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Soybeans:
July soybeans lost 30 1/4 cents on very light volume of 210,041 contracts. Open interest increased by a meager 1,175 contracts. Open interest in the July contract increased by 618 contracts on volume of 117,953 contracts. The most notable feature in the two major declines that have occurred during the past three days is the very low volume. The decline on May 18 was 33 cents, but volume was only 167,001 contracts while open interest declined by 3,552 contracts.
With respect to the bean complex ,the focus should be on soybean meal because of its high relative strength compared to soybeans on a year-to-date basis and since the beginning of the decline which began on May 1. Since meal topped out on April 30, total open interest has declined by 3928 contracts, or a decline of 1.55% of the total open interest. This compares to soybeans whose total open interest since May 1 has declined by 19,370 contracts, or 2.43%. In other words, the decline in open interest since May 1 has been far less in soybean meal than soybeans.
Another interesting set of facts are that on May 22, 2011 total soybean open interest was 554,937 contracts. As of May 22, 2012 total open interest in soybeans is 776,789 contracts, or a 28.56% increase in open interest from one year ago. On May 22, 2011 July soybeans closed at $13.80 1/4 and on May 22 2012, July soybeans closed at $13.82 1/4, or just two cents higher than one year ago. In other words, during a span of one year, soybean prices increased by a mere two cents but open interest was up a massive 28.56%.
On the other hand, open interest in soybean meal increased by a mere 8.55% from May 22, 2011 to May 22, 2012. On May 22, 2011 total soybean meal open interest stood at 227,562 contracts and on May 22, 2012, total soybean meal open interest was 248,847 contracts.
As mentioned earlier, open interest in soybeans increased dramatically compared to that of soybean meal. However the performance during that one year period was dramatically different as well. From May 22, 2011 to May 22 2012 soybeans prices increased by 2 cents or.14% while soybean meal increased by $41.40, or 11.48%. The point of this is to illustrate that soybean meal has been able to out perform soybeans, despite a modest increase in open interest. On a year-to-date basis soybean meal has advanced 29.93% while soybeans have advanced 15.33%. After analyzing soybeans versus soybean meal in a variety of time frames, it is readily apparent that soybean meal is the crown jewel of the bean complex.
Both soybeans and soybean meal remain on an intermediate term buy signal. It appears that both soybeans and soybean meal will generate a short-term sell signal on on May 23. The fundamentals of the market are bullish, but outside markets will have an enormous effect on the grain and oilseed complex. Do not short or implement bearish positions for soybeans and soybean meal. Stand aside.
Corn:
July corn lost 36 cents on fairly heavy volume of 348,805 contracts. Open interest declined by 9,845 contracts and open interest in the July contract declined by 6,975 contracts. This market has been undergoing liquidation for quite some time, and shortly I think the market will find a bottom, if only temporarily. Stand aside.
Wheat:
July wheat closed 18 1/2 cents lower on heavy volume of 195,451 contracts. Open interest increased on the decline by 6,184 contracts, which is bearish. In the six days when the market rocketed higher, open interest declined each day, which is bearish. A pattern of pattern of bearish open interest action is evident regardless of whether the market is moving higher or lower. Do not short the market, or implement bearish positions. Stand aside.
Crude oil:
July crude oil lost $1.01 on light volume of 433,160 contracts. The massive liquidation continues with open interest declining by 17,850 contracts. Crude oil remains on a short and intermediate term sell signal. Stand aside.
Gasoline:
July gasoline lost .54 cents on volume of 134,798 contracts. Open interest declined by 2,252 contracts. Gasoline remains on a short and intermediate term sell signal. Stand aside.
Copper:
July copper lost 1.50 cents on volume of 57,043 contracts. Open interest increased on the decline by 1,204 contracts. The market had a short rally on May 21, and as I write this on May 23 copper is 7.40 cents lower. In the Weekend Wrap of May 13, I wrote about an imminent decline in copper prices. Unfortunately the market collapsed the next day making it difficult to implement bearish positions. The market is massively oversold, and therefore speculators should wait for a rally of 15-20 cents before implementing bearish positions.
Gold:
June gold lost $12.10 on volume of 212,094 contracts. Open interest increased by 493 contracts. Please consult your investment advisor or broker before embarking upon a program to accumulate gold at lower prices.
Silver:
July silver lost 14.2 cents on volume of 46,353 contracts. Open interest declined by 246 contracts. Stand aside.
Euro:
The June Euro lost 70 points on heavy volume of 290,838 contracts. Open interest increased by 9,412 contracts. As I write this on May 23, the June Euro is sharply lower, down 1.60 cents having broken the low of 1.2600 on heavy volume. The next support area for the June Euro appears to be 1.2200. Stand aside.
S&P 500 E mini:
The June S&P 500 E mini lost 1.75 points on heavy volume of 2,457,837 contracts. Open interest increased by 20,119 contracts. Maintain long put protection.
