Soybeans:

May soybeans advanced 24.00 cents on light volume of 194,661. Volume was the lightest since February 3 when 171,232 contracts were traded and soybeans advanced 10.00 cents while total open interest increased by 2,963 contracts. On February 28, total open interest declined by 795 contracts, which is approximately 85% less than average. However, a decline of open interest on a 24 cent advance after a blow off move on February 27 is indicative of a lack of market enthusiasm. The March contract accounted for loss of 3,870 of open interest. As this report is being compiled on March 3, May soybeans are trading 7.75 cents lower after making a high for the move at 14.37 1/2. The high occurred between 5 o’clock and 5:15 AM CST and subsequently the market has traded lower all day. We think the high of March 3 is the secondary high, which is another indication of a market top. As indicated in the report of February 27, we advised clients to tighten stops, take partial profits and write out of the money calls.

From the February 27 report:

“OIA thinks we have a tradable top in soybeans. With the key reversal day yesterday, we are confident that rallies will be met by nervous longs looking to exit the market, which will cap any substantial rally. Although we have not advocated bullish positions, if clients are long soybeans, we strongly advise them to take partial profits and tighten stops. Also, consider writing out of the money calls in soybeans. Soybeans remain on a short and intermediate term buy signal.”

Soybean meal:

May soybean meal advanced $6.10 on volume of 72,181 contracts. Volume was the lowest since February 3 when 66,500 contracts were traded and soybean meal advanced $7.90 while total open interest increased by 6,932 contracts. On February 28, total open interest declined by 1,181 contracts, which relative to volume is approximately 40% below average, but like soybeans, a decline of open interest on the advance is bearish. As this report is being compiled on March 3, May soybean meal is trading $7.60 lower.

From the February 27 report:

“Like soybeans, we are leery of any major advance from here, and strongly suggest for holders of bullish meal positions to take partial profits and consider writing out of the money calls. Tighten stops on any remaining positions. Soybean meal remains on a short and intermediate term buy signal.”

Soybean oil:

May soybean oil advanced 64 points on light volume of 89,973 contracts. Volume was the lowest since January 29 when 72,304 contracts were traded and May soybean oil closed at 37.41. On February 28, total open interest declined by 4,939 contracts, which relative to volume is approximately 120% above average meaning that liquidation was heavy on the advance. The March contract accounted for loss of 3,959 of open interest. As this report is being compiled on March 3, May soybean oil is trading 49 points higher and has made a new high for the move at 42.76. Soybean oil has been performing well of late, but the fact remains during the rally open interest has been declining. The recent COT report confirms that managed money is liquidating short positions, rather than entering new long positions. Because we view the soybean market as having topped out, we are advising caution on long soybean oil positions. Clients should have good profits and it is important to protect them.

From the February 27 report:

“Like soybeans and soybean meal, we advise taking partial profits, tighten up sell stops on remaining positions and consider writing out of the money calls. Soybean oil remains on a short and intermediate term buy signal.”

Corn:

May corn advanced 9.00 cents on volume of 309,145 contracts. Volume declined from the 443,411 contracts traded on February 27 when May corn lost 6.50 cents and total open interest declined by a massive 53,358 contracts. On February 28, total open interest declined by 6,818 contracts, which relative to volume is approximately 10% below average. The March contract accounted for loss of 13,223 of open interest. As this report is being compiled on March 3, May corn has made a new high for the move at $4.82 3/4, which is its highest price since September 12, 2013 ($4.85 3/4) May corn is currently trading significantly off the high with a gain of 6.25 cents. The trading on March 3 seems to indicate there is that strong commercial selling at the top of the trading range. We have no recommended position in corn and it remains on a short and intermediate term buy signal.

Chicago wheat:

May Chicago wheat advanced 13.00 cents on volume of 85,076 contracts. Volume was the lightest since February 3 when 81,501 contracts were traded and wheat advanced 8.00 cents while total open interest declined by 4,568 contracts. On February 28, total open interest declined by 2,830 contracts, which relative to volume is approximately 35% above average meaning that liquidation was substantial. Not only did the March contract lose 1,089 contracts of open interest, but May lost 1,267 and July -784. In short, there was liquidation across the board on the advance. As this report is being compiled on March 3, May wheat is trading 22.75 cents higher and has made a new high for the move at $6.44 1/2, which is its highest print since December 12, 2013 ($6.48).

Like corn, the massive spike higher has all the earmarks of shorts getting blown out of the market and commercial interests taking advantage of the situation and aggressively selling into the buying frenzy. On February 20, we recommended that clients take partial profits in Chicago wheat, although Kansas City wheat has been our preferred trade. The situation in Ukraine is driving prices higher, and since the black sea region is a large exporter of wheat, it is difficult to ascertain the political fallout and how this will affect wheat exports from the region. Move up stops to protect profits.

Kansas City wheat:

May Kansas City wheat advanced 8.50 cents on very low volume of 16,986 contracts. Total open interest declined by a massive 1,344 contracts, which relative to volume is approximately 210% above average meaning that liquidation was extremely heavy on the advance. The March contract lost 753 of open interest and May -1,042. As this report is being compiled on March 3, May Kansas City wheat has made a new high for the move at $7.20 1/4, which is its highest print since $7.20 3/4 made on November 7, 2013. The May contract has backed off considerably from the high and is now trading 17.25 cents higher. Like Chicago wheat, we recommend that stops be moved up to protect profits on remaining positions.

Live cattle:

April live cattle advanced 52.5 points on volume of 50,244 contracts. Volume shrank from the 80,045 contracts traded on February 27 when April cattle lost 7.5 points and total open interest declined by 4,046 contracts. On February 28, total open interest declined by 431 contracts, which relative to volume is approximately 60% below average. The open interest action on February 28 was disappointing and not only did the February contract lose 731 of open interest, which is to be expected since it is expiring, but April lost 1,638. As this report is being compiled on March 3, April cattle is trading 87.5 points lower. Based upon the open interest declines of the past 2 days  after cattle made its high at 1.45975 on February 27 and a secondary high of 1.45775 on February 28, it appears the market needs to pullback before resuming its uptrend. Maintain bullish positions.

WTI crude oil:

April WTI crude oil advanced 19 cents on very low volume of 353,576 contracts. Total open interest increased by 5,718 contracts, which relative to volume is approximately 35% less than average. The April contract lost 6,200 of open interest. As this report is being compiled on March 3, April WTI has broken out to the upside and has made a new high for the move at $105.22 and is currently trading 1.61 higher on the day. April crude has taken out the high print of $105.12 made on September 23 on the WTI crude oil continuation chart. During the past week, we commented on the lackluster behavior of WTI, and the crisis in Ukraine has lit a match under the market causing the sharp move higher on March 3. We have no recommended position in WTI. April WTI crude oil remains on a short and intermediate term buy signal.

Natural gas:

April natural gas advanced 9.8 cents on light volume of 282,300 contracts. Volume was the lightest since February 3 when 276,103 contracts were traded and April natural gas closed at $4.905. On February 28, total open interest increased by a massive 16,132 contracts, which relative to volume is approximately 120% above average meaning that new longs were entering the market aggressively and pushing prices higher. The April contract lost 3,952 of open interest. As this report is being compiled on March 3, April natural gas is trading 10.3 cents lower after making a high of 4.736, which is its highest print since February 25 (4.774). It appears the air is coming out of the natural gas market, which makes it highly vulnerable to further downside action due to the significant long position of managed money. We have no recommendation at this time.

Euro:

The March euro advanced 1.11 cents on volume of 274,276 contracts. Volume was the highest since February 6 when 311,407 contracts were traded and the March euro closed at 1.3587. As this report is being compiled on March 3, the March euro is trading 79 pips lower and has made a low of 1.3731. The euro remains on a short and intermediate term buy signal. We have no recommendation at this time.

British pound:

The March British pound advanced 74 pips on volume of 127,425 contracts. Total open interest increased by 865 contracts, which relative to volume is approximately 65% less than average. This is one of the very few times there has been a fairly significant price advance and open interest has increased dramatically below average. Additionally, the March pound reached its highest level on the 28th (1.6767) since February 18 when the high print was 1.6821. As this report is being compiled on March 3, the March pound is trading 93 pips lower. We have no recommendation at this time. The pound remains on a short and intermediate term buy signal.

Yen:

The March yen advanced 27 pips on healthy volume of 172,684 contracts. Total open interest declined by 984 contracts, which relative to volume is approximately 70% below average. We would prefer to see open interest increases on advances, but the fact remains, March is entering its expiration and managed money is short the yen by a 2 to 1 margin. As this report is being compiled on March 3, the March yen is trading 37 pips higher and has made a new high for the move at .9882, which is its highest price since February 5 (.9923). It appears that the March yen will generate an intermediate term buy signal on March 3. We do not have a recommendation at this time.

Gold:

April gold lost $10.20 on volume of 151,347 contracts. Total open interest declined by 3,465 contracts, which relative to volume is approximately 10% below average. As this report is being compiled on March 3, April gold has taken out the previous high of 1345.60 made on February 26 and has made another new high at 1355.00. Additionally, April gold has made a new closing high of 1350.30. This is the highest close since October 28, 2013 ($1352.00). Maintain bullish positions recommended in the February 6 report.

Silver:

May silver lost 11.1 cents on volume of 42,632 contracts. Total open interest declined by 1,572 contracts, which relative to volume is approximately 40% above average meaning that liquidation was fairly heavy on a modest decline. For the past 3 trading sessions the lows in May silver have been the following: February 26 21.12, February 27 21.025, February 28 21.105. We think these lows should hold and that silver will work its way higher along with gold and platinum. Maintain the long straddle or strangle position or the long call position recommended in the February 6 report.

S&P 500 E mini:

March S&P 500 E mini gained3.50 points on heavier than normal volume of 2,125,925 contracts. The March E mini made a new  all-time high of 1866.50 on February 28, and as this report is being compiled on March 3 is trading at 1843.75 down 14.50 points. We continue to recommend the purchase of out of the money calls coupled with the long put positions for those clients that hold long equity positions.