Soybeans:

May soybeans lost 5.75 cents on volume of 205,056 contracts. Total open interest increased by 7,486 contracts, which relative to volume is approximately 45% above average meaning that shorts were very aggressive about initiating new positions and were able to drive prices lower. The March contract lost 497 of open interest. For the past 3 days beginning on March 7, open interest action relative to price has been acting in a bearish manner. In short, when soybeans advance, open interest goes down and when prices decline, open interest increases. As this report is being compiled on March 12, May soybeans are trading 25.25 lower and have made a new low for the move at 13.65 1/2, which is the lowest print since $13.65 3/4 made on February 25. Yesterday evening, May soybeans opened at 14.06 1/4, and the daily high has been 14.07 1/4 leaving a 5.75 cent gap between last evening’s opening and the previous day’s close of 14.13. We been advising clients to take profits on any long positions and hold onto the short call. At this juncture, all long positions should be closed with only the short call position remaining. Soybeans remain on a short and intermediate term buy signal, but we think it is clearly headed for a short-term sell signal within the next couple of days.

Soybean meal:

May soybean meal lost 50 cents on volume of 80,751 contracts. Total open interest increased by 164 contracts. The March contract lost 345 of open interest. As this report is being compiled on March 12, May soybean meal is trading $8.30 lower and has made a new low for the move at 431.00. Beginning on March 5, we were advising clients to take  profits in soybean meal and if not, to write short calls against the position. At this juncture, clients should be out of soybean meal, and if the short call position was written at higher levels, continue to hold it. If not, move to the sidelines. Soybean meal remains on a short and intermediate term sell signal, but we think a short-term sell signal is imminent.

Soybean oil:

May soybean oil lost 11 points on volume of 78,834 contracts. Total open interest increased by 2,275 contracts, which relative to volume is approximately 15% above average. As this report is being compiled on March 12, May soybean oil is trading 58 points lower and has made a new low for the move at 42.82. We have advised clients to write out of the money calls on their bullish positions and tighten stops. OIA anticipated that soybean oil would be the victim of weakness in soybeans, however, we do not think the move in soybean oil is over. Stops should be based on money management and profit considerations, and this should be your guide with respect to continuing to hold positions.

Corn:

May corn advanced 5.00 cents on volume of 280,549 contracts. Volume declined from the 310,177 contracts traded on March 10 when May corn lost 10.75 cents and total open interest declined by 1,336 contracts. On March 11, total open interest increased by 8,757 contracts, which relative to volume is approximately 20% above average meaning that new longs were entering the market at an above average rate and driving prices higher into the close.The March contract lost 941 of open interest May -1,401, July -1,291.  The reason open interest increased was there was a 10,742 contract increase in the March 2015 contract. This is undoubtedly the work of commercial interests. In short, if it were not for the massive increase in the March contract, total open interest would likely have declined. This is a sign of caution. As this report is being compiled on March 12, May corn is trading 3.50 higher and has taken out yesterday’s high of 4.85. Corn remains on a short and intermediate term buy signal. We have no recommendation.

Chicago wheat:

May Chicago wheat closed 18.25 cents higher on volume of 110,720 contracts. Volume was the highest since March 7 when 126,176 contracts were traded and May wheat advanced 8.00 cents while total open interest declined by 3,822 contracts. On March 11, total open interest increased by only 867 contracts, which relative to volume is approximately 60% below average. The March contract accounted for a gain of 22 and May lost 1,061 of open interest. It is remarkable with wheat selling at the highest prices since early December, that open interest has not been increasing on price advances.

As this report is being compiled on March 12, May wheat has made another new high at $6.84 1/2 and is trading 20.00 cents higher on the day. Aside from concern about wheat production in Ukraine, the North American Millers Association forecast that soft red winter wheat production in the US will total 437 million bushels, down from the 564.9 mb in 2013. May Chicago wheat is massively overbought and well overdue for correction. The first sign of this may be when we see a large increase of open interest on a price advance, and this may occur today. The notable feature of Chicago wheat has been the very large short position of manage money speculators and their refusal to liquidate as prices advanced. Once the bulk of these are blown out of the market the problem going forward is whether new buyers will step up and pay ever higher prices for wheat. We think caution is definitely in order and advise tightening stops on bullish positions.

Kansas City wheat:

May Kansas City wheat advanced 7.25 cents on relatively heavy volume of 27,606 contracts. Total open interest declined by 1,142 contracts, which relative to volume is approximately 55% above average, meaning that liquidation was fairly substantial on KC wheat advanced into new high territory (7.38). The March contract lost 33 of open interest, May -937, July -1218. As this report is being compiled on March 12, May KC wheat is trading 16.75 cents higher on the day and has made a new high for the move at $7.49 1/2. Like Chicago wheat, we think it is wise to tighten stops, and we will be looking for a huge increase of open interest in both KC and Chicago wheat as a warning sign that new buyers are entering the market at the top of the range.

Live cattle:

April live cattle gained 7.5 points on heavy volume of 82,405 contracts. Total open interest increased 564 contracts, which relative to volume is approximately 60% less than average. The April contract lost 9,655 of open interest. Yesterday, live cattle made a high 1.44575, which was the highest price since the contract high 1.46825 made on March 5. As this report is being compiled on March 12, April cattle is trading 62.5 points higher and has made a high for the day at 1.44000. Maintain bullish positions and move up stops to protect profits. We think prices are going higher, but the market may consolidate at this level before resuming its uptrend. The 20 day moving average is 1.42956 and the 50 day, 1.40447.

WTI crude oil:

April WTI crude oil lost $1.09 on heavy volume of 700,365 contracts. Total open interest increased by 4,310 contracts, which relative to volume is approximately 60% less than average. The April contract accounted for loss of 21,019 of open interest. As this report is being compiled on March 12, April WTI is trading $2.08 lower and has made a new low for the move at 97.55. It is likely that April WTI will generate a short-term sell signal on March 12.

The Energy Information  Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 6.2 million barrels from the previous week. At 370.0 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories decreased by 5.2 million barrels last week, but are near the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 0.5 million barrels last week and are below the lower limit of the average range for this time of year. Propane/propylene inventories fell 1.1 million barrels last week and are near the lower limit of the average range. Total commercial petroleum inventories decreased by 1.6 million barrels last week.

Natural gas:

April natural gas lost 4.6 cents on volume of 225,346 contracts. Total open interest declined by 4,072 contracts, which relative to volume is approximately 25% less than average. As this report is being compiled on March 12, April natural gas is trading 8.1 cents lower and has made a low of $4.448, which is its lowest print since 4.441 made on February 27. Natural gas remains on a short and intermediate term buy signal.

Euro:

The March euro advanced 10 pips on volume of 242,010 contracts. Total open interest increased by 6,193 contracts, which relative to volume is approximately average. As this report is being compiled on March 12, the March euro is trading 36 pips higher and has made a daily high of 1.3915, which was the exact high on March 7. The euro remains on a short and intermediate term buy signal. We have no recommendation.

Australian dollar:

The March Australian dollar lost 46 pips on volume of 121,270 contracts. Volume was the highest since February 4 when the print was 130,734 contracts and the March Australian dollar closed at 89.08. As this report is being compiled on March 12, the March Aussie dollar is trading 18 pips higher after making a low for the move at 89.20. On March 7, the March Australian dollar generated an intermediate term buy signal after generating a short-term buy signal on February 7. Usually after the generation of a buy signal, the market tends to pullback from 1-3 days and the Australian dollar has been conforming to this pattern. The low of 89.20 should be the extent of the downside, and the March Australian dollar should rally from here and test the March 7 high of 91.34.

Gold:

April gold advanced $5.20 on healthy volume of 179,172 contracts. Total open interest increased by 2,881 contracts, which relative to volume is approximately 35% below average. As this report is being compiled on March 12, April gold is trading sharply higher and has made a new high for the move at $1371.30. In yesterday’s report we commented on how open interest action was definitely improving and that market momentum would increase fairly rapidly as those sitting on the sidelines realize that gold is in a bull market. Maintain bullish positions recommended in February 6 report.

Silver:

May silver lost 9.5 cents on volume of 51,575 contracts. Total open interest declined by only 89 contracts. As this report is being compiled on March 12, is trading 34.3 cents higher. Maintain long straddles and strangles and the long call position recommended in the February 6 report.

S&P 500 E mini:

The S&P 500 E mini declined 12.00 points on volume of 1,767,550 contracts. Total open interest increased by 57,040 contracts, which relative to volume is approximately 25% above average. Is important to keep in mind that as the March contract enters expiration market participants are switching into the June contract which causes distortions in open interest. As this report is being compiled on March 12, the E mini is trading 0.75 higher after making a low of 1853.75. Continue maintain out of the money calls coupled with long puts for those clients who hold long equity positions.