Soybeans:

May soybeans advanced 17.50 cents on very low volume of 157,486 contracts. Volume fell from the 182,537 contracts traded on March 5 when May soybeans lost 2.50 cents and total open interest declined by 8,443 contracts. Additionally, volume was above the recent low of 148,109 contracts traded on March 4 when May soybeans advanced 13.75 cents and total open interest declined by 4,353 contracts. It was dramatically below average daily volume for February of 267,923 contracts and year to date average daily volume of 219,580. In short, volume is indicating that large numbers of traders are on the sidelines. On March 6, total open interest increased by 4,642 contracts, which relative to volume is approximately 20% above average. The March contract lost 521 of open interest. In other words, though participation was low, those that were involved were willing to make strong commitments and new longs were able to push the market higher. As this report is being compiled on March 7, May soybeans are trading 6.25 higher and have made a new high for the move at 14.59 3/4. The market is trading in the parabolic fashion, and the lack of volume indicates there are fewer players willing to participate in the upward thrust. For those who are long soybeans, we recommend tightening stops and maintain the short out of the money call position recommended on February 27.

Soybean meal:

May soybean meal advanced $1.30 on low volume of 65,887 contracts. Total open interest increased by 3,644 contracts, which relative to volume is approximately 120% above average. The March contract lost 730 of open interest. Beginning on February 28 through March 6, May soybean meal has been dramatically underperforming soybeans and soybean oil. For example, from February 28 through March 6 , May soybean meal has declined 0.16% while May soybeans have advanced by 3.45% and May soybean oil has gained 8.12% in the identical time frame. While soybeans have made a new high on March 7, May soybean meal has not gotten close to the high of $472.90 made on February 27. Soybean meal has been the out performer for quite a while, and conceivably, the consolidation of its recent gains may be temporary, or an indication that demand has been satiated in the short-term. This is important because soybean meal has been the primary driver of soybean prices. Like soybeans, we recommend tightening stops on long positions and maintaining short call positions recommended in the February 27 report.

Soybean oil:

May soybean oil gained 1.09 cents on light volume of 86,156 contracts. Total open interest increased by 1,297 contracts, which relative to volume is approximately 40% less than average, but is one of the very few total open interest increases since soybean oil generated a short-term buy signal on February 7. The March contract lost 305 and May -1812 of open interest, which makes the total open interest increased more impressive (bullish). On March 4, May soybean oil advanced 1.33 cents and total open interest increased by 1,842 contracts on volume of 89,947. In short, we have begun to see positive price and open interest action and though this is healthy, it may be an indication of a temporary top. We suspect that most of the open interest increase is probably by speculators who are buying at the top of the trading range. As this report is being compiled on March 7, May soybean oil is trading 33 points lower and has made a new high for the move at 45.05. We recommend tightening stops on long positions that were recommended in the February 10 report and continue to hold the out of the money call recommended on February 27.

Corn:

May corn advanced 9.00 cents on volume of 322,915 contracts. Volume declined from the 387,520 contracts traded on March 5 when May corn lost 2.50 cents and total open interest declined by 10,204 contracts. On March 6, total open interest increased by a massive 16,147 contracts, which relative to volume is approximately 100% above average meaning that fresh new longs were aggressively entering the market in large numbers and driving prices to new highs ($4.92 1/2). As as this report is being compiled on March 7, May corn is trading 2.75 lower after making a new high for the move at $5.02 1/2. This is the highest price for May corn since its high print of $5.13 made on September 3, 2013. Recently, we have seen large increases of open interest and believe  in today’s COT report that managed money will have added significantly to their long positions. Though May corn remains on a short and intermediate term buy signal, we think the market is vulnerable, and on a rally up to today’s high, we think out of the money calls should be written against long positions. The fact is, farmers are holding large amounts of corn and will need to sell the inventory and if history is any guide, at lower prices.

Chicago wheat:

May Chicago wheat advanced 3.50 cents on light volume of 78,119 contracts. Total open interest declined by 604 contracts, which relative to volume is approximately 60% below average. The March contract lost 58 of open interest and May -2,342.  From February 28 through March 6, May Chicago wheat has advanced 56.75 cents, while total open interest has declined for 5 consecutive days totaling 18,615 contracts. The difference in the price and open interest action in wheat versus corn could not be more different. From February 28 through March 6, May corn has advanced 36.50 cents or 8.03% and open interest has increased by 30,760 contracts. During this time, May Chicago wheat advanced 9.63%. In short, you have an example of bias in the market for corn and against wheat even though wheat is outperforming corn. As this report is being compiled on March 7, May wheat is trading 6.75 cents higher and has made a new high for the move at 6.63, which is the highest print since 6.67 made on December 5, 2013. Maintain bullish positions, but tighten stops to protect profits and keep in mind that May wheat is massively overbought relative to its 20 day moving average of 6.10 7/8.

Kansas City wheat:

May Kansas City wheat advanced 3.00 cents on light volume of 13,216 contracts. Total open interest increased by 315 contracts, which relative to volume is approximately 10% below average, but is the 2nd day in a row that open interest has increased on a price advance. This is unprecedented since KC wheat generated a short-term buy signal on February 5. The March contract lost 7 and May – 113 of open interest, which makes the total open interest increase more impressive (bullish). As this report is being compiled on March 7, May KC wheat is trading 7.00 cents higher and has made a new high for the move at 7.25 1/2, which is the highest print since 7.26 made on November 6, 2013. Like Chicago wheat, KC wheat is massively overbought and the 20 day moving average is 6.79 7/8. Maintain bullish positions, but tighten stops.

Live cattle:

April live cattle lost 52.5 points on volume of 52,005 contracts. Total open interest increased by 82 contracts. The April contract lost 4,234 of open interest. As this report is being compiled on March 7, April cattle is trading 27.5 points higher and has not penetrated yesterday’s low of 1.42775, or the low made on March 5 of 1.42625. We think cattle prices are headed higher and that bullish positions recommended in late December continue to be held. Stops should be moved up to protect profits. 

WTI crude oil:

April WTI crude oil gained 11 cents on heavy volume of 710,168 contracts. Total open interest increased by 4,815 contracts, which relative to volume is approximately 65% below average. The April contract lost 18,139 of open interest, which makes the total open interest increase somewhat more impressive (bullish). As this report is being compiled on March 7, April WTI is trading $1.24 higher, and has taken out yesterday’s high of 102.08, but has not taken out the high of 103.53 made on March 5. Much of the bullish action in WTI has been due to the Ukrainian crisis, and at this juncture we have no strong opinion about the market.

Natural gas:

April natural gas advanced 13.9 cents on light volume of 277,559 contracts. Total open interest increased by 5,010 contracts, which relative to volume is approximately 25% less than average. The April contract lost 9,102 of open interest. As this report is being compiled on March 7, April natural gas is trading 5.2 cents lower. Natural gas remains on a short and intermediate term buy signal. We have no recommendation, but think the path of least resistance is lower.

Euro:

The March euro advanced 1.30 cents on heavy volume of 354,273 contracts. Volume was the highest since December 12 when 387,214 contracts were traded and the March euro closed at 1.3737. On March 6, total open interest increased by a hefty 10,255 contracts, which relative to volume is 10% above average. As this report is being compiled on March 7, the March euro is trading 15 pips higher and has made a new high for the move at 1.3915, which is the highest print since December 27 (1.3893). We have no recommendation for the euro.

British pound:

The March British pound gained 25 pips on heavy volume of 133,608 contracts. Volume was the highest since February 19 when 140,200 contracts are traded and the March pound closed at 1.6694. On March 6, total open interest declined by 1,460 contracts, which relative to volume is approximately 55% less than average. The March pound made a new high for the move at 1.6777, but it is shy of the high print of 1.6821 made on February 18. As this report is being compiled on March 7, the March pound is trading 10 pips lower and has made another new high at 1.6784. We have no recommendation for the pound.

Yen:

The March yen lost 69 pips on substantial volume of 186,722 contracts. Total open interest increased by a massive 10,436 contracts, which relative to volume is approximately 120% above average meaning that new shorts were heavily entering the market and driving prices lower. March 6 was the 3rd day in a row when prices declined and open interest increased. From March 4 through March 6, the March yen has declined 154 pips, and total open interest has increased by 15,805 contracts. This is bearish open interest action. As this report is being compiled on March 7, the March yen is trading 26 pips lower and has made a new low for the move at .9637, which is the lowest print since January 23 (.9541). In the March 4 report, we recommended the initiation of long calls and advised to liquidate the position if the market penetrated .9725, which occurred yesterday. Clients should be on the sidelines. The March yen will generate a short and intermediate term sell signal on March 7.

Australian dollar:

The March Australian dollar advanced 1.14 cents on heavy volume of 113,620 contracts. Volume was the heaviest since February 4 when 130,734 contracts were traded and the March Australian dollar closed at 89.08. On March 6, total open interest increased by 2,968 contracts, which relative to volume is average. This is the 2nd day in a row that the Australian dollar has advanced and open interest has increased by a substantial amount. The March Australian dollar remains on a short-term buy signal, and may generate an intermediate term buy signal on March 7. We have no recommendation for the Australian dollar.

Gold:

April gold advanced $11.50 on heavy volume of 172,800 contracts. Volume was the heaviest since March 3 when 172,228 contracts were traded and April gold advanced $28.70 while total open interest increased by 8,998 contracts. On March 6, total open interest increased by 9,291 contracts, which relative to volume is approximately 100% above average meaning that new longs were heavily entering the market and driving prices higher. Despite the positive action yesterday, April gold was not able to break above its previous high for the move at $13 55.00 made on March 3.

As this report is being compiled on March 7, April gold is trading $11.50 lower on the day. The 10 year note is sharply lower and copper prices have collapsed. It appears that April gold may have reached a temporary top, and can easily correct to its 20 day moving average of $1320.40. It should be noted that the 50 day moving average of 1272.10 is about to cross above the 100 day moving average of 1273.70. Maintain bullish positions recommended in the February 6 report, but keep in mind the market should have a correction, especially since there has been a series of large open interest increases beginning on March 3. This indicates that speculators are beginning to climb on board, which is occurring at the top of the range.

Platinum:

April platinum gained $10.20 on healthy volume of 15,474 contracts.Total open interest increased by 382 contracts, which relative to volume is average. For the past 3 days, platinum has advanced $26.10 while total open interest has increased by 2,889 contracts.This indicates to OIA that speculators are climbing on board en masse at the top of the trading range, which makes platinum vulnerable to a correction. We have no recommendation for platinum.

Silver:

May silver gained 30.3 cents on volume of 40,429 contracts.Total open interest increased by 1,880 contracts, which relative to volume is approximately 75% above average meaning that new longs were aggressively entering the market and driving prices higher. As this report is being compiled on March 7, May silver is trading 59 cents lower on the day. Continue to hold long straddles, strangles or call positions recommended in the February 6 report.

S&P 500 E mini:

The March S&P 500 E mini gained 3.75 points on volume of 1,329,721 contracts.Total open interest declined by 983 contracts. On March 7, the E mini has made a new all-time high at 1887.50, which took out yesterday’s high of 1881.00 on what is being called a surprise employment report.Despite this, the March E mini is trading unchanged on the day. Continue to hold long calls per the February 21 report coupled with long put positions for those clients who hold long equity positions.