Soybeans:

May soybeans lost 4.75 cents on volume of 196,968 contracts. Total open interest declined by 4,879 contracts, which relative to volume is average. Although, May soybeans rallied to a high of 14.37 1/2, the March through July 2014 contracts all lost open interest. March -1953, May -2941, July – 652. As this report is being compiled on March 4, May soybeans are trading 8.75 cents higher and has made a daily high of 14.25 3/4. Our thesis that soybeans topped out on February 27 at 14.45 1/2 is holding up based upon dismal volume after February 27 along with liquidation on rallies. As we advised on February 27, write out of the money calls and if long soybeans, tighten stops and take partial profits. Soybeans remain on a short and intermediate term buy signal.

Soybean meal:

May soybean meal lost $7.20 on light volume of 76,960 contracts. Total open interest declined by 4,493 contracts, which relative to volume is approximately 140% above average, meaning that liquidation was very heavy on the decline. The March contract lost 1,994 of open interest and May lost 4,114. As this report is being compiled on March 4, May soybean meal is trading 90 cents higher on the day. Like soybeans, we recommended that clients should write out of the money calls on the remaining long positions, and tighten stops. We think May soybean meal topped out on February 27 at 472.90. On March 4 May soybean meal is trading approximately $20.00 from the high.

Soybean oil:

May soybean oil advanced 59 points on light volume of 93,001 contracts. Total open interest declined by 1,527 contracts, which relative to volume is approximately 35% below average. The March contract lost 1,804 of open interest and May -1350. On January 31, May soybean oil made its low at 37.14, and through March 3 has advanced 4.45 cents, yet open interest has gone down almost every day with very few exceptions, but has closed lower on only 7 days since January 31.

In the February 10 report, OIA recommended the initiation of bullish positions in soybean oil and clients should have healthy profits on the position. The strength of soybean oil after February 27 has been surprising in light of the dismal performance of soybeans. As this report is being compiled on March 4, May soybean oil is trading 71 points higher and is made a new high for the move at 43.79, which is its highest print since September 19, 2013 (43.91).

We recommended writing out of the money calls on bullish soybean positions based upon our concern that the soybean market is rolling over. However, it appears that soybean oil is trading independently of soybeans. For example, on March 4, May soybean oil is up 1.77% while May soybeans are +0.66% and May soybean meal is trading unchanged on the day. However, this may be due to the considerable short position held by managed money. The question remains whether new buyers will be willing to enter the market at multi-month highs to keep the rally going. Continue to hold bullish positions in soybean oil. Holding the out of the money calls depends how far out of the money the call was written. Keep in mind, if soybeans weaken considerably, soybean oil will be dragged down with it.

Corn:

May corn advanced 7.00 cents on extremely heavy volume of 549,381 contracts. Volume was the highest since February 19 when 554,886 contracts were traded and May corn closed at $4.60 1/4. On March 3, total open interest increased by 19,072 contracts, which relative to volume is approximately 40% above average meaning that substantial numbers of new buyers were willing to enter the market at relatively high prices and push May corn even higher. The March contract lost 8,060 of open interest, which makes the total open interest increase much more impressive (bullish). As this report is being compiled on March 4, May corn is trading 10.25 cents higher, but has taken out yesterday,s high of $4.82 3/4 with a new high of 4.85. Corn remains on a short and intermediate term buy signal. We have no recommendation.

Chicago wheat: May Chicago wheat did not generate an intermediate term buy signal on March 3, however it remains on a short-term buy signal.

May Chicago wheat advanced 29.25 cents on huge volume of 213,769 contracts. Volume was the highest since April 3, 2013 when 219,206 contracts were traded and May wheat closed at $7.47 1/2. On March 3, total open interest declined by a substantial 8,891 contracts, which relative to volume is approximately 60% above average meaning that liquidation was extremely heavy on a very large advance. The March through December 2014 contracts lost open interest. According to the most recent COT report, managed money was short by a ratio of 1.24:1, and this explains at least some of the decline of open interest. As this report is being compiled on March 4, May Chicago wheat is trading 6.00 cents higher, and has taken out yesterday’s high of 6.44 1/2. For May wheat to continue its advance, new buyers must be willing to pay the highest prices since mid December. If long Chicago wheat continue to hold bullish positions and tighten stops, although our preferred trade has been KC wheat.

Kansas City wheat:

May Kansas City wheat advanced 26.00 cents on heavy volume of 35,630 contracts. Volume was the highest since February 27 when 37,532 contracts were traded and total open interest declined by 1,804 contracts while May Kansas City wheat lost 14.50 cents. On March 4, total open interest increased by 1089 contracts, which relative to volume is approximately 20% above average. The March contract lost 361 of open interest, which makes the total open interest increase much more impressive (bullish). The open interest increase was the first since February 20 when May KC wheat advanced 2 cents and total open interest increased by 189 contracts on volume of 28,534 contracts. Contrary to Chicago wheat, managed money is long KC wheat by a ratio of 2.42:1, but this has been fueled by the liquidation of short positions rather than the addition of long positions. Continue to hold bullish positions and tighten stops to protect profits.

Live cattle:

April live cattle lost 85 points on volume of 52,165 contracts. Total open interest declined by a massive 4,374 contracts, which relative to volume is approximately 230% above average meaning that liquidation was extremely heavy on a rather modest decline. As this report is being compiled on March 4, April cattle is trading 1.825 cents higher and has made a new high for the move at 1.46300, which takes out the previous high of 1.45975 made on February 27. Although, we thought cattle might be pausing in its upward trajectory, it is apparent this was a one-day event and the rally will continue. April hogs are up the 3 cent limit for the 3rd day in a row. The hog market is on fire market and we recommend a stand aside posture due to the extreme overbought condition. Maintain bullish cattle positions recommended in late December.

WTI crude oil:

April WTI crude oil advanced $2.33 on extremely heavy volume of 751,831 contracts. Volume was the highest since February 12 when 769,751 contracts were traded and April WTI crude closed at $99.92. On March 3, total open interest increased by 17,791 contracts, which relative to volume is average. The April contract lost 3,573 of open interest, which makes the total open interest increased more impressive (bullish). As this report is being compiled on March 4, April WTI is trading $1.79 lower on the day and has made a low of 102.85, which is 10 cents below yesterday’s low (102.95). May Brent crude oil advanced $1.87 on huge volume of 906,014 contracts. However, open interest increased only 7,248 contracts. Brent crude volume was the highest since November 7 when 936,109 contracts were traded. April WTI remains on a short and intermediate term buy signal. We have no recommendation.

Natural gas:

April natural gas lost 11.7 cents on very light volume of 259,107 contracts. Remarkably, total volume was the lowest since January 6 when 195,768 contracts were traded and April natural gas closed at $4.178. On March 3, total open interest declined by 14,315 contracts, which relative to volume is approximately 120% above average meaning that liquidation was heavy on the decline, but the low volume indicates that participation was limited. Our view is that April natural gas topped out on February 24 at $5.209, and that the path of least resistance is lower. April natural gas remains on a short and intermediate term buy signal. We have no recommendation.

Euro:

The March euro declined by 89 pips on volume of 189,571 contracts. Volume declined from February 28 when 274,276 contracts were traded and the March euro advanced 1.11 cents while total open interest increased by 5,316 contracts. On March 3, total open interest declined by only 1,792 contracts, which relative to volume is approximately 55% below average. As this report is being compiled on March 4, the March euro is trading unchanged and has made a low of 1.3721, which is 5 pips below yesterdays print of 1.3726. The euro remains on a short and intermediate term buy signal. We have no recommendation.

British pound:

The March British pound lost 99 pips on light volume of 95,754 contracts. Volume declined from the 127,425 contracts traded on February 28 when the March pound advanced 74 pips and total open interest increased by 865 contracts. On March 3, total open interest declined by 4,624 contracts, which relative to volume is approximately 100% above average meaning that liquidation was substantial on the decline. As this report is being compiled on March 4, the March pound is trading 15 pips higher and has made a low of 1.6638, which is slightly below yesterdays print of 1.6651. The pound remains on a short and intermediate term buy signal. We have no recommendation.

Yen: On March 3, the March yen generated an intermediate term buy signal, after generating a short-term buy signal on January 27.

The March yen advanced 34 pips on volume of 151,568 contracts. Volume declined from the 172,684 contracts traded on February 28 when the March yen advanced 27 pips and total open interest declined by 984 contracts. On March 3, total open interest declined by 1,155 contracts, which relative to volume is approximately 65% less than average. As this report is being compiled on March 4, the March yen is trading 69 pips lower and has made a low of .9778, which is 2 pips above the low made on February 28 (.9776). Usually, after the generation of a buy signal, the market tends to pullback from 1-3 days. We are seeing the pullback today, and think there may be some follow-through tomorrow, but OIA believes the yen is headed higher. On March 4, the yen has pulled back slightly below the 20 day moving average of .9791. We recommend the initiation of long call positions using the strike that is appropriate for your risk tolerance. We would exit this position upon penetration of the February 21 low of .9725.

Gold:

April gold advanced $28.70 on heavier than normal volume of 172,228 contracts. Volume was the highest since February 18 when 195,176 contracts were traded and April gold advanced $5.80 while total open interest increased by 5,765 contracts. On March 3, total open interest increased by 8,998 contracts, which relative to volume is approximately 100% above average meaning that new longs were heavily entering the market to drive prices to new highs ($1355.00). The big disappointment was the relatively low volume when taking into account the strong advance into new high territory. Although market participants in yesterday’s trading felt strongly about their positions, the fact remains many would be gold buyers are on the sidelines waiting for a sizable correction. As we have pointed out in numerous reports, with the relatively low long to short ratio of managed money, we don’t think a major correction is at hand. Maintain bullish positions recommended in February 6 report.

Silver:

May silver advanced 24.4  cents on volume of 48,719 contracts. Total open interest declined by only 19 contracts. The action in silver continues to reinforce our view that speculators do not believe in the rally, and the COT stats confirm it. As this report is being compiled on March 4, May silver is trading 19.5 cents lower on the day. Silver remains on a short and intermediate term buy signal. Maintain long straddles or strangles or long call positions recommended in the February 6 report.

S&P 500 E mini:

The S&P 500 E mini lost 14.50 points on heavy volume of 2,408,895 contracts. Volume was the highest since February 3 when 3,026,524 contracts were traded and the March E mini closed at 1732 75. As this report is being compiled on March 4, the March E mini is trading 26.25 points higher and has made a new all-time high at 1872.00. On February 21, we recommended that clients buy out of the money calls against the long put positions they’ve been holding in order to mitigate any losses on long put positions. This trade is only for clients who hold long equity positions