Soybeans:

May soybeans gained 13 cents on light volume of 131,325 contracts. Volume was the lightest since March 11 when 124,703 contracts were traded and May soybeans advanced 8.50 cents and open interest increased 3,617 contracts. It is important to note that volume increases when soybeans close lower. For example, on March 19, May soybeans closed 2.75 cents lower and volume was 175,336 contracts. On March 18 May soybeans declined 16.50 cents and volume was 200,300 contracts. On March 15, volume was 162,179 while May soybeans declined 9.50 cents.  

On March 20, open interest declined 1,192 contracts, which in relation to volume is approximately 55% below average. The May contract accounted for loss of 2,397 of open interest. The USDA reported that soybean sales totaled 107.82 thousand tons, which is slightly above the USDA export projections for the season, but dramatically below the average sale per week. In yesterday’s report, we targeted the implementation of bearish positions at the $14.25-14.30 level. As this report is being compiled, May soybeans are trading 26.75 cents higher and have made a high of $14.49. The logistics problems in Brazil continues to provide potential support for soybeans. Conceivably, soybeans could rally to 14.53 1/8. However, we don’t think the market has the energy to trade much higher. If bearish positions have not been implemented, we advise waiting until the exchange data is published in the March 22 report. Use the 14.53 area as an exit point for any bearish positions.

Soybean meal:

May soybean meal gained $2.20 on volume of 52,169 contracts. Open interest declined 3,696 contracts, which in relation to volume is approximately 170% above average. The May contract accounted for loss of 3,103 of open interest. The USDA reported that sales totaled 143.45 thousand tons, which is dramatically above the USDA projection for the crop year, but sharply below the average sale per week. However, it is a very healthy number. From March 12 through March 20, open interest has declined 10,527 contracts while May soybean meal has declined $24.20. This is bullish open interest action relative to the price decline. Despite this, soybean meal should be approached from the short side due to it being on a short and intermediate term sell signal. However, clients should wait until the exchange stats are published in tomorrow’s report before implementing new bearish positions. However, as this report is being compiled, May soybean meal is trading $6.50 higher and has made a high of 423.40. We think there is little enthusiasm for the long side of the soybean complex by managed money.

Soybean oil:

May soybean oil gained 36 points on volume of 76,304 contracts. Total open interest increased by 2,126 contracts, which in relation to volume is slightly above average. The May contract accounted for loss of 3,717 of open interest, which makes the total open interest increase that much more impressive. The USDA reported that sales totaled 19.61 tousand tons, which was above the USDA projections for the current crop year, but below the average sale per week. It is interesting that the best performer from a price and open interest standpoint was soybean oil. As this report is being compiled, May soybean oil is trading 51 points higher. Of the three components in the soybean complex, soybean oil may be the big surprise to the upside due to the heavy net short position of managed money. Soybean oil remains on a short and intermediate term sell signal. Soybean oil should be traded from the short side, but we think it is premature to consider bearish positions.

Corn:

May corn advanced 4 cents on fairly heavy volume of 246,039 contracts. Volume increased from March 19 when 238,980 contracts were traded and open interest increased by 22,811 while May corn advanced 8.50 cents. Open interest had another massive increase with 13,514 contracts added to the total of the past several days, which in relation to volume is approximately 115% above average, meaning that new longs were entering the market and pushing corn prices higher. Corn made a new high for the move at 7.33, which is the highest price for May corn since February 5 when it reached $7.36 1/2. During the past 5 days beginning on March 14 May corn has advanced 22.50 cents while open interest has increased a total of 74,809 contracts. The massive increase in open interest confirms the uptrend and the buy signals that were generated on March 18 and March 19. The USDA reported that corn sales were 92.2 thousand tons, which is below the USDA projection for the crop year and below the average sale per week. The market is overbought relative to its 50 day moving average of 7.16 on the corn continuation chart. Clients who implemented long positions when corn generated a short-term buy signal should maintain these positions.

Wheat:

May wheat gained 14 cents on volume of 87,014 contracts. Total open interest increased by 1,341 contracts, which in relation to volume is approximately 40% less than average. What makes the total open interest increase more impressive is the May contract lost 1,870 of open interest. On March 20, open interest and price increased for the first time since March 12, when May wheat advanced 3.50 cents and open interest increased by 2,168 contracts on volume of 80,341. On March 14, wheat advanced 14.75 cents on volume of 116,608 contracts while open interest declined 7,772 contracts. On March 13, May wheat advanced 6.50 cents on volume of 127,386 contracts while open interest declined 4,889. Wheat appears to be in a transition stage from being massively bearish to neutral-constructive. The USDA reported that 484.5 thousand tons were sold, which is above the USDA projection for the crop year, but slightly below the average sale per week. We recommend that clients liquidate any short positions they may have and refrain from implementing new short positions. Wheat is on a short and intermediate term sell signal.

Crude oil:

May crude oil gained 98 cents on volume of 450,878 contracts. Volume declined dramatically from March 19 when 680,198 contracts were traded and open interest declined 30,003 contracts while May crude oil declined $1.59.  On March 20, total open interest declined 9,389 contracts, which in relation to volume is approximately 25% below average. The April contract accounted for loss of 14,492 of open interest. It is telling that the May contract lost 615 of open interest, and the reason this is important is the May contract accounted for 220,353 of open interest, which represents 13 1/2% of the total open interest in the crude oil contract. In short, the advance in crude oil prices was not accompanied by a very enthusiastic number of new participants in the market. Additionally, volume was the lowest since March 14 when 442,295 contracts were traded and crude oil advanced 51 cents, while total open interest declined 4,894 contracts. As we said in the report of March 19, the top in crude oil is likely to be at the 50 day moving average at 94.47. Crude oil should only be traded from the short side, and it remains on a short and intermediate term sell signal.

Natural gas:

May natural gas lost 1 cent on volume of 403,995 contracts. Open interest increased by 8,221 contracts, which in relation to volume is approximately 25% below average. For the past 3 trading sessions beginning on March 18, open interest has increased 31,442 contracts while natural gas has advanced 7.1 cents. As we have said before, we think it is wise to take some money off the table due to the rapid increase of open interest, meaning that large numbers of new longs are in the market at the high-end of the trading range.

Copper:

May copper advanced 4.10  cents on volume of 53,297 contracts. Open interest advanced 746 contracts, which in relation to volume is approximately 45% less than average. Copper remains on a short and intermediate term sell signal. We advise waiting for a rally to the $3.56 level before contemplating bearish positions.

Gold:

April gold lost $3.80 on volume of 166,498 contracts. Open interest declined 5,662 contracts, which in relation to volume is approximately 40% above average. The liquidation in gold continues whether it advances or declines.During the past 5 trading sessions beginning on March 14, gold has advanced $19.10 while open interest has declined 19,433 contracts. This is bearish open interest action relative to the price advance. We are recommending a stand aside position due to the possibility of an expanding banking crisis in the peripheral countries of the euro zone.

Platinum:

April platinum advanced $27.10 on heavy volume of 24,895 contracts. Open interest declined 1,096 contracts, which in relation to volume is approximately 75% above average. Liquidation was very heavy on the biggest advance in platinum since February 6 when April platinum advanced $29.30 on volume of 20,474 contracts and open interest increased by 1,717 contracts. On February 6, platinum made its high for the move at 1744.50. The dramatic decline of open interest on the biggest advance in over a month and a half is testament to the bearish technical condition of the market. Despite this, we think the low made on March 19, should hold, at least temporarily. Much of this will depend upon whether the equity indices are able to continue to trade in a buoyant manner.

Silver:

May silver lost 2.6 cents on light volume of 28,862 contracts. Open interest increased 72 contracts. Silver remains on a short and intermediate term sell signal. Stand aside.

Australian dollar:

The June Australian dollar gained 19 points on volume of 78,647 contracts. Open interest declined by 37,979 contracts, which is due to the expiration of the March contract. On March 15, the June Australian dollar generated a short-term buy signal, and it is a certainty it will generate in intermediate term buy signal on March 21. Previously, we have advised that clients write out of the money puts on the Australian dollar, and this trade has been working well. As this report is being compiled, the June Australian dollar is trading 65 points higher and has made a new high for the move at 1.0392.

Euro:

The June euro gained 70 points on volume of 319,932 contracts. Open interest declined 48,458 contracts due to the expiration of the March contract. The euro remains on a short and intermediate term sell signal, and we suggest that clients wait for a rally to the 1.31 area before contemplating bearish positions.

S&P 500 E mini:

The S&P 500 E mini gained 6.75 points on volume of 1,804,283 contracts. Open interest increased by a hefty 48,813 contracts, which in relation to volume is average, but a healthy number nonetheless. Stocks trading above their 50 day moving average on the NYSE advanced to 1639 on March 20 from 1550 on March 19. New highs minus new lows on the NYSE advanced to 613 on March 20 from 322 on March 19. We continue to advocate writing calls that are significantly out of the money on the S&P 500 E mini.