn declined 12.25 cents while open interest increased 1,204 contracts. On July 31, total open interest declined 4, 155 contracts, which relative to volume is approximately 25% less than average. The September contract lost 17,704 of open interest. The USDA reported that 5.3 million bushels were sold in the recent reporting week and total commitments stand at 740.9 mb while the USDA is projecting 700 mb. As this report is being compiled on August 1, corn has made another new low at $4.86 1/2. The critical growing period is upon us, and any change in weather could cause corn to rally, especially since managed money is heavily net short. Do not chase the market lower.

Wheat:

September wheat gained 9 cents on very heavy volume of 147,828 contracts. Volume was the highest since June 24 when 190,017 contracts were traded. On July 31, total open interest increased by 462 contracts, which is minuscule and dramatically below average. The USDA reported that 21.9 mb was sold in the recent reporting week, which brings total commitments to 473.7 mb versus the USDA projection of 1075 mb for the crop year which ends on May 31 2014. On August 1, September wheat is trading 9.75 cents lower and has made a low of $6.48 1/4, which matches the low of July 29 and is 0.25 above the low of $6.48 made on July 26. It would be a very positive development if wheat could continue to find support at $6.48. Wheat remains on a short and intermediate term sell signal.

Cotton:

December cotton advanced 4 points on volume of 14,601 contracts. Open interest increased by 1,428 contracts, which relative to volume is approximately 275% above average meaning that new longs and shorts were heavily entering the market but were unable to move cotton prices much one way or the other. Cotton remains on a short-term sell signal, but an intermediate term buy signal. Per our recommendation of July 30, we advise clients to reduce their exit point on bearish positions to 86.55, which was the high on July 23.

Live cattle:

October live cattle lost 17 points on light volume of 35,494 contracts. Total open interest increased by 1,232 contracts, which relative to volume is approximately 40% above average. The August contract lost 2,515 of open interest. As this report is being compiled on August 1, October cattle is trading 85 points lower. Although cattle is on a short and intermediate term buy signal, no positions have been recommended. The market continues to trade sideways to lower and we await a breakout to the upside before recommending bullish positions.

Crude oil:

September crude oil advanced $1.95 on light volume of 582,312 contracts. Surprisingly, volume increased only 36,000 contracts from July 30 when September crude lost $1.47 and open interest increased 294 contracts. Additionally, volume was lower than the 604,753 contracts traded on July 24 when crude oil lost $1.84 and open interest declined 3,296 contracts. On July 31, open interest increased 14,698 contracts, which relative to volume is average. As this report is being compiled on August 1, September crude oil is trading $2.67 higher and has made a new high for the move at $107.93. We continue to be unimpressed with crude oil despite the rally. Low volumes are showing that market participation is not what it should be and open interest increases are tepid at best. In short, there appears to be skepticism about the ability of crude oil to advance significantly higher from here. Crude oil remains on a short and intermediate term buy signal.

Natural gas:

September natural gas advanced 1.4 cents on very light volume of 179,366 contracts. Open interest increased by 68 contracts. The EIA reported a stock build of 57 bcf versus expectations of 59 bcf. As this report is being compiled on August 1, September natural gas is trading 5.8 cents lower and has made a new low for the move of 3.341. Natural gas has been on a short-term sell signal since May 31 and an intermediate term sell signal since June 24.

Euro:

The September euro gained 73 points on heavy volume of 336,390 contracts. Volume was the highest since July 11 when 379,148 contracts were traded and the euro advanced 2.15 cents while open interest increased 798 contracts. On July 31, open interest increased 4,660 contracts, which relative to volume is approximately 40% less than average. As this report is being compiled on August 1, the September euro is trading 1.17 lower and has made a new low for the move at 1.3193. The market has been overbought and needed to setback before we could recommend bullish positions.

From the July 30 report:

“Ever since generating a short and intermediate term buy signal on July 22, the biggest pullback has been 40 points on July 24. Usually, after a buy signal is generated, the market pulls back from 1 to 3 days, and the fact this is not occurred is testament to the strength in the euro. It is overbought, but with a large number of managed money shorts, the market can stay overbought longer than usual. We discourage clients from entering new long positions at current levels, and would prefer to see the euro setback near to 1.3100.”

S&P 500 E mini:

The S&P 500 E mini declined 4.25 points on heavy volume of 1,984,484 contracts. Volume was the highest since June 28 when 2,147,867 contracts were traded and the E mini declined 7.25 points. Note the heaviest volume days during the past 23 sessions occurred when the E mini had a pullback, not when it advanced. On July 31, open interest increased by 15,400 contracts, which relative to volume is approximately 60% below average. As this report is being compiled on August 1, the E mini is trading 17.75 points higher and has made a new high for the move at 1700.75. Though the market continues to advance, we think the risk is all to the downside, and strongly advise the initiation of put protection, especially for those clients who hold long equity positions. Interest rates continue to rise and tapering is on the horizon along with the imminent appointment of a new Federal Reserve chairman. In addition, the republicans promise to make the debt ceiling an issue, which will be hotly contested.