On March 8, the USDA will release its world supply and demand estimates.

Soybeans:

May soybeans lost 8.75 cents on light volume of 152,449 contracts. Volume was the lowest since January 24 when 151,141 contracts were traded and May soybeans closed at $14.23 3/4. On March 1, open interest declined 3,517 contracts, which in relation to volume is  average. As this report is being compiled on March 4, May soybeans are trading 6.50 cents higher, and the low of $14.34 1/4 is slightly above the low made on March 1 of 14.33 and the low of 14.34 made on February 28. Although soybeans remain on a short, but intermediate term buy signal, the market looks firm and should move higher, barring a severe decline in the equities market. However, soybeans need to prove they can generate an intermediate term buy signal,, before we can recommend long positions.

Soybean meal:

May soybean meal lost $6.30 on light volume of 63,406 contracts. Volume was the lowest since February 4 when 63,578 contracts were traded and May soybean meal closed at 431.40. On March 1, open interest increased by 88 contracts, and the March contract accounted for loss of 2,268 of open interest. Previously, we have recommended that stops be placed at $424.30, which means on March 4, longs in May futures have been stopped out. Stay with long call options. Soybean meal remains on a short and intermediate term buy signal. If the March 4 low holds, this would provide additional support to the market. We continue to think that soybean meal will move higher. The only potential problem is a severe decline in equities, which we think is a distinct possibility.

Soybean oil:

May soybean oil gained 55 points on light volume of 89,135 contracts. Volume was the lowest since February 15 when 88,518 contracts were traded and May soybean oil closed at 52.01. On March 1, open interest declined by 571 contracts, which in relation to volume is approximately 65% less than average. As this report is being compiled, soybean oil is trading 25 points higher and has made a new high for the move at 50.33. Soybean oil remains on a short and intermediate term sell signal, but clients should wait for a rally to the 51.00-51.50 area to implement bearish positions.

Corn:

May corn gained 5 cents on light volume of 205,258 contracts. Volume was the lowest since February 4 when 185,054 contracts were traded and May corn closed at $7.36 1/4. On March 1, open interest declined 7,851 contracts, which in relation to volume is approximately 45% above average, which is negative open interest action relative to the price advance. As this report is being compiled, May corn is trading 8.25 cents lower. The low for the move in corn occurred on February 25 when it reached $6.80 3/4. With the net short position of managed money at the highest level since mid-2012, we continue to discourage new short positions in corn. As this report is being compiled, corn is trading nearly at par with wheat which is a rare occurrence and hasn’t occurred in several months. Additionally, the spread between March and May corn is trading at nearly 20 cents premium to March. Corn remains on a short and intermediate term sell signal.

Wheat:

May wheat gained 6 cents on volume of 99,172 contracts. Volume was the lowest since February 4 when 74,348 contracts were traded and May wheat closed at $7.70 3/4. On March 1, open interest increased by 2,499 contracts, which in relation to volume is average. As this report is being compiled, May wheat is trading 18.25 cents lower and has made a new low for the move of $6.97 1/2, which is slightly below 6.97 3/4, the low made on February 26. Like corn, we recommend that clients refrain from entering new short positions in wheat. This is not to say wheat cannot make new lows, it can. However, we suspect  the upcoming USDA report will show a massive increase in the use of feed wheat. Additionally, the 150 week moving average for wheat on the continuation chart is $7.12 3/4, and the 200 week moving average is 6.64. In short, wheat is trading at the lower end of its trading range of the last couple of years.

Crude oil: On March 1, April crude oil generated an intermediate term sell signal.

April crude oil lost $1.37 on surprisingly light volume of 524,395 contracts. Open interest increased by 12,413 contracts, which in relation to volume is average. The most notable feature since crude oil topped out on January 30, has been the build in open interest on rallies and declines. Also, it is notable that volume on the decline has been below the average daily volume year to date. In the March 3 Weekend Wrap, we included pertinent parts of our reports from February 10 and February 17, in which we documented the the reasons for crude moving lower. The long to short ratio, which we calculated from the most recent COT report showed there are still hefty numbers of managed money longs in crude oil. Since generating a short-term sell signal on February 22, the market has traded steadily lower. As this report is being compiled, April crude is trading 85 cents lower and has made a new low for the move at $89.33.

Natural gas: On March 1, April natural gas generated a short-term buy signal.

April natural gas lost 3 cents on volume of 270,412 contracts. Open interest increased by 1,300 contracts, which in relation to volume is approximately 75% less than average. In the March 3 report, we commented that natural gas was looking to move higher, and as this report is being compiled, it has made a new high for the move at $3.54. Natural gas remains on an intermediate term sell signal, and clients wanting to get long should use setbacks as buying opportunities. A more conservative way of trading the natural gas market is to write out of the money puts. During past 3 days, each high has been higher, but the market  made a low of $3.408 on Monday, which was the lowest price since $3.395 made on February 28. Managed money is significantly short natural gas, which should provide fuel for an upside move.

Copper:

May copper lost 4.65 cents on volume of 80,970 contracts. Volume was the highest since February 26 when 112,361 contracts were traded and copper advanced 2.20 cents while open interest declined 5,552 contracts. On March 1, open interest declined 2,907, which in relation to volume is approximately 40% above average. Copper made a new low for the move at $3.4725, which is the lowest price since 3.4615 made on November 16, 2012. Do not short the market at current levels.

Gold:

April gold lost $5.80 on volume of 214,387 contracts. Open interest increased by 2,048 contracts, which in relation to volume is approximately 50% less than average. Stand aside.

Platinum:

April platinum lost $10.00 on volume of 16,374 contracts. Open interest declined 320 contracts, which in relation to volume is approximately 25% less than average. Stand aside.

Silver:

May silver gained 5.8 cents on volume of 61,782 contracts. Open interest increased by 1,032 contracts, which in relation to volume is approximately 35% less than average. Stand aside.

Euro:

The March euro climbed 45 points on volume of 328,979 contracts. Open interest declined 2,068 contracts, which in relation to volume is approximately 60% below average. The euro is on a short-term sell signal but remains on a intermediate term buy signal. Stand aside and wait for a rally to the 1.32 area before implementing short positions.

S&P 500 E mini:

The S&P 500 E mini gained 3.25 points on volume of 2,608,167 contracts. Open interest increased by 3,143 contracts which is minuscule and dramatically below average. We recommend the writings of out of the money calls in the E mini as the more conservative way of planning for a correction.