Soybeans:

May soybeans advanced 2.50 cents on volume of 212,552 contracts. Interestingly, volume was considerably higher than the 168,629 contracts traded on March 19 when May soybeans advanced 13.00 cents and total open interest declined by 13,205 contracts. Additionally, volume was the highest since March 13 when 222,838 contracts were traded and May soybeans advanced 9.25 cents while total open interest increased by 8,315 contracts. On March 20, total open interest declined by 6,582 contracts, which relative to volume is approximately 20% above average meaning that liquidation was fairly substantial on a minor advance. The May contract lost 6,548 of open interest, July -952, August and September -32. This was the 3rd day in a row that soybean prices advanced and open interest declined. This confirms the downward direction of the market.

Accounting for heavier than normal volume was the rally up to $14.56 1/2, which was 3.50 cents below the high of 14.60 made on March 7. In yesterday’s report, we stated the high was likely in on soybeans after the final thrust higher on March 20. As this report is being compiled on March 21, May soybeans are trading 25.75 cents lower and have made a daily low of 14.0 5 1/4, which is the lowest price since 13.84 1/2 made on March 18.

From the March 19 report:

“This is the second day in a row that soybean prices have advanced and open interest has declined. This is bearish. As this report is being compiled on March 20, May soybeans are trading 4.25 cents lower and has made a low of 14.22 1/4, but also made a new high for the move at 14.56 1/2, which is 3.50 cents short of the high of 14.60 made on March 7. We think there is a good chance that today’s high is the extent of the move.”

Soybean meal:

May soybean meal advanced $4.50 on fairly heavy volume of 80,268 contracts. Volume was the highest since March 13 when 86,099 contracts were traded and May soybean meal advanced $5.40 while total open interest increased by 389 contracts. On March 20, total open interest increased by 981 contracts, which relative to volume is approximately 45% less than average. The May contract lost 1,105 of open interest, which makes the total open interest increase more impressive (bullish). Yesterday, soybean meal made a new high for the move of $471.80, which took out the previous high of 471.15 made on February 27. As this report is being compiled on March 21, May soybean meal is trading $9.80 lower and has made a daily low of 455.00. In the March 19 report, we stated: “We think there is a good chance that the high of March 20 will be the high for the move.”

Soybean oil: On March 20, May soybean oil generated a short-term sell signal, but remains on an intermediate term buy signal.

As is usually the case after the generation of a sell signal , the market has a tendency to rally from 1-3 days  and this will be the opportunity to initiate bearish positions. 

Corn:

May corn declined 9.25 cents on fairly light volume of 179,251 contracts. Considering the magnitude of the decline, it is surprising that volume was significantly below that of March 19 when 204,733 contracts were traded and corn declined 1.50 cents  while total open interest declined by 674 contracts. On March 20, total open interest declined by 4,946 contracts, which relative to volume is approximately average. The May contract accounted for loss of 5,227 of open interest. As this report is being compiled on March 21, May corn is trading unchanged on the day. Corn remains on a short and intermediate term buy signal. We have no recommendation.

Chicago wheat:

May Chicago wheat lost 12.00 cents on heavy volume of 177,414 contracts. Volume exceeded that of March 19 when 155,953 contracts were traded and May wheat advanced 23.25 cents while total open interest increased by 4,146 contracts. Additionally, volume was the highest since March 3 when 213,769 contracts are traded and May wheat advanced 29.25 cents while total open interest declined by 8,891 contracts. On March 20, total open interest increased by 6,806 contracts, which relative to volume is approximately 50% above average, meaning that new short sellers were aggressively entering the market and driving prices lower. Open interest increased pretty much across the board with the exception of the September contract, which lost 324 of open interest. Otherwise, the May 2014 through July 2016 contracts gained open interest. The dramatic increase in open interest on a fairly minor decline after a long advance is a bit unsettling. Yesterday, we recommended the purchase of long puts to protect profits and mitigate any further downside. As we said yesterday, it is possible the market has made a top, or a temporary top. Stay with bullish positions recommended on February 6 and the long put position recommended in the March 19 report.

Kansas City wheat:

May Kansas City wheat lost 6.25 cents on relatively heavy volume of 33,625 contracts. Total open interest increased by 1,290 contracts, which relative to volume is approximately 50% above average meaning that new short sellers were aggressive about entering new positions and driving prices lower. The May contract lost 667 of open interest, which makes the total open interest increase more impressive (bearish). There were open interest increases in the July 2014 through September 2015 contracts. The hefty increase of open interest on March 20 is especially troubling with respect to Kansas City wheat. The reason is Kansas City wheat has seen the largest (relative to volume) and most consistent increases of open interest compared to Chicago wheat. With prices at nine-month highs accompanied by increases of open interest, especially in the later stages of the advance, a decline of open interest would have been healthy. This is another confirming sign that both Chicago and KC wheat prices have made a top or temporary top. Like Chicago wheat, we have recommended long puts to protect profits on bullish positions.

Live cattle:

April live cattle lost 1.70 cents on volume of 77,631 contracts. Volume exceeded trading on March 14 when April cattle advanced 1.625 cents on volume of 74,176 contracts and total open interest increased by 4,119 contracts. On March 20, total open interest declined by 2,900 contracts, which relative to volume is approximately 50% above average meaning that liquidation was heavy on the decline. The April contract lost 5,376 of open interest. The market made a new high for the move on March 20 of 1.46850, which slightly took out the previous high of 1.46825 made on March 5. As this report is being compiled on March 21, April cattle is trading unchanged on the day and has made a low of 1.43500, which is slightly above yesterday’s low of 1.44450. We do not think the rally in cattle is over and advise that bullish positions recommended in late December continue to be held.

WTI crude oil:

May WTI crude oil lost 27 cents on volume of 529,376 contracts. Total open interest declined by 10,114 contracts, which relative to volume is approximately 20% below average. The April contract lost 21,763 of open interest. In yesterday’s report, we recommended that bearish positions be initiated, in addition to the short call recommended on March 12 when WTI generated a short-term sell signal. In yesterday’s report, we stated that bearish position should be liquidated if the low for the day was above 98.76 and  that we didn’t expect an advance much beyond 99.98. As this report is being compiled on March 21, May WTI is trading 1.14 higher with a daily low of 98.25, which is below the pivot point of 98.76. Additionally, the high for the day of $100.25, is only 27 cents above the pivot point of 99.98. Continue to hold bearish positions.

Natural gas:

April natural gas declined 11.5 cents on heavier than normal volume of 262,360 contracts. Volume was the highest since March 13 when 308,649 contracts were traded and April natural gas declined by 10.7 cents while total open interest declined by 10,171 contracts. On March 20, total open interest increased by 257 contracts, which is minuscule and dramatically below average. The April contract lost 18,243 of open interest, which makes the total open interest increased  more bearish. As this report is being compiled on March 21, April natural gas is trading 5.6 cents lower and has made a new low for the move the $4.286. On March 12, April natural gas generated a short-term sell signal. As stated before, we think the short-term trading range for natural gas is between 4.160 -4.280.

Euro:

The June euro lost 49 pips on volume of 209,515 contracts. Total open interest declined by 119 contracts, which is minuscule and dramatically below average. The problem with the euro is that the market has had a significant decline over the past 2 days, yet open interest in the June contract declined by only 2,127 contracts. On March 19, when the euro declined 1.00 cent, open interest in the June contract lost only 1874 of open interest. In short, the market has declined by approximately 1 1/2 cents yet open interest has declined by a very minor amount. This means there are likely significant numbers of market participants long at higher levels, who will be forced to liquidate as prices move lower. We think this bodes ill for the market and believe that prices are headed lower. With managed money long the euro by a ratio of 2.44:1, there is plenty of fuel for a continued downside move. The euro remains on a short and intermediate term buy signal. We have no recommendation.

British pound: The June British pound generated a short-term sell signal on March 19 and we are awaiting a rally before recommending the initiation of bearish positions.

Yen: The June yen remains on a short and intermediate term sell signal. We will report developments when they occur, but at this point have no recommendation.

Gold:

April gold lost $10.80 on volume of 198,633 contracts. Total open interest declined by 1,683 contracts, which relative to volume is approximately 55% less than average. As this report is being compiled on March 21, April gold is trading $5.50 higher on the day. Gold is in a corrective phase and the generation of a short-term sell signal in silver is not going to help gold. The correction is within a normal range and currently stands approximately $10.00 below the 20 day moving average and approximately 36.00 above the 50 day moving average. Maintain bullish positions recommended on February 6.

Silver: On March 20, May silver generated a short-term sell signal, but remains on an intermediate term buy signal.

May silver lost 39.6 cents on volume of 49,973 contracts. Total open interest increased by 1,759 contracts, which relative to volume is approximately 40% above average, meaning that new short sellers were aggressively entering the market and driving prices to new lows for the move ($20.14). Hopefully, silver will remain on an intermediate term buy signal, but at this juncture it does not look likely. In the report of March 17, we recommended that clients take profits on silver and move to the sidelines.

S&P 500 E mini:

The S&P 500 E mini gained 13.75 points on volume of 2,017,011 contracts. Total open interest declined by 24,806 contracts. This is the last trading day of the March contract. As this report is being compiled on March 21, the June E mini is trading 3.25 points lower after making a high of 1876.75, which is the highest print since March 11 when the E mini made a high of 1882.25. For clients who hold long equity positions, continue to hold long puts coupled with out of the money calls.