Soybeans:

May soybeans lost 26.00 cents on volume of 249,686 contracts. Volume was the highest since February 27 when 427,926 contracts were traded and May soybeans lost 7.00 cents while total open interest declined by 14,723 contracts. On March 12, total open interest declined by 6,007 contracts, which relative to volume is average. The March contract lost 306 of open interest. This is the first time in recent days that total open interest has declined when soybean prices declined. This is the first sign that market participants are beginning to throw in the towel. However, there is more liquidation ahead, and though soybeans have not yet generated a short or intermediate term sell signal, we think this is on the horizon. As this report is being compiled on March 13, May soybeans are trading 9.00 cents higher and have made a daily high of 13.98 3/4. We have no new recommendation at this juncture. Clients should be out of bullish positions, however they should continue to hold short out of the money call positions.

Soybean meal:

May soybean meal lost $7.70 on volume of 87,183 contracts. Total open interest declined by 1,720 contracts, which relative to volume is approximately 20% below average. The March contract lost 381 of open interest. As this report is being compiled on March 13, May soybean meal is trading $7.50 higher on the day. This is the first time, we have seen outperformance in soybean meal versus the other members of the complex. Clients should be out of bullish positions, however they should continue to hold short out of the money call positions. However, if May soybean meal makes a daily low above 443.00, we would abandon the short call position Soybean meal remains on a short and intermediate term buy signal.

Soybean oil:

May soybean oil lost 33 points on volume of 92,417 contracts. Total open interest declined by 357 contracts, which is minuscule and dramatically below average. As this report is being compiled on March 13, May soybean oil is trading 37 points lower and has made a new low for the move at 42.87. We are seeing strength in soybeans and soybean meal and soybean oil is the weak sister on March 13. We think soybean oil will test its old high of 45.05 made on March 7 and possibly take this out. Make sure sell stops are in place on bullish positions and that short calls continue to be held.

Corn:

May corn advanced 5.25 cents on volume of 262,332 contracts. Volume was below the 280,549 contracts traded on March 11 when May corn advanced 5.00 cents and total open interest increased by 8,757 contracts. On March 12, total open interest increased by 7,915 contracts, which relative to volume is approximately 20% above average, meaning that new longs continued enter the market and push corn prices higher. The March contract lost 788 of open interest. As this report is being compiled on March 13, May corn is trading 2.25 lower and has made a high of 4.93 1/4, which is its highest price since $5.02 1/2 (the high for the move) made on March 7. Corn remains on a short and intermediate term buy signal. We have no recommendation.

Chicago wheat:

May Chicago wheat advanced 24.75 cents on heavy volume of 142,239 contracts. Volume was the heaviest since 213,769 contracts were traded on March 3 when May wheat advanced 29.25 cents and total open interest declined by 8,891 contracts. On March 12, total open interest declined again, this time by 1,831 contracts, which relative to volume is approximately 45% less than average. There were open interest declines in the nearby months with March losing 18 of open interest, May – 3,155, July -1,087. It is absolutely stunning to continue to see open interest decline on strong advances into new high territory. Since generating a short-term buy signal on February 5, May Chicago wheat has advanced 94.50 cents, and yet open interest is still declining. We think the market is well overdue for correction, but conceivably will advance until we see speculators piling in at the top of the range. Chicago wheat remains on a short and intermediate term buy signal. Continue to hold positions recommended in February 6 report, but tighten stops based upon sound money management.

Kansas City wheat:

May Kansas City wheat advanced 19.25 cents on volume of 27,970 contracts. Volume is approximately the same as March 11 when May KC wheat advanced 17.25 cents on volume of 27,606 contracts and total open interest declined by 1,142 contracts. On March 12, total open interest increased by a massive 2613 contracts, which relative to volume is approximately 250% above average meaning that new buyers were extremely aggressive and push prices to new highs for the move (7.49 1/2). As this report is being compiled on March 12, May KC wheat is trading 4.75 lower on the day. Continue to hold bullish positions recommended in February 6 report, but tighten stops based upon sound money management.

Live cattle:

April live cattle advanced 65 points on healthy volume of 71,236 contracts. Total open interest increased by 2,159 contracts, which relative to volume is approximately 20% above average. The April contract lost 8,836 of open interest, which makes the total open interest increase much more impressive (bullish). As this report is being compiled on March 13, April cattle is trading 17.5 points lower. Continue to hold bullish positions recommended in late December. April hogs are up the 3 cent limit to a new all-time high of 1.18925.

WTI crude oil: On March 12, April WTI crude oil generated a short-term sell signal, but remains on an intermediate term buy signal.

April WTI crude oil lost $2.04 on huge volume of 1,082,134 contracts. Volume was the heaviest since July 10, 2013 when 1,182,514 contracts were traded. On March 12, total open interest declined by 17,063 contracts, which relative to volume is approximately 40% below average. The April contract lost 30,575 of open interest, which means there was sufficient open interest increases in the forward months to bring total open interest to a significantly below average. Based upon the massive long position of managed money and the below average liquidation seen on March 12, it is apparent that crude oil prices have much farther to fall. Usually after the generation of a sell signal, the market has a tendency to rally from 1-3 days. In this case, we may not see much of a rally because there are massive numbers of speculators who are showing losses and will eagerly sell into any rally, which will cap the advance. We think a reasonable and more conservative strategy is to write out of the money calls in the strike of your choice based upon your risk tolerance. If in fact the market does rally, the loss on the position should be one that is within your risk parameters, but allows you to hold the position to profitability once the market resumes its decline. Alternatively, you may want to wait for the rally before initiating bearish positions.

Natural gas: On March 12, April natural gas generated a short-term sell signal, but remains on an intermediate term buy signal.

April natural gas lost 11.5 cents on volume of 283,793 contracts. Surprisingly, volume was the highest since February 27 when 292,550 contracts were traded and April natural gas declined 3 cents while total open interest increased by 3,551 contracts. On March 12, open interest declined by 2,253 contracts, which relative to volume is approximately 60% below average. The April contract lost 15,459 of open interest. As this report is being compiled on March 13, April natural gas is making new lows and is trading 11.6 cents lower on the day. Natural gas should have a countertrend rally, at which time bearish positions could be considered. Until then, we have no recommendation. Keep in mind, that the structure of the natural gas market has changed dramatically due to the massive stocks drawdown during the past couple of months. In short, the downside may not be all that great, but will be a terrific set up for bullish positions in the summer, especially if temperatures are above average.

The Energy Information Administration announced that working gas in storage was 1,001 Bcf as of Friday, March 7, 2014, according to EIA estimates. This represents a net decline of 195 Bcf from the previous week. Stocks were 958 Bcf less than last year at this time and 858 Bcf below the 5-year average of 1,859 Bcf. In the East Region, stocks were 395 Bcf below the 5-year average following net withdrawals of 95 Bcf. Stocks in the Producing Region were 335 Bcf below the 5-year average of 737 Bcf after a net withdrawal of 79 Bcf. Stocks in the West Region were 127 Bcf below the 5-year average after a net drawdown of 21 Bcf. At 1,001 Bcf, total working gas is below the 5-year historical range.

Euro:

The March euro advanced 33 pips on huge volume of 365,603 contracts. Surprisingly, volume exceeded the 354,273 contracts traded on March 6 when the March euro advanced 1.30 cents and total open interest increased by 10,255 contracts. On March 12, total open interest increased by 10,310 contracts, which relative to volume is average. As this report is being compiled on March 13, the March euro has made a new high for the move at 1.3967, but has pulled back and is currently trading 3 pips higher on the day. We have no recommendation at this juncture. However, the last thing Europe needs is a strong euro, which in our view will set the stage for an easier monetary policy, and will sow the seeds for a new bear market.

Gold:

April gold advanced $23.80 on huge volume of 270,209 contracts. Volume was the heaviest since January 29 when 279,610 contracts were traded and April gold closed at $1262.20. On March 12, total open interest increased by 9,107 contracts, which relative to volume is approximately 30% above average meaning that new longs were rushing in and pushing prices to new highs for the move ($1371.30). As this report is being compiled on March 13, April gold is trading 50 cents lower on the day, but has made another new high for the move at 1375.70. During the past 3 days, total open interest has increased by 19,742 contracts while April gold has advanced $32.30. The market is overbought and with large numbers of new longs entering the market, gold remains highly vulnerable to a correction, which is long overdue. With the major indices down sharply on the day, gold is trading firmly, and it is obvious that speculators now view gold in a completely different light from only a week or two ago. Gold has clearly broken out, which is what OIA was saying when it generated a short-term buy signal on January 13 and an intermediate term buy signal on February 11.

Silver:

May silver advanced 54.3 cents on volume of 65,567 contracts. Volume was the highest since March 7 when 66,901 contracts were traded and May silver lost 64.6 cents while total open interest increased by 896 contracts. On March 12, total open interest increased by 1,391 contracts, which relative to volume is approximately 20% below average. As this report is being compiled on March 13, May silver is 13.3 cents lower. Since the mining of silver is directly connected to copper production, we think the massive collapse in copper has affected the psychology of trading silver. Maintain bullish positions recommended on February 6.

S&P 500 E mini:

The March S&P 500 E mini gained 2.50 points on volume of 1,887,549 contracts. Total open interest increased by 91,770 contracts. Massive open interest increases and decreases during the expiration of contracts is typical and this is the result of contracts being rolled over from one month into the next. As this report is being compiled on March 13, the March E mini is trading 19.50 points lower and has made a daily low of 1845.50. Maintain out of the money calls coupled with long puts for those clients who hold long equity positions.