Soybeans:

March soybeans lost 11.75 cents on volume of 265,725 contracts. Volume shrank from the 285,371 contracts traded on February 11 when March soybeans advanced 9.25 and total open interest increased by 7,372 contracts. On February 12, total open interest declined by 7,376 contracts, which relative to volume is average. The March contract lost 19,014 of open interest, which makes the open interest decline bullish. It is perfectly healthy for open interest to decline when price declines, especially when the market is overbought. As this report is being compiled on February 13, March soybeans are trading 17.50 higher and have made a new high for the move at $13.47 1/2, which takes out yesterday’s high of 13.40.

As mentioned before, our concern has been the large open interest increase on the advance and the elevated COT ratio according to last week’s report. Additionally, the Brazilian harvest is underway and it promises to be a massive crop, which heightens the likelihood of cancellations of previous US sales to Chinese importers. Although price and open interest action is  bullish, the two aforementioned factors makes us cautious and question the degree to which soybeans can continue to advance. March soybeans remain on a short and intermediate term buy signal. Stand aside.

The USDA reported that 173.6 thousand metric tons (tmt) have been sold, which is the lowest weekly sale since January 2 (155.5 tmt). This brings total commitments season to date to 1.587.2 billion bushels (bb) versus USDA projections of 1.510 bb.  Based upon the USDA export projections for the season versus current sales, the department obviously expects cancellations.

Soybean meal:

March soybean meal lost $5.70 on volume of 105,294 contracts. Open interest increased by 964 contracts, which relative to volume is approximately 50% less than average. The March contract lost 8,525 of open interest, which makes the total open interest increase potentially bearish. As this report is being compiled on February 13, March soybean meal is trading $7.60 higher and has made a new high for the move the $455.00 which takes out yesterday’s high of 452.90. Like soybeans, March soybean meal remains on a short and intermediate term buy signal, but we are concerned about soybean meal’s ability to move significantly higher from here. Soybean meal remains on a short and intermediate term buy signal. Stand aside.

The USDA reported weekly sales of 18.73 tmt, which is the lowest weekly sale since the season began on October 1. Total commitments season to date is 7065.7 tmt versus USDA projections of 9888 tmt.

Soybean oil:

March soybean oil gained 14 points on volume of 153,018 contracts. Volume increased from the 126,474 contracts traded on February 11 when March soybean oil advanced 12 points and total open interest declined by 3,691 contracts. On February 12, total open interest increased by a hefty 4592 contracts, which relative to volume is approximately 20% above average meaning that new longs were fairly aggressive about initiating positions. Making the total open interest increase more impressive was the fact that the March contract lost 3684 of open interest. There were open interest increases in the May 2014 through July 2015 contracts, with the exception of September 2014, which lost 57 contracts of open interest. This is the first time since generating a buy signal on February 7 that soybean oil has had a total open interest increase when prices advanced. As this report is being compiled on February 13, March soybean oil is trading 35 points higher and has made a new high for the move at 39.60. In the February 10 report, we recommended the initiation of bullish positions and that the February 7 low of 38.46 should be as an exit point. Stay with bullish positions.

The USDA reported that weekly sales of soybean oil totaled 53.33 tmt, which is the highest sale in 4 weeks, and brings total commitments season to date to 519.26 tmt versus USDA per injections for the season of 657.7 tmt.

 Corn:

March corn lost 1.50 cents on heavy volume of 470,171 contracts. Volume increased slightly from the 461,080 contracts traded on February 11 when March corn declined 1.50 cents and total open interest increased by 1,971 contracts. On February 12, total open interest increased by substantial 17,188 contracts, which relative to volume is approximately 40% above average meaning there was a major battle between longs and shorts, but prices moved only fractionally lower. The March contract lost 32,076 of open interest, which makes the total open interest increase more impressive (potentially bullish). There were open interest increases in the May 2014 through December 2015 contracts. As this report is being compiled on February 13, March corn is trading in a narrow range of 3.00 cents and is unchanged on the day. Corn remains on a short and intermediate term buy signal, but we recommend a stand aside posture.

USDA announced that 1269.8 tmt of corn has been sold, bringing total commitments season to date to 1.362 bb versus USDA projections of 1.600 bb. This week’s sale was the 6th highest of the season, which began on September 1.

Chicago wheat:

March Chicago wheat lost 3.25 cents on heavy volume of 181,730 contracts. Volume fell from the 195,408 contracts traded on February 11 when March Chicago wheat advanced 5.50 and total open interest declined by 697 contracts. On February 12th, total open interest declined by 2,453 contracts, which relative to volume is approximately 40% less than average. The March contract lost 19,087 of open interest. On February 12, March wheat made a new high for the move at $5.98 1/4 and as this report is being compiled on February 13 March wheat is trading 5.00 cents higher, but has not taken out yesterday’s high. We much prefer the long side of KC wheat to Chicago, however if long from lower levels move up the sell stop, which was originally recommended at 5.66 1/4, the February 7 low.

Kansas City wheat:

March Kansas City wheat lost 2.50 cents on volume of 39,774 contracts. Volume declined from the very heavy volume traded on February 11 of 44,154 contracts when March KC wheat advanced 2.75 cents and total open interest declined by 875 contracts. On February 12, total open interest increased by 1,259 contracts, which relative to volume is approximately 25% above average, meaning that both longs and shorts were fairly aggressive about initiating positions, but the market moved fractionally lower. The March contract lost 5,361 of open interest. On February 12, March KC wheat made a new high for the move at $6.71 1/2, which is the highest prices December 16 when March made a high print of 6.72 1/2. As this report is being compiled on March 13, March KC wheat is trading 5.00 cents higher and has taken out yesterday’s high. Move sell stops up to break even on bullish positions recommended in the February 6 report.

The USDA reported for the most recent week 597 tmt had been sold, which brings total commitments to date of 1.002.8 bb versus USDA projections for the season, which ends on May 31 of 1.175 bb. The sale for the current week was above the average sale for the season to date.

 Live cattle:

April live cattle lost 40 points on low volume of 43,821 contracts. Total open interest increased by 2,301 contracts, which relative to volume is approximately 100% above average meaning that shorts were definitely in control on Wednesday. As this report is being compiled on February 13, April cattle is trading 1.275 cents higher and has made a daily high of 1.42450, which is below the contract high at 1.43200 made on January 22. Stay with bullish positions that were recommended nearly 2 months ago months ago and maintain short out of the money call positions recommended in the January 30 report. We think the market is going to take out the January 22 high, but as stated before, we see a market grinding higher rather than a sharp upside blow off.

WTI crude oil:

March WTI crude oil advanced 43 cents on heavy volume of 769,751 contracts. Volume was the highest since December 4 when 830,979 contracts were traded and March WTI and closed at $97.45. On February 12, total open interest increased only 1,566 contracts, which is minuscule and dramatically below average. The March contract lost 34,794 of open interest. March WTI made a high of $101.38 yesterday, which is its highest print since October 16 of 101.81. We remain concerned about the massive increase of open interest during the past several sessions, coupled with the relatively high long to short ratio in last week’s COT report. Conceivably, the reversal from the high seen yesterday on heavy volume accompanied by a minor increase of open interest could be the nascent sign the market is trading near the top of the range. March WTI currently is trading at prices when they topped out in the 4th quarter 2013. Stand aside.

Natural gas:

March natural gas closed unchanged on volume of 503,629 contracts. Total open interest declined by 2,606 contracts, which relative to volume is approximately 75% below average. The March contract lost 29,473 of open interest. With huge ice and snow storms on the East coast and throughout the South, March natural gas is trading 32.2 cents higher on the day. Stand aside.

The Energy Information Administration announced that working gas in storage was 1,686 Bcf as of Friday, February 7, 2014, according to EIA estimates. This represents a net decline of 237 Bcf from the previous week. Stocks were 863 Bcf less than last year at this time and 631 Bcf below the 5-year average of 2,317 Bcf. In the East Region, stocks were 315 Bcf below the 5-year average following net withdrawals of 106 Bcf. Stocks in the Producing Region were 232 Bcf below the 5-year average of 845 Bcf after a net withdrawal of 89 Bcf. Stocks in the West Region were 84 Bcf below the 5-year average after a net drawdown of 42 Bcf. At 1,686 Bcf, total working gas is below the 5-year historical range.

Euro:

The March euro lost 44 pips on volume of 225,403 contracts.Total open interest declined by 604 contracts,which is minuscule and dramatically below average. As this report is being compiled on February 13, the March euro is trading 81 pips higher and has made a high of 1.3692.We recommended a short call position in the euro on February 6 with the proviso to exit the position if the daily low is above 1.3651. However, the pivot point has changed to 1.3660 on Thursday. As this report is being compiled on February 13, the March euro is trading 77 pips higher on the day. Liquidate the short call position if the March euro makes a daily low above the new pivot point of 1.3660. Conceivably, the dollar could generate a short-term sell signal tomorrow if the euro continues to move higher.

British pound:

The March British pound advanced 1.48 cents on heavy volume of 158,259 contracts.Volume was higher than on January 24 when 157,524 contracts were traded and the March pound closed at 1.6500.The March pound will generate a short-term buy signal on February 13, which reverses the short-term sell signal generated on February 4.

Yen:

The March yen advanced 15 pips on low volume of 104,061 contracts.Total open interest increased by 1,521 contracts, which relative to volume is approximately 40% below average. As this report is being compiled on February 13, the March yen is trading 17 pips higher and has made a high of .9835. We think it is inevitable the March yen will attempt to test last week’s high of .9927.

Gold:

April gold advanced $5.20 on very low volume of 123,088 contracts. Total open interest declined by 734 contracts, which relative to volume is approximately 60% below average. As this report is being compiled on February 13, April gold has made a new high for the move at 1302.40 and has closed at 1300.10. This is the highest close since November 7 when April printed $1310.30. In the February 6 report, we recommended that bullish positions be initiated, and the trade is working well. Stay with bullish positions. As we said in yesterday’s report, the market is”climbing a wall of worry”and low volume is indicating a lack of participation by managed money, which leads us to believe that gold will continue to move higher.

Platinum:

April platinum advanced $19.50 on volume of 9,683 contracts.Total open interest increased by 492 contracts, which relative to volume is approximately 100% above average meaning that new longs were aggressively entering the market and pushing prices higher. As this report is being compiled on February 13, platinum continues to advance and has made a high of $1417.60. It appears inevitable that platinum will generate a short-term buy signal, perhaps as early as tomorrow.

Silver: On February 12, March silver generated a short-term buy signal,which reverses the short-term sell signal generated on January 31. March silver remains on an intermediate term sell signal.

March silver advanced 18.8 cents on heavy volume of 91,346 contracts.Volume was the heaviest since November 26 when 96,980 contracts were traded and March silver closed at $19.890. On February 12, total open interest increased by a very healthy 3,592 contracts, which relative to volume is approximately 55% above average meaning that new longs were aggressively entering the market and pushing prices higher($20.39). As this report is being compiled on February 13, March silver has made another new high at 20.515.

For the past 2 days, March silver has made its low early in the evening sessions, and it has not been violated for the rest of the evening and day sessions. This level of buoyancy is very positive, especially since silver has has had a tendency to reverse. On February 6, we recommended long straddles or strangles depending upon your risk tolerance. Stay with these positions. In our view, silver headed much higher.

S&P 500 E mini:

The S&P 500 E mini gained 3.50 points on volume of 1,401,446 contracts.Total open interest increased by 19,330 contracts, which relative to volume is approximately average. As this report is compiled on February 13, the E mini continues to rally and is trading 8.50 higher on the day. Maintain long put protection if holding long equity positions.