Soybeans:

January soybeans gained 6 cents on light volume of 124,786 contracts. Open interest increased by a minuscule 387 contracts, but that was fairly constructive since the January contract was responsible for the liquidation of 5,512 contracts. In other words, there was sufficient buying in the forward months to offset the decline of open interest in the January contract.

The latest COT report, which was released Monday afternoon showed that managed money liquidated 8,971 contracts of their long positions and added 5,093 contracts to their short positions. Commercial interests added 7,435 contracts to their long positions, but liquidated 7,499 contracts of their short positions. The action between managed money and commercial interests was totally the opposite. As of the latest report, managed money is now long soybeans by a ratio of 5.64:1 which is down significantly from the previous week of 7.48:1 and down dramatically from the ratio of 2 weeks ago of 13.66:1.

Soybean meal:

January soybean meal gained $3.50 on volume of 62,487 contracts. Volume nearly doubled from November 23, when 33,809 contracts were traded and January meal gained 10 cents, while open interest declined by 3,853 contracts. On November 26, open interest declined by 2,259 contracts, which in relation to volume is approximately 40% above average, meaning that liquidation was heavy. The December contract was responsible for the liquidation of 6,607, which means there was not sufficient new positions to offset the decline in December.

The latest COT report showed that managed money liquidated 1,405 contracts of their long positions and also liquidated 1,295 contracts of their short positions. Commercial interests added 6,163 contracts to their long positions and also added 6,218 contracts to their short positions. As of the latest report, managed money is long soybean meal by a ratio of 3.34:1, which is up slightly from the previous week of 3.15:1, but significantly lower than the ratio of 2 weeks ago of 4.91:1.

Soybean oil:

January soybean oil gained 26 points on volume of 131,925 contracts. Note that volume in soybean oil exceeded soybeans by approximately 7,000 contracts. Additionally, soybean oil traded approximately 21,000 contracts above its average daily volume year to date of 107,427 contracts. This contrasts with soybean and soybean meal volume which traded below the average daily volume year to date of 212,890 contracts and 73,190 contracts respectively. On November 26, open interest declined by 4,005 contracts, which in relation to volume is approximately 20% above average. The December contract accounted for the liquidation of 11,966 contracts.

The COT report showed that managed money liquidated 3,297 contracts of their long positions and added 3,942 contracts to their short positions. Commercial interests liquidated 1,226 contracts of their long positions and also liquidated 4,270 contracts of their short positions. As of the latest report, managed money is short by a ratio of 2.41:1, which is higher than the previous week of 2.10:1, and significantly higher than the ratio of 2 weeks ago of 1.78:1. During the time that the COT report was compiled (November 14-November 20), soybean oil advanced 1.29 points or 2.70%. In short, managed money continues to add to their short positions while the market moves higher. It is rumored that this week’s export sales will be another terrific number, and may even blow past the USDA’s export projections for the season which ends on August 31, 2013. For more information on soybean oil, please review the Weekend Wrap of November 25.

Corn:

March corn advanced 1.50 cents on fairly heavy volume of 308,516 contracts. Volume was more than double November 23’s, and was the highest volume since November 16, when corn advanced 5.75 cents and open interest declined by 2,825 contracts. Total open interest declined by a massive 26,570 contracts, which in relation to volume is approximately 250% above average, meaning that liquidation was extremely heavy. Accounting for the heavy liquidation was the performance of the December contract which lost 46,077 contracts of open interest.

The COT report showed that managed money added 15,051 contracts to their long positions, but liquidated 18,716 contracts of their short positions. Commercial interests liquidated 2,895 contracts of their long positions but added a massive 29,897 contracts to their short positions. As of the latest report, managed money is long corn by a ratio of 9.82:1, which is up substantially from the previous week of 5.80:1 and the ratio of 2 weeks ago of 6.61:1.

Wheat:

March wheat gained 2.25 cents on volume of 108,167 contracts. Volume was more than double November 23’s when 52,700 and contracts were traded and open interest declined by 23,474 contracts, while wheat advanced 2.25 cents. On November 26, open interest declined by 8,065 contracts, which in relation to volume is approximately 225% above average. The December contract saw liquidation of 15,552 contracts.

The COT report showed that managed money liquidated 16,855 contracts of their long positions, but added 2,006 contracts to their short positions. Commercial interests added 982 contracts to their long positions, but liquidated 1,110 contracts of their short positions. As of the latest report, managed money is long wheat by a ratio of 1.43:1 (one of the lowest readings of the last couple of months), which is down from the previous week of 1.72:1 and the ratio of 2 weeks ago of 1.69:1.

Crude oil:

January crude oil lost 54 cents on light volume of 287,893 contracts. Open interest increased by 7,211 contracts, which in relation to volume is average. Crude oil continues to display bearish open interest action relative to price.

The COT report showed that managed money added 6,271 contracts to their long positions, but liquidated 5,072 contracts of their short positions. Commercial interests liquidated 4,558 contracts of their long positions, and also liquidated 5,129 contracts of their short positions. As of the latest report, managed money is long crude oil by a ratio of 2.05:1 which is up slightly from the previous week of 1.87:1 and slightly lower than the ratio of 2 weeks ago of 2.10:1.

Heating oil:

January heating oil declined by 2.66 cents on volume of 142,337 contracts. Open interest declined by 769 contracts, which in relation to volume is approximately 70% less than average. This is the 5th day in a row that open interest relative to price has been acting in a bullish congruent fashion. 

The COT report showed that managed money added 193 contracts to their long positions and also added 2,247 contracts to their short positions. Commercial interests liquidated 3,657 contracts of their long positions and also liquidated 1,104 contracts of their short positions. According to the latest report, managed money is long heating oil by a ratio of 2.75:1, which is down from the previous week of 3.27:1 and down substantially from the ratio of 2 weeks ago of 4.09:1.

Natural gas:

January natural gas lost 16.6 cents on fairly light volume of 308,570 contracts. Open interest declined by 8,383 contracts, which in relation to volume is average. It is positive to see open interest decline as price declines, but there is still a large number of relatively new longs who may need to liquidate if the market continues to pull back.

The COT report showed that managed money added 15,204 contracts to their long positions and also added 548 contracts to their short positions. Commercial interests liquidated 1,531 contracts of their long positions and also liquidated 183 contracts of their short positions. As of the latest report, managed money is long natural gas by a ratio of 1.06:1, which is a reversal from the previous week when managed money was short by a ratio of 1.01:1, Two weeks ago, managed money was long by a ratio of 1.08:1. In short, managed money has not been able to make up its mind whether it wants to be long or short.

Gold:

December gold lost $1.80 on heavy volume of 247,546 contracts. Volume was the highest since November 17, when 306,101 contracts were traded and December gold lost $1.00, while open interest increased by 3,239 contracts. On that date, gold made a low of 1703. On November 26, open interest declined by 810 contracts, which is a minuscule decline and significantly below average. As this report is being compiled on November 27, volume has already exceeded the volume traded on November 26. Gold did not generate a short-term buy signal on November 26.

The COT report showed that managed money added 9,367 contracts to their long positions and liquidated 1,642 contracts of their short positions. Commercial interests liquidated 651 contracts of their long positions, but added 5,287 contracts to their short positions. According to the latest COT report, managed money is long gold by a ratio of 12.92:1 which is up from the previous week of 10.58:1 and the ratio of 2 weeks ago of 9.53:1. During the compilation of the COT report, which was from November 14 through November 20, gold advanced $3.80.

Silver: On November 26, December silver generated a short-term buy signal. This reverses the short-term sell signal generated on October 19.

December silver advanced 2.1 cents on heavy volume of 106,629 contracts. Volume was the highest since June 25, 2012 when 126,413 contracts were traded and December silver closed at $27.665. The dramatically higher volume can be attributed to speculators switching out of the December contract and into February forward contracts. On November 26, open interest declined by 1492 contracts, which in relation to volume is approximately 35% less than average. One of the interesting aspects of trading on November 26 was that the trading range was only 34 cents which is more than half of the 21 day average true range of 77.3 cents. Often, high volume during a narrow range day is a predictor of a major move. With silver on a short and intermediate term buy signal, we are awaiting a setback close to the 50 day moving average of $33.21. There should be a tremendous amount of support at the $33 area. This is the level that clients should look to enter bullish positions.

The COT report showed that managed money added 3,291 contracts to their long positions and liquidated 1,906 contracts of their short positions. Commercial interests added 45 contracts to their long positions and also added 3,403 contracts to their short positions. According to the latest report, managed money is long silver by a ratio of 9.61:1, which is up substantially from the previous week of 5.79:1 and the ratio of 2 weeks ago of 5.76:1. During the period that the COT report was compiled, silver advanced 73 cents.

Australian dollar:

The December Australian dollar lost 6 points on volume of 88,210 contracts. Open interest declined by 251 contracts. The COT report showed that leveraged funds liquidated 975 contracts of their long positions, but added 2,150 contracts to their short positions. As of the latest report, leveraged funds are long by a ratio of 1.70:1 which is down slightly from the previous week of 1.78:1, and about the same as 2 weeks ago of 1.71:1.

Euro:

The December euro lost 23 points on volume of 181,424 contracts. Open interest declined by 9,741 contracts, which in relation to volume is approximately 110% above average, meaning that liquidation was very heavy.

The COT report showed that leveraged funds liquidated 3,517 contracts of their long positions, but added 2,232 contracts to their short positions. As of the latest report, leveraged funds are short by a ratio of 4.49:1, which is up from the previous week of 3.82:1, and the ratio of 2 weeks ago of 3.28:1.

S&P 500 E mini:

The December S&P 500 E mini lost 2.00 points on light volume of 1,225,696 contracts. Open interest increased by 6,242 contracts, which is minuscule and dramatically below average. On November 27, the Shanghai Composite Index closed at 1991.17 down 26.30 points, which is the lowest close in nearly 4 years. This came on the heels of the Chinese reporting dramatic job growth. As we’ve indicated in prior reports, glowing Chinese pronouncements of economic strength should be taken with a grain of salt. The Shanghai Composite Index is telling us that there are troubles in China. With respect to the S&P 500 E mini and other U.S. indices, clients should view trading during the fiscal cliff crisis in the same way as the European crisis. One day there is positive news, the next day negative news.

The COT report showed leveraged funds liquidated 55,524 contracts of their long positions, but added 44,921 contracts to their short positions. As of the latest, report leveraged funds are short by a ratio of 1.48:1, which is above the previous week of 1.28:1 and about the same as 2 weeks ago of 1.50:1.