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July soybeans lost 33 cents on very light volume of 167,001 contracts. Total open interest declined by 3,552 contracts. Open interest in the July contract declined by 650 contracts on volume of 88,009 contracts. The fact that volume was light and the open interest decline was modest is constructive market action. Soybeans remain on an intermediate term buy signal, but a short-term buy signal has not been generated. The market is entering a period of seasonal strength, however stand aside for now.
July corn gained 10 1/2 cents on heavier than normal volume of 323,456 contracts. Volume was the highest since May 10 when corn traded 388,948 contracts. Open interest declined by a massive 14,807 contracts. Since the rally started on May 14, open interest has declined by 42,380 contracts. This is bearish open interest action in relation to a rally of over 50 cents. Stand aside.
July wheat closed 37 1/2 cents higher on extremely heavy volume of 214,423 contracts. Total open interest declined by 778 contracts. The analysis of the open interest numbers for all contracts showed that open interest in the July and September contracts declined by a total of 3,447 contracts on volume of 164,605 contracts. The offset to that was the buying in the December 2012 and 2013 contracts, which is why the total open interest decline was minor. As I pointed out in the May 20 Weekend Wrap, speculators should not enter long or short positions. This is a market that will rise and fall based upon the latest weather forecast.
June crude oil lost $1.14 on volume of 561,992 contracts. Open interest declined by a massive 26,041 contracts. During the past two sessions open interest in crude oil has declined by 52,000 contracts. Ever since the market topped out on May 1, 2012, liquidation has been the most notable feature along with the price decline. Crude oil generated an intermediate term sell signal on May 7. Stand aside.
June gasoline lost 1.13 cents on volume of 131,143 contracts. Open interest declined by 3,829 contracts. Gasoline generated a short-term sell signal on April 17, 2012 and an intermediate term sell signal on May 15. Stand aside.
July copper lost 1.05 cents on volume of 61,248 contracts. Open interest increased by 2,303 contracts. The market made a new low for the move at $3.4315, which was the lowest price since December 30, 2011 when the market reached a low of $3.42. In the Weekend Wrap of April 15, I wrote about the supply glut in copper and warned speculators about an imminent decline in prices. Speculators should wait for a rally before implementing bearish positions. Please see the Weekend Wrap of May 13 about copper and the efficacy of using the ETN, JJC as a proxy for the metal.
On Friday May 18, Reuters wrote a piece on the burgeoning supplies of iron ore, coal and copper in China. The following is a quote from that article:
“At Qingdao Port home to one of China’s largest iron ore terminals, hundreds of mounds of iron ore, each as tall as a three-story building spill over into an area signposted “grain storage” almost to the street.”
“Further south, some bonded warehouses in Shanghai are using carparks to store swollen copper stockpiles another unusual phenomenon that bodes ill for global metal prices and raises questions about China’s ability to sustain its economic growth as the rest of the world falters.”
“Copper stocks in Shanghai’s bonded storage, the biggest in China, are now double the 300,000 metric tons average of the past four years.”
“For copper, Chinese traders appeared to have misjudged the fundamentals and embarked on a massive shopping spree in November expecting demand to rebound after the lunar new new year.”
“But the buyers never materialized in bulk and China is now left with up to 1.4 million metric tons of copper, the most since 2009.”
“The glut has already prompted some firms to sell copper into London metals exchange warehouses, a move which would further depress the exchange’s benchmark prices.”
“Copper has also lost its luster as a financing tool for investors who use the metal as collateral to borrow yuan and also invest in the property sector, which has fizzled out.”
June gold gained $17.00 on volume of 207,820 contracts. Open interest declined by 4272 contracts. Although gold has not generated a short or intermediate term buy signal, speculators and investors should consult their investment advisor or or broker about accumulating gold for a long term position.
July silver gained 69.6 cents on volume of 48,048 contracts. Open interest declined by 852 contracts. Stand aside.
The June Euro gained 24 points on volume of 308,154 contracts. Open interest declined by 3,455 contracts. On Friday the market made a new low for the move at 1.2644. I have been warning speculators to stand aside in this market because the number of speculative shorts is near record levels.
S&P 500 E mini:
The June S&P 500 E mini lost 10.50 points on heavy volume of 2,824,268 contracts. Open interest increased by 34,574 contracts. Open interest has been increasing significantly on the decline, but the market is massively oversold. As I write this on May 21, the S&P 500 E mini is up 18.00 points. The market is due for a rebound rally, however speculators should continue to hold long put protection.