Soybeans:

May soybeans lost 21.75 cents on volume of 196,754 contracts. Volume increased approximately 61,000 contracts from March 2 when soybeans lost 10.75 while open interest increased 3,123 contracts. On March 13, open interest declined 4,277, which in relation to volume is approximately 15% below average. Export sales reported by the USDA showed that 657.7 thousand tons were sold in the recent reporting period. This is dramatically above USDA projections for the current crop year and average weekly exports year to date. Commitments total 1.304 billion against the USDA projected commitments of 1.345.

Clients who acquired long positions in futures and options when short and intermediate term buy signals were generated, should be out of the market as of March 13. We recommended that sell stops be placed at the $14.50 level. As this report is being compiled, May soybeans have made a new low for the move at $14.29.  It appears that Chinese demand is waning for US exports and the window for increasing soybean exports is closing due to shipments from Brazil which should be increasing substantially in the coming months. Soybeans remain on a short and intermediate term buy signal. Stand aside.

Soybean meal:

May soybean meal lost $7.30 on volume of 77,168 contracts. Volume increased by approximately 33,000 contracts from March 12 when soybean meal lost $1.80 and open interest increased by 2,917 contracts. On March 13, open interest declined 2,268 contracts, which in relation to volume is approximately 15% above average. We previously recommended that stops be placed at the $428.00 level, and therefore all long positions in futures and options should have been liquidated on March 13. The USDA announced that 51.6 thousand tons were sold, which is dramatically below the 200,000 tons average per week from the beginning of the crop year, but dramatically above the USDA export projection. As of the latest report, 7,522 thousand tons have been committed versus USDA projections of 8,074 thousand tons. Soybean meal remains on a short and intermediate term buy signal. Stand aside.

Soybean oil:

May soybean oil lost 46 points on volume of 85,903 contracts. Volume increased approximately 26,000 contracts from March 12 when soybean oil lost 46 points and open interest increased 1,012 contracts. On March 13, open interest increased by 4,017 contracts, which in relation to volume is approximately 75% above average, meaning new shorts were entering the market and driving prices lower. Export sales were disappointing at 6,000 tons, which is below the average sale year to date and significantly below USDA export projections. 795,000 tons have been committed versus the projected commitments for the crop year at 1,043 thousand tons. Soybean oil remains on a short and intermediate term sell signal. Although it is likely soybean oil is headed lower, we think that new short positions should be avoided at this juncture.

Corn:

May corn lost 4 cents on volume of 258,883 contracts. Volume was the highest since March 6 when 331,327 contracts were traded and May corn lost 20.50 cents, while open interest increased 7,351 contracts. On March 13, open interest increased by 5,122 contracts, which in relation to volume is approximately 25% below average. The USDA reported that export sales of corn totaled 282 thousand tons, which was above the weekly export projections and the average sale year to date. Although corn dipped to $7.00 1/2, the market pulled back from the lows and closed only slightly lower. As this report is being compiled, corn has rallied 4.50 cents and has made a high for the day at $7.17, which is just shy of the highs made on March 13 and March 12 of $7.17 3/4. Corn remains on a short and intermediate term sell signal, but is trading firmly, despite sharply lower prices for the soybean complex. This may be due in part to the sharply lower dollar index.

Wheat:

May wheat gained 6.50 cents on volume of 127,386 contracts. Volume increased dramatically by approximately 47,000 contracts from March 12 when wheat advanced 3.50 cents and open interest increased by 2,168 contracts. On March 13, open interest declined 4,889 contracts, which in relation to volume is approximately 50% above average, meaning that liquidation was fairly heavy on the advance. Keep in mind that managed money is heavily short wheat, and the move higher likely spooked some nervous shorts. The USDA announced that wheat exports totaled 888.5 thousand tons, which is the second highest export total for the season and is the largest in 10 weeks. This week, sales were dramatically above the average sale to date and above the USDA export projections for the crop year. Wheat has been priced competitively on the world market, and the use of feed wheat is likely to be much higher than the projected number from the latest USDA supply demand report. Wheat remains on a short and intermediate term sell signal. Stand aside.

Crude oil:

April crude oil lost 2 cents on heavy volume of 723,353 contracts. Open interest declined 9,519 contracts, which in relation to volume is approximately 45% below average. Crude made a high at $93.40 which was 7 cents below the high made on March 12. For the past 2 days open interest has declined 15,020 contracts while crude oil has advanced 46 cents. This is bearish open interest action relative to the price advance. However, since making its bottom of $89.33 on March 4 through March 13, open interest has increased  38,406 contracts, while crude oil prices have advanced $1.84. This is bullish congruent open interest and price action.

Although crude oil is on a short and intermediate term sell signal, and previously we have suggested the implementation of short positions, or long puts at the 93.00-93.50 area, we think it is wise to set aside the idea of shorting crude oil at this juncture. As this report is being compiled, on March 14, crude oil is trading 22 cents higher and has made a high of $93.02. The dollar is having a healthy setback, which should boost the price of crude oil. Another factor to consider is that based upon the most recent COT report, which was tabulated as of March 5, managed money is long by a ratio of 3.50:1. This is one of the lowest ratios in a couple of months, which means there are a significant number of managed money shorts who will be forced to cover positions as prices move higher. If April crude oil closes at $93.19 or better, we would continue to recommend that clients stand aside.

Natural gas:

April natural gas gained 3.5 cents on fairly light volume of 299,879 contracts. Volume declined approximately 86,000 contracts from March 12 when natural gas closed unchanged and open interest increased by 9,008 contracts. On March 13, open interest increased 5,606 contracts, which in relation to volume is approximately 25% less than average. The Energy Information Administration announced a draw of 145 bcf from natural gas stocks, which was more than double the 66 bcf draw of 1 year ago. As of the latest report, stocks are approximately 18% below year ago levels, but 12% above the five-year average. As this report is being compiled, natural gas has advanced 13.3 cents and has made a new high for the move at $3.83. On March 1, April natural gas generated a short-term buy signal, and generated an intermediate term buy signal on March 8.

From the March 1 report on natural gas written March 4:

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 2.95 cents on volume of 54,255 contracts. Volume declined approximately 18,000 contracts from March 12 when May copper advanced 3.75 cents and open interest declined 638 contracts. On March 13, open interest increased by a massive 5,074 contracts, which in relation to volume is approximately 250% above average, meaning that new shorts were heavily entering the market and driving prices lower. Copper remains on a short and intermediate term sell signal, and although we think prices are likely to go lower, we prefer to wait for a rally.

Gold:

April gold lost $3.30 on volume of 165,085 contracts. Open interest increased 8,832 contracts, which in relation to volume is approximately 110% above average, meaning that new shorts were entering the market and driving prices lower. The market made a new high for the move at $1598.80, and on the 10 minute chart that reflected that price spike, 9,644 contracts were traded or nearly 6% of total volume for the entire session. Large spikes in volume accompanied by new highs for the move often signal a top or temporary top. With the dollar trading lower, gold is not responding positively, and is essentially unchanged for the day. There is no reason to be involved on the long or short side of gold at this juncture.

Platinum:

April platinum lost $1.90 on volume of 9990 contracts. Open interest declined by a massive 715 contracts, which in relation to volume is approximately 180% above average. The platinum market is seen a tremendous amount of liquidation, and remains on a short and intermediate term sell signal. Stand aside.

Silver:

May silver lost 21.3 cents on volume of 38,635 contracts. Open interest increased by a massive 1,662 contracts, which in relation to volume is approximately 65% above average, meaning that new shorts were entering the market and driving prices lower. Stand aside.

Euro:

The March euro lost 67 points on heavy volume of 409,310 contracts. Volume was approximately 2,500 contracts above the volume traded on March 7 when the euro gained 1.12 and open interest declined 6,030 contracts. On March 13, open interest increased by a massive 17,166 contracts, which in relation to volume is approximately 55% above average. The euro made a new low at 1.2924, which is the lowest price for the euro since early December. On March 14, the euro made a fractionally lower low at 1.2911. As we have pointed out before, often a large increase in volume accompanied by a large increase/decrease of open interest can signal a bottom or temporary bottom. As this report is being compiled, the euro is trading 39 points higher and has rebounded to 1.3033. The euro generated a short-term sell signal on February 26 and an intermediate term sell signal on March 4. Stand aside.

S&P 500 E mini:

The S&P 500 E mini gained 3.25 points on lighter than recent volume of 2,160,933 contracts. Volume was the lowest since March 4 when 2,088,299 contracts were traded and the E mini advanced 9.25 while open interest increased 49,476 contracts. On March 13, open interest increased by 5,360 contracts which is minuscule and dramatically below average. The market internals of the NYSE continue to be abysmal with 618 stocks making new highs minus new lows. This is a 25 stock increase from March 12. Also, the number of stocks trading over their 50 day moving average fell to 1653 from 1673 on March 12. In short the pattern of ever-increasing prices for the E mini while market internals deteriorate continues. We recommend writing calls that are significantly out of the money, or if clients prefer, a more conservative approach would be writing calls significantly out of the money and buying a call that is further out of the money.