Soybeans:

March soybeans lost 16.25 cents on volume of 190,595 contracts. Volume increased from January 28 when 118,614 contracts were traded and March soybeans lost 2.25 while open interest increased by 4,569 contracts. On January 29, total open interest increased by a massive 14,064 contracts, which relative to volume is approximately 185% above average meaning that heavy numbers of new short sellers were entering the market and driving prices lower. The March through August 2014 contracts all gained open interest. As this report is being compiled on January 30, March soybeans have rallied 11.25 cents. March soybeans remain on a short and intermediate term sell signal and rallies are opportunities to initiate bearish positions. Use the January 23 high of 12.96 3/4 as an exit point for bearish positions.

The USDA reported sales of 494.8 thousand metric tons (tmt), which brings total commitments to 1.564.4 billion bushels (bb) versus USDA projections for the season of 1.450 bb.

Soybean meal:

March soybean meal lost  $5.30 on volume of 61,871 contracts. Total open interest increased by 1,626 contracts, which relative to volume is average. The March contract lost 1,271 of open interest, which makes the total open interest increase more impressive (bearish). As this report is being compiled on January 30, March soybean meal is trading $4.20 higher. Ultimately, we think soybean meal prices are headed lower, but are currently on a short and intermediate term buy signal, therefore we recommend a stand aside posture.

The USDA reported that only 68.31 tmt had been sold, which was the lowest sale since January 2. Total commitments as of the latest report are 6763.28 tmt versus USDA projections for the season of 9707 tmt.

Corn:

March corn declined 4.50 cents on volume of 272,318 contracts. Total open interest declined by 4,564 contracts, which relative to volume is approximately 25% less than average. The March contract accounted for loss of 9,320 of open interest. As this report is being compiled on January 30, March corn is trading 4.75 higher and has made a new high for the move at $4.34 1/2. Corn remains on a short-term buy signal, but an intermediate term sell signal. Stand aside.

The USDA reported sales of corn exploded to 1837.9 tmt, which is the highest weekly sale in 13 weeks. Total commitments as of the latest report are 1.254.8 bb versus USDA projections for the season of 1.450 bb. Exports are at their highest pace since the 2007-2008 season.

Chicago wheat:

March Chicago wheat lost 14.50 cents on huge volume of 166,688 contracts. Volume was the highest since January 10 when 187,859 contracts were traded and March wheat closed at $5.69. On January 10, March wheat had made its new contract low of $5.60 1/2, and this was broken on January 29 with a new contract low of $5.50 1/2. On January 29, total open interest increased by 1,985 contracts, which relative to volume is approximately 45% less than average. The March contract lost 2,852 of open interest, which makes the total open interest increase more impressive (bearish). Wheat remains on a short and intermediate term sell signal. Stand aside.

The USDA reported that sales of wheat totaled 794.9 tmt, which was the highest sale in 13 weeks. This brings total commitments season to date of 959.2 million bushels (mb) versus USDA projections for the season, which ends on May 31 of 1.125 bb.

Live cattle:

April live cattle advanced 17.5 points on low volume of 47,509 contracts. Total open interest increased by a massive 4,745 contracts, which relative to volume is approximately 300% above average meaning that new longs and shorts were both aggressively entering the market, but prices moved only fractionally higher. The February contract lost 606 of open interest. Cattle continues to consolidate its gains and during the consolidation open interest is not declining as we would prefer. Maintain bullish positions.

WTI crude oil:

March WTI crude oil lost 5 cents on very low volume of 416,634 contracts. Volume was the lowest since December 31 when 264,754 contracts were traded and March WTI closed at $98.55. On January 29, total open interest declined by 11,350 contracts, which relative to volume is average. The February contract accounted for loss of 10,948 of open interest. As this report is being compiled on January 30, March WTI is trading 89 cents higher and has made a new high for the move at 98.59, which took out the previous high of 97.84 made on January 23. The market is rallying on low volume and since January 23, each successive day’s volume has been lower. From January 23 through January 29 March WTI has advanced only 4 cents.

On January 24, March WTI generated a short-term buy signal but remains on an intermediate term sell signal. From January 14 through January 29 March WTI has advanced 5.89% versus March Brent of +1.74%. Brent crude remains on a short and intermediate term sell signal. We continue to be unimpressed by the rally despite March WTI being on a short-term buy signal. However, WTI may get a boost because it looks like March heating oil will generate a short-term buy signal on January 30. We continue to recommend a stand aside posture.

Natural gas:

March natural gas advanced 52.4 cents on volume of 522,009 contracts. Volume increased from the 439,764 contracts traded on January 28 when March natural gas advanced 26.7 cents and total open interest declined by 18,820 contracts. On January 29, open interest declined again, this time by 11,335 contracts, which relative to volume is approximately 15% below average. However, we are seeing a consistent pattern of open interest declines on major price advances. As we said in previous reports, this indicates that both buyers and sellers are liquidating at a heavy pace and moving to the sidelines. As this report is being compiled on January 30, March natural gas is trading 34.7 cents lower and has made a daily low of $5.055. There is no reason to be involved in natural gas at this juncture. Natural gas remains on a short and intermediate term buy signal.

The Energy Information Administration announced that working gas in storage was 2,193 Bcf as of Friday, January 24, 2014, according to EIA estimates. This represents a net decline of 230 Bcf from the previous week. Stocks were 637 Bcf less than last year at this time and 437 Bcf below the 5-year average of 2,630 Bcf. In the East Region, stocks were 269 Bcf below the 5-year average following net withdrawals of 124 Bcf. Stocks in the Producing Region were 121 Bcf below the 5-year average of 924 Bcf after a net withdrawal of 84 Bcf. Stocks in the West Region were 47 Bcf below the 5-year average after a net drawdown of 22 Bcf. At 2,193 Bcf, total working gas is below the 5-year historical range.

Euro: The long call option recommended on January 27 should be liquidated. 

The March euro lost 2 pips on heavy volume of 266,717 contracts. Volume increased from the 163,380 contracts traded on January 28 when the March euro declined 10 pips and open interest increased by 1,004 contracts. On January 29, open interest increased by a substantial 9,710 contracts, which relative to volume is approximately 40% above average, meaning that both longs and shorts were aggressively entering the market and prices moved only fractionally lower. As this report is being compiled on January 30, the March euro is trading 1.13 cents lower and has made a daily low of 1.3543. It appears likely the March euro will generate a short-term sell signal tomorrow. If this is the case then during the month of January, we will have seen 3 signals generated in the euro. First, on January 8 when the March euro generated a short-term sell signal, and on January 24 when the March euro generated a short-term buy signal. OIA has been issuing reports on commodities for over 2 years and we have never seen reversals of this nature within a three-week timeframe. The markets are being buffeted by emerging market currency and equity turmoil and numerous other cross currents both economic and political.

British pound:

The March British pound lost 4 pips on volume of 92,694 contracts. Total open interest increased by 1,656 contracts, which relative to volume is approximately 25% less than average. As this report is being compiled on January 30, the March pound is trading 96 pips lower and has made a low of 1.6439, which is its lowest price since January 21 when March sterling reached 1.6392. We are targeting the 50 day moving average of 1.63674 as a possible entry point on the long side. Contrary to the euro, the March pound has consistently been on a short and intermediate term buy signal through the month of January.

Yen:

The March yen gained 80 pips on heavy volume of 245,210 contracts. Volume was the highest since January 24 when 295,276 contracts were traded and the March yen advanced 82 pips while total open interest declined by 4,424 contracts. On January 29, total open interest increased by 3,759 contracts, which relative to volume is approximately 40% less than volume, but this is the first time in quite a while we have seen open interest increase on a price advance. As this report is being compiled on January 30, the March yen is trading 62 pips lower and remains on a short-term buy signal, but an intermediate term sell signal. The March yen generated a short-term buy signal on January 27. Stand aside.

Gold:

April gold advanced $11.40 on very heavy volume of 279,610 contracts. Volume was the heaviest since November 26 when 310,510 contracts were traded and April gold closed at $1242.40. On January 29, total open interest declined by 6,595 contracts, which relative to volume is average. The February contract lost 23,574 of open interest. As this report is being compiled on January 30, April gold is trading $18.50 lower. The problem with gold continues to be the terrible performance of silver and the increasingly bearish trading in platinum. In our view, gold is going no place until silver gets out of its doldrums. Make sure risk parameters are in place, and if stopped out, there will be another opportunity to get back in once we see more favorable trading in platinum and silver.

Platinum:

April platinum lost $1.30 on volume of 7989 contracts. Total open interest declined by 4 contracts. As this report is being compiled on January 30, platinum is trading sharply lower and has made a new low for the move at $1380.00 and closed at 1382.30. This is the lowest close since the December 31 print of 1373.80. It is highly likely that tomorrow a short-term sell signal will be generated and possibly an intermediate term sell signal. Clients should be out of bullish positions in platinum.

From the January 27 report:

“In yesterday’s report, we stated that platinum could reverse if it penetrated the pivot point. If clients have not liquidated their long positions, we suggest they do so. With gold and especially silver acting negatively, we see no reason to maintain bullish positions in platinum. Although, April platinum has not generated a short-term sell signal, it could occur sometime this week.”

From the January 24 report:

“Maintain bullish positions, but make sure sell stops are in place. If April platinum penetrates $1413.40, this would be the first sign of a possible reversal.”

Silver:

March silver gained 4.9 cents on volume of 47,506 contracts. Total open interest declined by 1,361 contracts, which relative to volume is average. As this report is being compiled on January 30, March silver is trading sharply lower and has made a new low for the move at $18.97. In yesterday’s report, we thought there was a possibility that silver may have made a bottom, but trading on Thursday confirms a bottom continues to be elusive. We have no recommended position in silver. Stand aside.

S&P 500 E mini:

The March S&P 500 E mini lost 17.00 points on heavy volume of 2,751,580 contracts. Total open interest increased by 34,076 contracts, which relative to volume is approximately 45% less than average, but it is the first major open interest increase since the E mini began its decline. Clients should continue with long put protection if they hold long equity positions.