Soybeans:

May soybeans lost 7.75 cents on light volume of 136,094 contracts. Remarkably, volume was the lowest since January 28 when 118,614 contracts were traded and May soybeans closed at $12.71. On March 14, total open interest declined by 7,596 contracts, which relative to volume is approximately 120% above average meaning that liquidation was heavy though participation was light as evidenced by volume. The front months  lost open interest, March -117, May -7384, July -1570. As this report is being compiled on March 17, May soybeans are trading unchanged on the day. As we have indicated in previous reports, we think the highs are in for soybeans and though they have not generated a short-term sell signal, we think this is imminent. The only position that should be held at this juncture are short calls recommended on March 11.

Soybean meal:

May soybean meal advanced $2.10 on light volume of 50,100 contracts. Total open interest declined by 853 contracts, which relative to volume is approximately 25% below average. The March contract lost 81 of open interest in May – 1272. As this report is being compiled on March 17, May soybean meal is trading $3.20 higher. Continue to hold the short call position recommended on March 11, but if the low for the day in the May contract is above $443.40, liquidate the position.

Soybean oil:

May soybean oil lost 70 points on volume of 80,690 contracts. Total open interest declined by 4,131 contracts, which relative to volume is approximately 100% above average meaning that liquidation was very heavy on the decline. The May contract lost 5,334 of open interest. As this report is being compiled on March 17, May soybean oil is trading 43 points lower and has made a new low for the move at 41.84, which took out the previous low of 41.87 made on March 3. Ever since May soybean oil topped out at 45.05 on March 7, the market has closed lower for 5 consecutive days. For soybean oil to resume its advance, the low for the day must be above 42.58. Soybean oil remains on a short and intermediate term buy signal. We have no recommendation at this juncture.

Corn:

May corn advanced 1.00 cent on light volume of 204,390 contracts. Total open interest declined by 1,253 contracts, which relative to volume is approximately 65% less than average. The March contract lost 455 of open interest, May -3822, July -2862. As this report is being compiled on March 17, May corn is trading 3.25 lower on the day. The net long position of manage money remains at a stratospheric level and we discussed this in the Weekend Wrap of March 16. Though corn remains on a short and intermediate term buy signal, we see no reason to be involved in the market.

From the March 16 Weekend Wrap:

“As remarkable as it is, managed money’s long position exceeds that of March 26, 2013, when the long to short ratio made a high of 3.62:1 and corn closed at $7.34 3/4. From February 26 through March 11, which encompasses 2 COT periods, the long to short ratio has increased from 1.68:1 to 3.78:1, yet May corn prices have advanced only 22.00 cents. We consider this to be a danger sign to anyone long the market. There is extreme bullishness in the market, yet corn’s advance  has been tepid. Although we are unwilling to call a top in the corn market, the massive long position of manage money and the unimpressive performance during the past couple of weeks should give anyone pause about having any significant position in the market.”

Chicago wheat:

May Chicago wheat advanced 13.50 cents on volume of 106,047 contracts. Total open interest declined by 1,722 contracts, which relative to volume is approximately 30% less than average. The March contract gained 9 contracts while May -3255. For the past 3 days beginning on March 12, open interest has been acting in a bearish fashion relative to prices. For example, open interest declines when prices advance and increases when prices decline. Additionally, May wheat has been unable to take out the March 13 high of 6.96 1/2. Putting this all together, we advise caution for bullish positions and think the March 14 low of 6.69 3/4 would be a reasonable exit point for bullish positions. It appears the market has discounted much of the Ukraine-Crimea crisis at this juncture, and because wheat is massively overbought, it becomes highly vulnerable to a garden-variety correction.

Kansas City wheat:

May Kansas City wheat advanced 14.75 cents on volume of 18,530 contracts. Total open interest increased by 1,197 contracts, which relative to volume is approximately 145% above average meaning that new buyers were aggressively entering the market and pushing prices higher. As this report is being compiled on March 17, May KC wheat is trading 5.75 cents lower on the day. KC wheat is massively overbought relative to its 20 day moving average of $7.04 3/8 and the 50 day moving average of 6.61 1/8. We would use the March 14 low of $7.32 to exit bullish positions.

Live cattle:

April live cattle advanced 1.625 cents on healthy volume of 74,176 contracts. Total open interest increased by 4,119 contracts, which relative to volume is approximately 120% above average meaning that new longs were extremely aggressive about entering new long positions and driving prices higher. The April contract lost 4,738 of open interest, which makes the total open interest increased very bullish. As this report is being compiled on March 17, April cattle is trading unchanged on the day, but has made another new high for the move at 1.45925. Continue to hold bullish positions recommended in late December 2013.

WTI crude oil:

April WTI crude oil advanced 69 cents on volume of 530,524 contracts. Total open interest declined by 5,348 contracts, which relative to volume is approximately 50% less than average. The April contract lost 19,916 of open interest. As this report is being compiled on March 17, April crude oil is trading $1.10 lower and has made a daily low of 97.37, which is the lowest print since February 7 (96.72). Most telling is the Brent crude contract, which is trading $1.95 lower. This is the contract that should be most impacted by the Ukraine crisis, and yet it is underperforming WTI with a decline of 1.77% versus -1.08% for April crude.

On March 12, April WTI crude oil generated a short-term sell signal, but remains on an intermediate term buy signal. Usually, after the generation of a sell signal the market has a tendency to rally for a a day or two, but this did not occur and on March 12 due to the extreme weakness in crude, we suggested that clients write out of the money calls. This trade continues to work well and recommend holding the position. We think lower prices are in store, especially since heating oil generated a short and intermediate term sell signal on Friday and it appears that gasoline will generate a short-term sell signal on March 17.

Heating oil: On March 14 May heating oil generated a short and intermediate term sell signal.

Natural gas:

April natural gas advanced 4.2 cents on volume of 162,409 contracts. Remarkably, volume was the lightest since December 24, 2013 when 140,762 contracts were traded. On March 14, total open interest declined by 5,871 contracts, which relative to volume is approximately 40% above average meaning that liquidation was fairly heavy on a modest advance. The April contract lost 10,925 of open interest. As this report is being compiled on March 17, April natural gas is trading 11.5 cents higher after gapping higher at the open leaving a gap of 5.7 cents. On March 12, April natural gas generated a short-term sell signal, but has yet to generate an intermediate term sell signal. We have no recommendation at this juncture.

Euro:

The June euro advanced 45 pips on heavy volume of 314,870 contracts. Total open interest declined by 14,376 contracts, which relative to volume is approximately 75% above average meaning that liquidation was extremely heavy on the advance. There has been talk that the advance in the euro can be attributed to the Russian government removing funds from the United States and converting them into euros. The euro remains on a short and intermediate term buy signal. We have no recommendation.

Yen:

The June yen advanced 36 pips on heavy volume of 271,445 contracts. Total open interest increased by 8,423 contracts, which relative to volume is approximately 20% above average. As this report is being compiled on March 17, the June yen is trading 41 pips lower. The yen remains on a short and intermediate term sell signal. We have no recommendation.

Gold:

April gold advanced $6.60 on heavier than normal volume of 213,476 contracts. Total open interest increased by 4,950, which relative to volume is approximately 10% below average. As this report is being compiled on March 17, April gold is trading $9.50 lower after making a new high for the move at $1392.60. We encourage readers to review the March 16 Weekend Wrap on gold. The market is massively overbought and is well overdue for correction, although this may be shallow and of short duration.

Silver:

May silver advanced 21.5 cents on volume of 53,801 contracts. Total open interest increased by 2,033 contracts, which relative to volume is approximately 50% above average meaning that new longs were aggressively entering the market and driving prices to a new high for the move of $21.795. As this report is being compiled on March 17, May silver is trading 18.7 cents lower after making a daily high of 21.650, which did not take out the high of March 14. Silver remains on a short and intermediate term buy signal. Maintain positions recommended in the February 6 report.

S&P 500 E mini:

The S&P 500 E mini lost 6.75 points on huge volume of 3,507,601 contracts. Total open interest increased by 162,396 contracts, which is due to the expiration of the March contract. Maintain the long call position recommended on February 21 along with long put positions for clients who hold long equity positions.

10 year Treasury Note: On March 14, the June 10 year treasury note generated a short-term buy signal, which reversed the short-term sell signal generated on March 7.