Soybeans:

August soybeans lost 1.50 cents on 192,785 contracts. Total open interest declined by 10,385 contracts, which relative to volume is approximately 100% above average, meaning that liquidation was heavy. The July contract accounted for loss of 4,799 of open interest. The USDA released its acreage and grain stocks report and it showed that 77.728 million acres were planted, which was up 1% from 2012 and increased from USDA’s March expectations of 77.126 million acres. Stocks in all positions totaled 435 million bushels, down 35% from June 2012. Supplies of soybeans are going to be tight for the next 2 months, and this should support advancing prices. Soybeans remain on a short and intermediate term buy signal.

Soybean meal:

August soybean meal lost 30 cents on volume of 106,923 contracts. Open interest declined by 5,501 contracts, which relative to volume is approximately 100% above average, meaning that liquidation was heavy. The July contract accounted for loss of 4,594 of open interest. August soybean meal made a new high for the entire move at $442.30, which is the highest price for August soybean meal for 2013. We expect that meal prices will continue to move higher for the next month or so. Soybean meal remains on a short and intermediate term buy signal.

Corn: On June 28, September corn generated a short-term sell signal and remains on an intermediate term sell signal.

September corn lost 25 cents on very heavy volume of 443,821 contracts. Volume was the highest since June 19 when 445,480 contracts were traded and corn advanced 9 cents while open interest increased only 46 contracts. On June 28, total open interest declined by 14,412 contracts, which relative to volume is approximately 20% above average. The July contract accounted for loss of 13,110 of open interest. The USDA reported that the number of acres planted was 97.379 million acres, which was up slightly from 2012 and an increase from USDA’s March projection of 97.282 million acres. Grain stocks totaled 2.764 billion bushels, which was down 12% from June 2012. Corn made a new low for the move at $5.40 1/2, which was the lowest price since May 21 when it reached 5.38 1/2.  Although there is support at this level going back over one year, as this report is being compiled on July 1, September corn is trading 13.00 cents lower, and has decisively broken support. The market is oversold, but with managed money still net long corn, there is a considerable amount of room for further liquidation.

Wheat:

September wheat lost 16 cents on heavy volume of 120,209 contracts. Surprisingly, total open interest increased only 105 contracts, which is minuscule and dramatically below average. The July contract accounted for loss of 1,854 of open interest. September wheat made a new low at $6.56, and on the continuation chart wheat is trading at one year lows. As this report is being compiled on July 1, September wheat has made another new low at $6.52 3/4. The USDA reported that all wheat acres planted was 56.530 million acres, up 1% from 2012 and this was increased from USDA’s previous projection of 56.440 million acres. Additionally, stocks totaled 718 million bushels, down 3% from June 2012. Wheat remains on a short and intermediate term sell signal.

Cotton:

December cotton gained 13 points on very light volume of 12,441 contracts. Volume was the lowest since June 26 when 10,933 contracts were traded. Total open interest declined by 332 contracts, which relative to volume is average. The USDA reported that cotton acres planted were 10.3 million, which is up from the previous report of 10.03 million acres. The estimate by the USDA is down 17% from 2012. On June 24, December cotton generated a short-term sell signal, and we would wait for a bounce before initiating bearish positions. The 83.00 level has been providing support going back to June 4, and as this report is being compiled on July 1 December cotton is trading 1.25 cents higher. Since generating the short-term sell signal on June 24, cotton has not rallied much. The open interest stats on July 1 may tell us whether the rally has further to go.

Live cattle:

August live cattle lost 0.90 cents on heavier than normal volume of 53,668 contracts. Total open interest declined by 2,091 contracts, which relative to volume is approximately 50% above average meaning that liquidation was fairly heavy. On June 27, August cattle generated a short-term buy signal, but remains on an intermediate term sell signal. Thus far, cattle has only had one setback and this occurred on June 28. We would wait for a further setback, especially because we think other markets are vulnerable to further downside.

Crude oil:

August WTI crude oil lost 49 cents on volume of 565,994 contracts. Surprisingly, total open interest declined only 69 contracts, which is minuscule and dramatically below average. The August contract lost 9,799 of open interest, but there was sufficient new entrants into the marketplace to bring down total open interest. As this report is being compiled on July 1, August crude oil is trading $1.58 higher and has made a new high for the move at $98.28, which is 6 cents above the high of 98.22 made on June 20. We think much of the advance on July 1 is due to the rapid disintegration of political stability in Egypt, and the continuing conflict in Syria, which is spreading to Lebanon and other parts of the Middle East including Jordan. As our readers know, we are less than enthusiastic about crude oil from a fundamental point of view, however with geopolitical tensions rising, anything is possible. Crude oil remains on a short and intermediate term buy signal, however we would avoid the being involved in the market at this juncture.

Brent crude oil:

August Brent crude oil lost 66 cents on volume of 582,508 contracts. Volume was the highest since June 24 when 619,264 contracts were traded. On June 28, total open interest increased by 12,016 contracts, which relative to volume is approximately 20% below average. As this report is being compiled on July 1, Brent is trading 85 cents higher, which is slightly less than half of the advance in the WTI. From June 24 through June 28, open interest has increased by 35,932 contracts and during this time Brent advanced $1.25. This is bullish open interest action relative to the price advance. On June 24, August Brent generated a short-term sell signal and has been on an intermediate term sell signal. June 27 was the third day that Brent pulled back (rallied) from the point it generated a short-term sell signal. Usually, this is a point at which bearish positions can be initiated. As we indicated in past reports, there are no reasonable exit points for a bearish strategy in the event that Brent continues to rally. Previously, we suggested that a more conservative strategy would be to write out of the money calls. However, we are conflicted by the positive open interest action relative to the price advance and the real possibility of a blowup in the Middle East.

Heating oil:

August heating oil lost 2.92 cents on volume of 123,379 contracts. Total open interest declined 423 contracts, which relative to volume is approximately 80% below average. The August contract lost 4,695 of open interest. Heating oil remains on a short-term buy signal, but an intermediate term sell signal.

Gasoline:

August gasoline lost 1.25 cents on light volume of 108,974 contracts. Total open interest declined by 1,430 contracts, which relative to volume is approximately 45% less than average. The August contract accounted for loss of 5,418 of open interest. On June 24, August gasoline generated a short-term sell signal and has been on an intermediate term sell signal. As this report is being compiled on July 1, August gasoline is trading 2.16 cents higher.

Natural gas:

August natural gas lost 1.7 cents on volume of 272,742 contracts. Total open interest declined by a massive 11,968 contracts, which relative to volume is approximately 70% above average meaning that liquidation was extremely heavy on the decline. The August 2013 through February 2014 contracts all lost open interest. Natural gas made a new low for the move at $3.526, which is the lowest for the August contract since February 22 when it reached $3.484. The market should find some support at $3.40 and 3.36. On May 31 and June 24, natural gas generated a short and intermediate term sell signal respectively.

Euro:

The September euro lost 29 points on volume of 266,847 contracts. Open interest increased by 719 contracts, which is minuscule and dramatically below average. The euro remains on a short and intermediate term buy signal.

Dollar index:

 The September dollar index gained 22 points on volume of 35,949 contracts. Volume was the highest since June 24 when 43,303 contracts were traded. Total open interest increased by 1,537 on June 28, which relative to volume is approximately 65% above average meaning that new participants were entering the market aggressively and pushing prices higher. This is a distinct contrast to the trading of the past several days when open interest barely changed as the dollar index move sharply higher.

Beginning on June 19, the September dollar index has rallied nonstop and made a new high on June 28 of 83.595, which is its highest price since June 3 when it reached 89.670. This represents an advance of 2.403 points, or 2.91% The fascinating aspect of the rally is that open interest barely changed. For example on June 18 (one day before the rally) open interest stood at 51,036 contracts and on June 27 open interest totaled 51,858, or total increase of 822 contracts.

The fact that open interest increased heavily on June 28 may signify that the dollar index is due for a short-term pullback before generating a short-term buy signal. On June 26, the cash dollar index generated an intermediate term buy signal, therefore it appears only a matter of time before the short-term buy signal is generated. This has bearish implications for the euro because the euro comprises approximately 57% of the weight of the dollar index.

S&P 500 E mini:

The September S&P 500 E mini lost 7.25 points on volume of 2,147,867 contracts. Total open interest increased by 2,887 contracts, which relative to volume is minuscule and dramatically below average. As this report is being compiled on July 1, the E mini is trading 13.00 points higher and has made a high of 1620.50. If speculators were stopped out per the advice of the June 27 report, we would recommend  they re-enter short futures positions and use the high of July 1 as an exit point. Long puts can be initiated at current levels

From the June 27 report:

During the rally of the past 3 trading sessions beginning on June 25, open interest has declined by 73,257 contracts while the E mini has advanced 40.25 points. This is decidedly bearish open interest action relative to the price advance. In our view, it confirms the E mini is headed lower and that speculators should be initiating bearish positions, if they have not done so already. It is possible we may see a final thrust to the 1621.00 area, but we think this is it on the upside. Speculators can use the high of June 27 (1614.25) and 1614.50, the high on June 28 as exit points for short futures positions.