Soybeans:

July soybeans lost 9.75 cents on volume of 164,210 contracts. Open interest increased by 7216 contracts, which relative to volume is approximately 75% above average, meaning that new shorts were entering the market aggressively and driving prices lower. The May contract accounted for loss of 1,032 of open interest. As this report is being compiled on May 13, July soybeans have advanced 13.25 cents. Soybeans remain on a short-term buy signal but an intermediate term sell signal. The short-term buy signal was generated on May 9.

Soybean meal:

July soybean meal lost $6.40 on volume of 81,098 contracts. Open interest declined by 2,802 contracts, which relative to volume is approximately 40% above average, meaning that liquidation was considerably above normal. However, the decline of open interest with price is positive. The May contract lost 947 of open interest. As this report is being compiled on May 13, July soybean meal is trading $5.30 higher. On May 9, soybean meal generated a short-term buy signal, but remains on an intermediate term sell signal.

Corn:

July corn lost 12.25 cents on volume of 272,572 contracts. Volume was the highest since April 30 when 340,289 contracts were traded and corn lost 9.75 cents while open interest declined 11,560 contracts. On May 10, open interest increased by a minor 288 contracts. The May contract accounted for loss of 2,822 of open interest. As this report is being compiled on May 13, July corn is trading 21.50 cents higher. On May 3, July corn generated a short-term buy signal, but remains on an intermediate term sell signal.

Wheat:

July wheat lost 19.25 cents on volume of 89,414 contracts. Open interest increased by 1,919 contracts, which relative to volume is approximately 20% below average, which means that shorts did not have strong convictions about adding positions at the low-end of the recent trading range. The May contract lost 74 lots of open interest. As this report is being compiled, July wheat is trading 13.25 cents higher. On May 2, July wheat generated a short-term buy signal, but remains on an intermediate term sell signal.

Coffee:

July coffee lost 3.45 cents on volume of 39,447 contracts. Volume declined approximately 5,000 contracts from May 9 when coffee advanced 3.75 cents and open interest increased 620 contracts. On May 10, open interest declined by 2,341, which relative to volume is approximately 135% above average, meaning that liquidation was extremely heavy. As this report is being compiled on May 13, July coffee is trading 1.70 cents higher. On May 8, July coffee generated a short-term buy signal but remains on an intermediate term sell signal. In the May 12 Weekend Wrap we wrote about the prospects for coffee going forward and suggest that clients review this if they have not done so already. We think the market is going higher, and are pleased with the fact that managed money remains net short.

Cotton:

July cotton lost 1.44 cents on volume of 19,815 contracts. Open interest increased by 1,507 contracts, which relative to volume is approximately 210% above average, meaning that new shorts were aggressively entering the market and driving prices lower. As this report is being compiled on May 13, July cotton is trading one half cent lower and has made a low of 85.00. In the May 12 Weekend Wrap,we wrote about cotton’s prospects giving both the bull & bear case. We prefer the short side of the market, and the extraordinarily large increase of open interest on Friday’s decline bodes ill for any significant upside. With the long to short ratio at the highest level in a couple of months, the market is vulnerable to severe long liquidation.

Crude oil:

June crude oil lost 35 cents on extremely heavy volume of 818,165 contracts. Volume was the highest since April 15 when 858,007 contracts are traded and June crude oil closed at $89.03. On May 10, open interest increased by 9,536 contracts, which relative to volume is approximately 55% less than average. On May 6, June WTI crude generated a short and intermediate-term buy signal. As this report is being compiled, crude is trading 69 cents lower.

Brent crude:

June Brent crude lost 56 cents on volume of 781,550 contracts. It is rare to see volume in Brent trade below WTI. Open interest on May 10 increased by 16,052 contracts, which relative to volume is approximately 20% less than average, however, this was a stronger increase than WTI. Brent crude remains on a short and intermediate term sell signal. Brent crude remains on a short and intermediate term sell signal.

Heating oil:

June heating oil lost 3.04 cents on light volume of 116,877 contracts. Open interest increased by 1,588 contracts, which relative to volume is approximately 45% less than average. The COT report showed that managed money remains net short heating oil and we consider this to be a positive. Heating oil remains on a short-term buy signal, which was generated on May 7, but is on an intermediate term sell signal.

Gasoline:

June gasoline lost 2.48 cents on volume of 118,403 contracts. Open interest declined by 2,255 contracts, which relative to volume is approximately 25% below average. For the past 3 trading sessions beginning on May 8, price and open interest has been acting in a bullish congruent fashion. Gasoline has been unable to generate a short-term buy signal, let alone an intermediate term buy signal. However, we think a short-term buy signal is imminent, but at this juncture  prefer heating oil because it has shown high relative strength compared to gasoline.

Natural gas:

June natural gas lost 7.3 cents. On light volume of 288,773 contracts. Open interest declined by 3,326 contracts, which relative to volume is approximately 50% less than average. Natural gas remains on a short-term sell signal but an intermediate term buy signal.

Copper:

July copper gained 1.25 cents on volume of 85,799 contracts. Open interest increased by 2,256 contracts, which relative to volume is  average. Please review the May 12 Weekend Wrap on copper. Copper remains on a short and intermediate term sell signal.

Australian dollar:

The June Australian dollar lost 44 points on heavy volume of 168,626 contracts. Open interest increased by 9,638 contracts, which relative to volume is approximately 120% above average meaning that new shorts were entering the market aggressively and driving prices lower. On April 23, OIA announced that the Australian dollar generated a short and intermediate term sell signal. On April 29 and 30 we recommended writing out of the money call options. The trade is working well and clients should continue to hold this position.

Euro:

The June euro lost 33 points on heavy volume of 303,866 contracts. Open interest increased by 8,487 contracts, which relative to volume is average. The market made a new low for the move at 1.2938, which is the lowest since April 5. Despite the sharp move lower, the euro has not yet generated a short-term sell signal, which would reverse the short-term buy signal generated on May 1.

S&P 500 E mini:

The S&P 500 E mini gained 5.00 point on volume of 1,659,672 contracts. Open interest declined by 19,048 contracts, which relative to volume is approximately 50% less than average. We continue to recommend put protection on the E mini, especially for those who hold long equity positions.