Soybeans:

May soybeans lost 39.00 cents on surprisingly light volume of 223,638 contracts. Volume was below March 7 when 224, 385 contracts were traded and May soybeans advanced 19.75 cents while open interest declined 5,514 contracts. This was bearish open interest action relative to the price advance. On March 10, total open interest increased by 3,828 contracts, which relative to volume is approximately 25% less than average, but an open interest increase on the decline of 39 cents is bearish. The March contract lost 1,621 of open interest. The light volume combined with the increase of open interest indicates that longs are digging in and refusing to liquidate even though it’s becoming more apparent with each passing day that soybeans have likely topped. As this report is being compiled on March 11, May soybeans are trading 5.25 cents lower and have taken out yesterday’s low of 14.14 with a new low for the move at 14.10 3/4. Maintain the short call position, and if long, we suggest that clients consider liquidating positions, if they have not done so already. Soybeans remain on a short and intermediate term buy signal.

The USDA report released yesterday was disappointing because ending stocks were reduced only 5 million bushels bringing down ending stocks to 145 mb. Ending stocks at this time last year was 141 mb. Exports were increased by only 20 mb.

Soybean meal:

May soybean meal declined $13.10 on volume of 76,789 contracts. Total open interest declined by 1,230 contracts, which relative to volume is approximately 30% less than average. The March contract lost 560 of open interest and May – 1,958. As this report is being compiled on March 11, May soybean meal is trading $1.60 lower and has made a new low for the move at 442.10. Maintain short call positions and we suggest that long positions be liquidated if this has not been done already.

That USDA reported that total use of soybean meal declined by 300 thousand metric tons and ending stocks were left unchanged.

Soybean oil:

May soybean oil lost 46 points on volume of 81,647 contracts. Total open interest declined by only 94 contracts. The March contract lost 263 of open interest. As this report is being compiled on March 11, May soybean oil is trading 17 points higher, and has been the strongest of the bean complex for the past couple of days. This is likely because the USDA report released yesterday showed that ending stocks declined by approximately 10%. Maintain bullish positions, but keep short call positions in place.

USDA announced that ending stocks declined by 170 million tons, which brings ending stocks of 1.575 billion tons significantly below last year’s 1,705 billion tons. 

Corn:

May corn lost 10.75 cents on surprisingly light volume of 310,177 contracts. Volume declined from the 392,664 contracts traded on March 7 when May corn lost 2.00 cents after making a new high for the move at $5.0 2 1/2. Total open interest increased by only 465 contracts. On March 11, total open interest declined by only 1,336 contracts, which relative to volume is approximately 80% below average. Like soybeans, it is apparent that longs are digging in and refusing to liquidate. Based upon open interest increases over the past couple of weeks and that managed money is stratospherically long, corn should have seen a substantial decline of open interest on Monday, which would have been healthy for the market. Corn remains on a short and intermediate term buy signal. We have no recommendation.

The USDA disappointed longs with exports increasing only 25 mb, which resulted in ending stocks declining by 25 mb.

Chicago wheat:

May Chicago wheat lost 13.25 cents on volume of 88,826 contracts. Total open interest declined by only 195 contracts. The March contract lost 76 of open interest. The minor decline of open interest in wheat is actually quite positive because there are small numbers of speculative longs in the market, therefore liquidation would be light on the decline. As this report is being compiled on March 11, May Chicago wheat is trading 20.75 cents higher, and has taken out 6.63, the high for the move made on March 7. Maintain bullish positions, and move up stops.

Kansas City wheat:

May Kansas City wheat lost 10.00 cents on light volume of 14,173 contracts. Total open interest increased by 217 contracts, which relative to volume is approximately 40% below average. The March contract lost 1 of open interest and May -473. As this report is being compiled on March 11, May KC wheat is trading 17.75 cents higher and has taken out the previous high for the move of 7.25 1/2 made on March 7. Maintain bullish positions recommended in the February 6 report and move up stops.

Live cattle:

April live cattle lost 10 points on heavy volume of 78,480 contracts. Total open interest declined by 5,769 contracts, which relative to volume is approximately 185% above average meaning that both longs and shorts were heavily liquidating. The April contract lost 14,495 of open interest. As this report is being compiled on March 11, April cattle is trading 12.5 points lower on the day after making a high of 1.44575, which is below its contract high of 1.46825 made on March 5. Maintain bullish positions recommended in late December and move up sell stops.

WTI crude oil:

April WTI crude oil lost $1.46 on volume of 528,265 contracts. Volume increased from the 525,729 contracts traded on March 7 when April WTI advanced $1.02 and open interest declined by 7,164 contracts. On March 10, total open interest declined by 4,581 contracts, which relative to volume is approximately 55% below average. The April contract lost 18,453 of open interest. As this report is being compiled on March 11, April WTI is trading 98 cents lower and has made a new low for the move at 99.96. Although April WTI remains on a short and intermediate term buy signal, the fact remains that managed money is stratospherically long. We think they will head for the exits once they realize there is a good chance the market has topped. April WTI topped out at $105.22 on March 3 and has had only sporadic rallies. Our only concern about writing out of the money calls is that the situation in Ukraine could worsen, which could cause the market to rally again. At this juncture, we prefer a stand aside posture.

Natural gas:

April natural gas advanced 3.3 cents on light volume of 273,326 contracts. Total open interest declined by 7,033 contracts, which relative to volume is average. The April contract lost 16,815 of open interest. As this report is being compiled on March 11, April natural gas is trading 4.9 cents lower, but has not taken out yesterday’s low of 4.556. Natural gas remains on a short and intermediate term buy signal. We have no recommendation.

Euro:

The March euro lost 30 pips on volume of 181,445 contracts. Total open interest declined by 2,600 contracts, which relative to volume is approximately 40% below average. As this report is being compiled on March 11, the March euro is trading 7 pips lower, but has not taken out yesterday’s high of 1.3898. Euro remains on a short and intermediate term buy signal. We have no recommendation.

Gold:

April gold advanced $3.30 on volume of 152,993 contracts. Total open interest increased by a hefty 7,754 contracts, which relative to volume is approximately 100% above average meaning that new longs and shorts were aggressively entering the market, but longs had the edge and were able to drive prices higher at the close. As this report is being compiled on March 11, April gold is trading 2.70 higher and is made a daily high of 1353.00, which is slightly below the high for the move of 1355.00 made on March 3. From March 3 through March 10, price and open interest have been acting in a bullish congruent manner. This is a distinct change from the prior period when open interest increases on advances were out of the ordinary. We expect April gold to move on to new highs and take out the October 28, 2013 print of 1361.80. We think the mindset has changed regarding gold, and we could begin to see some robust advances. Maintain bullish positions recommended in the February 6 report.

Silver:

May silver lost 1.8 cents on volume of 40,779 contracts. Total open interest increased by 368 contracts, which is 65% less than average. As this report is being compiled on March 11, May silver is trading 6.5 cents lower and has made a daily low of 20.67, which is above yesterdays low of 20.61. In yesterday’s report, we stated that holders of long call positions should liquidate them if May silver penetrated yesterday’s low. Thus far, silver is holding up fairly well considering that copper continues its collapse on March 11 and is trading 7.60 cents lower on the day to a new contract low of $2.9420.  Also, this is a new multiyear low. Maintain the long straddle-strangle positions recommended in February 6 report.

S&P 500 E mini:

The March S&P 500 E mini lost 0.75 point on light volume of 1,235,808 contracts. Total open interest increased by 15,548 contracts, which relative to volume is approximately 45% less than average. As this report is being compiled on March 11, the E mini is trading 6.75 points lower but has not taken out yesterdays low of 1865.75. Maintain the long out of the money call, coupled with long puts for those clients who hold long equity positions.

One final point about the comparison made in the March 9 Weekend Wrap between the current bull market and the previous market 2002-2007. Occasionally, when using a market analog it is more appropriate in terms of time rather than in price. In short, the fact that the 2002-2007 bull market lasted 5 years and one day could be a strong indication that the current bull market may last 5 years and one day and ended on March 7, 2014. At the very least, the time analog between between the bull markets of 2002-2007 and 2009-2014 indicate the current bull market is on borrowed time.