The USDA will release its supply and demand report on July 11.
August soybeans gained 12.75 cents on volume of 187,655 contracts. Total open interest declined by 2,311 contracts, which relative to volume is approximately 45% less than average. The July contract accounted for loss of 2,157 of open interest. During the past 2 days beginning on July 8, August soybeans have advanced 36.25 cents while open interest has declined 4,614 contracts. In short, participants do not believe in the rally and the decline of open interest indicates that both longs and shorts are liquidating as prices move higher. In our view, this increases the likelihood that prices will likely continue to advance on low volume. As this report is being compiled on July 10, August soybeans are trading 5.25 cents higher, but have not taken out the high of $14.79 1/2 made on July 9.
August soybean meal gained $6.80 on fairly heavy volume of 92,858 contracts. Total open interest increased by 640 contracts, which relative to volume is approximately 65% less than average, but in contrast to soybeans, open interest in soybean meal increased. The July contract accounted for loss of 2,541 of open interest, which makes the total open increase more impressive. On July 10, soybeans were unable to take out the July 9 high, but soybean meal has made a new high for the move on July 10 at $455.00, which is a fractionally above $454.60, the high on July 9. We prefer the long side of soybean meal over soybeans.
September corn gained 18.50 cents on fairly heavy volume of 276,726 contracts. Volume was the highest since July 1 when 300,277 contracts were traded and corn declined 15.75 cents while open interest increased by 7,114 contracts. On July 9, open interest increased by 5,766 contracts, which relative to volume is approximately 20% less than average, but it is the most significant increase of open interest on an advance in many weeks. Managed money is significantly short corn although they are not net short. Corn remains on a short and intermediate term sell signal.
September Chicago wheat gained 14.50 cents on fairly heavy volume of 110,877 contracts. Volume was the highest since July 2 when 119,307 contracts were traded and wheat advanced 3.25 cents while open interest increased 19,925 contracts. On July 9, open interest declined by 7,559 contracts, which relative to volume is approximately 160% above average, meaning that liquidation was very heavy on the advance. The July contract accounted for loss of 6 lots. Managed money is significantly net short Chicago wheat. Wheat remains on a short and intermediate term sell signal.
December cotton gained 65 points on light volume of 13,981 contracts. Total open interest increased by a massive 1,953 contracts, which relative to volume is approximately 340% above average, meaning that new longs were entering the market at extraordinarily high levels, and pushing prices higher. This is very bullish open interest action relative to the price advance. From July 1 through July 9, total open interest increased by 3315 contracts while December cotton advanced 1.97 cents. This is bullish open interest action relative to the price advance. It appears that cotton may generate a short-term buy signal on July 11, which would reverse the short-term sell signal generated on June 24. Cotton remains on an intermediate term buy signal.
October live cattle gained 52 points on heavy volume of 67,620 contracts. Volume was the highest since May 15 when 75,983 contracts were traded. October cattle made a new high for the move at 1.26975, which is its highest price since May 3. On July 9, total open interest increased by 2,608 contracts, which relative to volume is approximately 50% above average meaning that new longs were aggressively entering the market and pushing prices higher. Open interest in the August contract declined by 5,954 contracts, which makes the total open interest increase much more impressive. The market action on July 9 (price, volume and open interest) was the most positive day since cattle generated a short-term buy signal on June 27.
August crude oil gained 39 cents on heavy volume of 794,959 contracts. Volume was the highest since July 3 when 1,078,939 contracts were traded and crude oil advanced $1.74 while open interest declined 5,135 contracts. On July 9, open interest increased by 24,595 contracts, which relative to volume is approximately 20% above average. The August contract lost 15,197 lots of open interest, which makes the total open interest increase much more impressive. During the past 3 days beginning on July 5, open interest has increased 53,534 contracts while WTI has advanced $2.29.
The Energy Information Administration released their weekly statistics and it showed there was a 9.9 million barrel draw in the most recent reporting week. As it stands, total stocks are 373.9 million barrels, which is down from 378.2 million barrels at the same time last year and is the lowest in 5 months. According to Dow Jones “The drop of 20.2 U.S. oil inventories have tumbled over the past two weeks, sending Nymex crude to fresh 14-month highs. One big reason: railroad shipments
of crude have soared, allowing surging domestic production to get from storage tanks to refineries that need it. U.S. Energy Department, citing American Association of Railroads data, says that rail shipments of oil and fuel
products in the first six months of 2013 were up 48% from 2012, which translates to about 1.4-million-barrels a day of crude moving by rail around the U.S.
“In the week ended July 5, the EIA said, crude stocks fell 9.9 million barrels to 373.9 million barrels, the lowest in five months. Crude stocks are 4.3 million barrels, or 1.1%, below the year-earlier level, the first deficit since March 23, 2012.”
“U.S. refiners lifted crude oil processing to 16.118 million barrels a day last week, the highest level since July 27, 2007 and 344,000 barrels a day above a year earlier. In the past two weeks, crude runs have averaged 16.1 million barrels a day, the highest level over two consecutive weeks since early July 2005.”