July 8 report

The COT report covers the period of June 26 and July 2.

On July 11, the USDA will release its monthly supply and demand report (WASDE).

Soybeans:

The COT report, which was tabulated on July 2 and released on July 8 due to the July 4 holiday, showed that managed money liquidated 13,407 contracts of their long positions and added 711 contracts to their short positions. Commercial interests liquidated 9,643 contracts of their long positions and also liquidated 25,067 contracts of their short positions. As of the latest report, managed money is long soybeans by a ratio of 4.24:1, which is down slightly from the previous week of 4.67:1, but up from the ratio of 2 weeks ago of 3.68:1.

August soybeans advanced 23.50 cents on light volume of 135,438 contracts. Open interest declined by 2,303 contracts, which relative to volume is approximately 25% less than average. The July contract lost 1,230 of open interest. The August contract made a new high at 14.59 1/2, which took out the previous high of 14.53 3/4 made on July 1. As this report is being compiled on July 9, August beans are trading 17.50 cents higher and have made a new high for the move at 14.79 1/2. We have been warning clients about the very tight balance sheet in soybeans and to expect higher prices. Soybeans remain on a short and intermediate term buy signal

Soybean Meal:

The COT report showed that managed money liquidated 8,360 contracts of their long positions and added 815 contracts to their short positions. Commercial interests liquidated 4,499 contracts of their long positions and also liquidated 11,136 contracts of their short positions. As of the latest report, managed money is long soybean meal by a ratio of 3.01:1, which is down from the previous week of 3.44:1 and the ratio of 2 weeks ago of 4.25:1.

August soybean meal advanced $13.50 on volume of 78,898 contracts. Total open interest declined by 978 contracts, which relative to volume is approximately 45% less than average. The July contract accounted for loss of 1,508 of open interest. On July 8, August soybean meal made a new high of $442.90, which took out its previous high of $442.30 made on June 28. As this report is being compiled on July 9, August soybean meal has made a new high at $454.60 and is trading $8.20 higher on the day. We have been partial to soybean meal over soybeans, but soybean meal has a tendency to top out in July,, therefore it is difficult to ascertain how much more upside is left in soybean meal. As in the case of all grains, a weather scare could send old crop beans and meal dramatically higher. Soybean meal remains on a short and intermediate term buy signal.

Soybean oil:

The COT report showed that managed money liquidated 2,360 contracts of their long positions and added 4,731 contracts to their short positions. Commercial interests added 1,190 contracts to their long positions and liquidated 4984 contracts of their short positions. As of the latest report, managed money is short soybean oil by a ratio of 1.67:1, which is up from the, previous week of 1.52:1 and the ratio of 2 weeks ago of 1.42:1. Soybean oil remains on a short and intermediate term sell signal

Corn:

The COT report showed that managed money liquidated a massive 40,811 contracts of their long positions and added a massive 31,715 contracts of their short positions. Commercial interests added 24,294 contracts to their long positions and liquidated a massive 72,790 contracts of their short positions. As of the latest report, managed money is long corn by a ratio of 1.17:1, which is down dramatically from the previous week of 1.67:1 and the ratio of 2 weeks ago of 1.71:1. The current ratio is the lowest in at least one year and is the lowest of the past several weeks.

September corn gained 7.50 cents on volume of 175,376 contracts. Total open interest declined by 6,073 contracts, which relative to volume is approximately 40% above average. The July contract accounted for loss of 3,146 of open interest. Ever since corn has made new lows for the move during the past couple of days, we have cautioned against initiating short positions due to the significant amount of support dating back to June 2012. The COT report showed that managed money has gotten extremely bearish at the very low-end of the trading range, and this is generally a cautionary sign that a countertrend rally is more likely than not. As this report is being compiled on July 9, September corn has advanced 15.50 cents and has made a new high for the move at $5.54 3/4. Corn remains on a short and intermediate term sell signal.

Wheat:

The COT report showed that managed money liquidated 6,745 contracts of their long positions and added 22,460 contracts to their short positions. Commercial interests added 19,454 contracts to their long positions and liquidated 10,804 contracts of their short positions. As of the latest report, managed money is short wheat by a ratio of 1.62:1, which is up substantially from the previous week of 1.24:1 and the ratio of 2 weeks ago of 1.41:1.

September wheat gained 3 cents on volume of 88,379 contracts. Total open interest declined by 2,219 contracts, which relative to volume is average. The July contract accounted for loss of 197 of open interest. Like corn, we have been cautioning speculators not to initiate short positions in wheat. The market is not only massively oversold, but it has been trading at the very low-end of its range going back to June 2012. As this report is being compiled on July 9, September wheat is trading 15.75 cents higher and has made a new high for the move at $6.83. Wheat remains on a short and intermediate term sell signal.

Cotton:

The COT report showed that managed money added 327 contracts to their long positions and also added 549 contracts to their short positions. Commercial interests liquidated 1,614 contracts of their long positions and added 1,551 contracts to their short positions. As of the latest report, managed money is long cotton by a ratio of 7.31:1, which is down slightly from the previous week of 7.79:1 and the ratio of 2 weeks ago of 7.41:1.

December cotton gained 30 points on volume of 12,180 contracts. Open interest increased by 314 contracts, which relative to volume is average. We are looking for a spot to initiate bearish positions in cotton, but the market has been trading somewhat firmly of late. Since making its recent low of 83.11 on June 24, cotton has been trading sideways to higher. At this juncture, we have no way of determining whether this sideways pattern will resolve itself by a move to the upside, or a return to test the June 24 low. However, as this report is being compiled on July 9 December cotton is trading 45 points higher, and most commodities are trading positively even though the dollar index has made a new high for the move and is trading sharply higher. The risk on environment, which is reflected by a bounce in the 10 year note and a rally in the major indices may act support cotton, if only temporarily. Cotton remains on a short-term sell signal, but an intermediate term buy signal.

 Live cattle:

The COT report showed that managed money liquidated 3,106 contracts of their long positions and also liquidated 11,875 contracts of their short positions. Commercial interests liquidated 766 contracts of their long positions and added 1,875 contracts to their short positions. As of the latest report, managed money is long cattle by a ratio of 1.87:1, which is up significantly from the previous week of 1.49:1 and the ratio of 2 weeks ago of 1.28:1.

August live cattle gained 12 points on fairly heavy volume of 57,275 contracts. Volume was the highest since June 21 when 60,057 contracts were traded and August cattle advanced 1.60 cents while open interest declined 5,311 contracts. On July 8, open interest increased 841 contracts, which relative to volume is approximately 40% below average. The August contract accounted for loss of 4343 of open interest. The market continues to trade in a sideways pattern, and the question remains whether cattle has the momentum to break to the upside, or whether discouraged longs will begin to liquidate. Cattle remains on a short-term buy signal, but an intermediate term sell signal.

Crude oil:

The COT report showed that managed money added 26,450 contracts to their long positions and also added 3,660 contracts to their short positions. Commercial interests added 4,742 contracts to their long positions and also added 2,791 contracts to their short positions. As of the latest report, managed money is long crude oil by a ratio of 9.45:1, which is down slightly from the previous week of 9.78:1 and the ratio of 2 weeks ago of 9.99:1.

August WTI crude oil lost 8 cents on heavy volume of 727,118 contracts. Total open interest increased by 20,523 contracts, which relative to volume is average. The August contract lost 19,710 of open interest, which makes the total open interest increase much more impressive. Open interest on July 8 increased by the largest amount since the rally in crude oil began on June 24. During the past 5 trading sessions beginning on July 1 through July 8, August crude oil has advanced $6.76 while open interest has declined by 24,075 contracts. This is definitely bearish open interest action relative to the price advance.

WTI made a new high for the move at $104.12 on Monday, which is its highest level since April 2012. The market continues to look firm and it appears that WTI wants to go higher, despite being massively overbought. Remarkably, despite its overbought condition, on July 9 as this report is being compiled, crude oil is trading 14 cents higher even though the dollar index is sharply higher. From the time that WTI began its rally on June 24 through July 8, WTI advanced 9.54% while the September dollar index has advanced nearly two full points (+1.83) or 2.22%. In short, the movement of the dollar index and WTI have been substantially correlated during the  move of the past 2 weeks. This is another indication that the strength ofWTI should not be underestimated. Crude oil remains on a short and intermediate term buy signal.

Brent crude oil:

Brent crude oil declined by 29 cents on volume of 676,771 contracts.Open interest increased by 3,975 contracts, which relative to volume is approximately 65% less than average.Brent generated a short and intermediate term buy signal on July 3 and July 5 respectively. This is another reason why speculators should not underestimate the strength of the move in WTI and Brent.

Heating oil:

The COT report showed that managed money added 2,050 contracts to their long positions and liquidated 919 contracts of their short positions. Commercial interests added 1,058 contracts to their long positions and also added 3,107 contracts to their short positions. As of the latest report, managed money is short heating oil by a ratio of 1.36:1, which is down from the previous week of 1.49:1, but up from the ratio of 2 weeks ago of 1.14:1.

August heating oil lost .0096 cents on volume of 109,135 contracts. Total open interest declined 2,986 contracts, which relative to volume is average. The August contract accounted for loss of 2,951 of open interest. Heating oil remains on a short and intermediate term buy signal.

Gasoline

The COT report showed that managed money added 1,132 contracts to their long positions and also added 1,595 contracts to their short positions. Commercial interests liquidated 10,432 contracts of their long positions and also liquidated 13,288 contracts of their short positions. As of the latest report, managed money is long gasoline by a ratio of 2.03:1, which is down from the previous week of 2.13:1, and down substantially from the ratio of 2 weeks ago of 3.30:1.

August gasoline lost 1.31 cents on heavy volume of 161,036 contracts. Total open interest increased by 784 contracts,which relative to volume is approximately 75% below average. The August contract lost 5,562 of open interest. On July 3, August gasoline generated a short-term buy signal, however it has not generated in intermediate term buy signal as of July 9, but this is likely on July 10.

Natural gas:

The COT report showed that managed money added 5,041 contracts to their long positions and also added 14,043 contracts to their short positions. Commercial interests liquidated 3,423 contracts of their long positions and also liquidated 13,185 contracts of their short positions. As of the latest report, managed money is short natural gas by a ratio of 1.01:1,which is down slightly from the previous week of 1.03:1, but down substantially from the ratio of 2 weeks ago when managed money was long natural gas by a ratio of 1.06:1.

August natural gas advanced 12.3 cents on volume of 240,838 contracts.Total open interest declined by 6,337 contracts, which relative to volume is average.The August contract accounted for loss of 9,611 of open interest. As this report is being compiled on July 9, August natural gas is trading 10.2 cents lower. Natural gas remains on a short and intermediate term sell signal.

Copper:

The COT report showed that managed money added 2,428 contracts to their long positions and liquidated 3,206 contracts of their short positions. Commercial interests liquidated 2,329 contracts of their long positions and also liquidated 1,696 contracts of their short positions. As of the latest report, managed money is short by a ratio of 1.92:1, which is down from the previous week of 2.21:1 and the ratio of 2 weeks ago of 2.08:1.

Palladium:

The COT report showed that managed money liquidated 70 contracts of their long positions and added 464 contracts to their short positions.Commercial interests added 175 contracts to their long positions and also added 1,149 contracts to their short positions. As of the latest report, managed money is long palladium by a ratio of 10.24:1, which is down significantly from the previous week of 13.43:1 and down dramatically from the ratio of 2 weeks ago of 24.19:1.

Platinum:

The COT report showed that managed money added 730 contracts to their long positions and also added 585 contracts to their short positions. Commercial interests added 557 contracts to their long positions and liquidated 574 contracts of their short positions. As of the latest report, managed money is long platinum by a ratio of 2.27:1, which is down slightly from the previous week of 2.31:1 and the ratio of 2 weeks ago of 2.61:1.

 Gold:

The COT report showed that managed money liquidated 4,430 contracts of their long positions and added 4,475 contracts to their short positions. Commercial interests added 9,599 contracts to their long positions and also added 5,523 contracts to their short positions. As of the latest report, managed money is long gold by a ratio of 1.26:1, which is down from the previous week of 1.39:1 and the ratio of 2 weeks ago of 1.55:1.

Silver:

The COT report showed that managed money added 681 contracts to their long positions and liquidated 2,091 contracts of their short positions. Commercial interests added 978 contracts to their long positions and also added 1,520 contracts to their short positions. As of the latest report,managed money is long silver by a ratio of 1.12:1, which is up from the previous week of 1.01:1, and up dramatically from the ratio of 2 weeks ago when managed money was short by a ratio of 1.02:1.

Canadian dollar:

The COT report showed that leveraged funds added 9,184 contracts to their long positions and also added 13,075 contracts to their short positions. As of the latest report, leveraged funds are short the Canadian dollar by a ratio of 1.89:1, which is down from the previous week of 2.13:1 and the ratio of 2 weeks ago of 5.73:1.

Australian dollar:

The COT report showed that leveraged funds liquidated 2,318 contracts of their long positions and added 8,853 contracts to their short positions. As of the latest report, leveraged funds are short the Australian dollar by a ratio of 1.74:1, which is up from the previous week of 1.49:1 and the ratio of 2 weeks ago of 1.43:1.

Swiss franc:

The COT report showed that leveraged funds liquidated 1,651 contracts of their long positions and added 1,212 contracts to their short positions. As of the latest report, leveraged funds are long the Swiss franc by a ratio of 1.60:1, which is down from the previous week of 2.20:1 and the ratio of 2 weeks ago of 1.99:1.

British pound:

The COT report showed that leveraged funds liquidated 1,997 contracts of their long positions and added 14,535 contracts to their short positions. As of the latest report, leveraged funds are short by a ratio of 1.73:1, which is up substantially from the previous week of 1.20:1 and the ratio of 2 weeks ago of 1.26:1.

Euro:

The COT report showed that leveraged funds liquidated a massive 28,396 contracts of their long positions and added 2,136 contracts to their short positions. As of the latest report, leveraged funds are now short by a ratio of 1.12:1, which is a dramatic reversal from the previous week when leveraged funds were long by a ratio of 1.49:1 and the ratio of 2 weeks ago when they were long by a ratio of 1.45:1.

The September euro gained 45 points on volume of 183,087 contracts.Total open interest declined by 1,089 contracts, which relative to volume is approximately 65% below average. The euro remains on a short and intermediate term sell signal. As this report is being compiled on July 9, the September euro is trading 97 points lower and has made a new low for the move at 1.2755.

Japanese yen:

The COT report showed that leveraged funds added 2,375 contracts to their long positions and added 11,856 contracts to their short positions. As of the latest report, leveraged funds are short by a ratio of 2.46:1,which is up slightly from the previous week of 2.37:1 and the ratio of 2 weeks ago of 2.38:1.

Dollar index:

The COT report showed that leveraged funds added 2,322 contracts to their long positions and added 1,543 contracts to their short positions. As of the latest report, leveraged funds are short the dollar index by a ratio of 2.34:1, which is down slightly from the previous week of 2.68:1, but slightly higher than the ratio of 2 weeks ago when leveraged funds were short by a ratio of 2.20:1. Remarkably, leveraged funds have been short during the entire dollar rally and apparently are digging in. This indicates that the dollar index has further to rally because short covering will add fuel for a continued move higher.

S&P 500 E mini: On July 8, the September S&P 500 E mini generated a short-term buy signal, which reverses the short-term sell signal generated on June 21.

The COT report showed that leveraged funds added 40,755 contracts to their long positions and also added 37,829 contracts to their short positions. As of the latest report, leveraged funds are short the E mini by a ratio of 1.48:1, which is down from the previous week of 1.53:1 and the ratio of 2 weeks ago of 1.96:1.

The September S&P 500 E mini gained 8.25 points on light volume of 1,319,375 contracts. Open interest declined by 8,215 contracts, which relative to volume is approximately 65% less than average. It is apparent that most commodity markets have entered a risk on environment,and we expect the E mini to test the May 22 high of 1685. The market remains overbought and should have a setback. If bearish positions have not been liquidated, this will be an opportunity to do so. Volume on July 8 was tepid, and if preholiday trading on July 3 is not counted, volume on July 8 was the lowest since before May 13 when 1,340,691 contracts were traded. As this report is being compiled on July 9,with approximately 90 min. left ago in the session, volume has just risen slightly above 1 million contracts. Additionally, there is considerable resistance at the 1649-1652 level going back to May 31.