Soybeans:

November soybeans advanced 11.25 and January gained 13.50 cents on heavier than normal volume of 213,205 contracts. Volume was the highest since November 8 when 263,316 contracts were traded and November beans advanced 27.25 and January beans gained 29.50 cents. On November 12, open interest increased by 4,324 contracts, which relative to volume is approximately 20% below average. The November contract lost 1,164 of open interest, which makes the total open interest increase more impressive (bullish). From November 6 through the 12th, total open interest has increased 14,285 contracts while January soybeans advanced 64.25 cents. The open interest increase on November 12 was the largest since November 6. All of this bodes well for a continued move higher. As this report is being compiled on November 13, January soybeans are trading 2.00 cents lower and have made a low of $13.071/2, which is approximately 4 cents above its 50 day moving average. As a result of soybeans trading close to their 50 day moving average, there may not be much of a pullback to initiate new bullish positions. Use 12.88 1/4 to exit long futures positions. On November 11, January soybeans generated a short and intermediate term buy signal.

Soybean meal:

December soybean meal advanced $5.60 on total volume of 93,758 contracts. Total open interest increased by 4,647 contracts, which relative to volume is approximately 100% above average, meaning that new buyers were entering the market and driving prices higher. The December contract lost 841 of open interest, which makes the total open interest increase much more impressive (bullish). December soybean meal made a high of $429.30, which took out the October 24 high of 428.10, and was the highest price since September 19 when December soybean meal reached 431.30. The 50 day moving average for the December contract is $415.70, therefore the pullback that usually occurs after the generation of a buy signal may be small. As this report is being compiled on November 13, December meal is trading $4.90 lower and has made a low for the day at 420.70. Futures traders could use the November 11 low of $417.30 as an exit point for long positions, and option traders can take advantage of the pullback by initiating long call positions.

Corn:

December corn lost 2.50 cents on volume of 319,185 contracts. Total open interest declined by 2,897 contracts, which relative to volume is approximately 50% less than average. The December contract lost 28,963 contracts, which means there were open interest increases in the forward months that brought down total open interest to a below average number. As this report is being compiled on November 13, corn is trading the 1.25 cents lower. Corn remains on a short and intermediate term sell signal, but we expect a continuation of the rally to the 50 day moving average of $4.43 7/8. Stand aside.

Wheat:

December Chicago wheat lost 1 cent on heavy volume of 143,302 contracts. Total open interest increased by 5,696 contracts, which relative to volume is approximately 55% above average meaning that new short sellers were aggressively entering the market and driving prices fractionally lower. December Chicago wheat made a low of $6.44 1/2, which is one half cent above the low for the move made on November 8. As this report is being compiled on November 13, December Chicago wheat has made another new low for the move the $6.43 1/4. The open interest increase on price declines has been relentless. Beginning on November 4 through November 12, open interest has increased by a massive 45,413 contracts while wheat has declined only 22.50 cents. While the price and open interest action is unquestionably bearish, the massive increase of open interest, a good portion of which is likely to be speculative in nature, will set the stage for a significant rally down the road. December Chicago wheat remains on a short and intermediate term sell signal.

December Kansas City wheat declined 3.00 cents on volume of 27,236 contracts. Total open interest increased by 831 contracts, which relative to volume is approximately 20% above average, meaning that new short sellers were entering the market and driving prices lower. The December contract accounted for loss of 5,389 of open interest, which makes the total open interest increased much more impressive (bearish). For 3 out of the past 4 days, beginning on November 7, open interest has increased on price declines. This indicates that participants are becoming increasingly bearish on Kansas City wheat, but not nearly as bearish as they are on Chicago wheat. KC wheat remains on a short and intermediate term sell signal.

Live cattle:

December live cattle lost 7.5 points on volume of 59,212 contracts. Total open interest increased by 2,264 contracts, which relative to volume is approximately 50% above average meaning that new short sellers were entering the market in numbers that were considerably above average and driving cattle prices fractionally lower. The December contract lost 6,280 of open interest, which makes the total open interest increased much more impressive (bearish). From October 25, when December cattle topped out at 1.34700 through November 12, December cattle has lost 30 points and year to date (which may surprise many), December cattle is trading 3.13 cents or 2.30% lower. Open interest from October 25 through November 22 has increased by 6,974 contracts. In essence, cattle is essentially unchanged during the past 13 sessions, but open interest has increased. Additionally, managed money is as bullish as they have ever been (long to short ratio 6.01:1) ever since cattle generated a short-term buy signal on September 23. There is a real battle going on between longs and shorts, and will likely be resolved by an explosive move. Although cattle remains on a short and intermediate term buy signal, we see no reason to be involved in the market at this juncture.

Crude oil:

December crude oil lost $2.10 on very heavy volume of 804,101 contracts. Volume was the highest since October 17 when 873,513 contracts were traded and total open interest declined by 15,532 contracts and December crude oil lost $1.62. On November 12, total open interest increased by a minuscule 5,172 contracts, which is 65% below average. The December contract lost 28,014 of open interest, which makes the total open interest increase much more impressive (bearish). Remarkably, November 12 was one of the few days during the past several of weeks that open interest has increase on the decline. Prior to the 12th, open interest increased on November 7, and before that on October 3 when crude oil lost 79 cents and open interest increased by 6,207 contracts. December crude oil closed $102.97 on October 3. In short, crude oil has fallen approximately $10.00 from October 3 through November 12, yet open interest has increased on price declines only 3 times. This tells us market participants are reluctant to initiate new short positions as the market is moving lower. As a result, OIA will be closely monitoring increases of open interest on further price declines in conjunction with  COT reports. This will provide us with a frame of reference to determine when crude oil prices are bottoming.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 1.6 million barrels from the previous week. At 385.4 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 3.8 million barrels last week and are in the upper half of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories decreased by 4.9 million barrels last week and are at the lower limit of the average range for this time of year. Propane/propylene inventories fell 2.7 million barrels last week and are in the lower half of the average range. Total commercial petroleum inventories decreased by 8.4 million barrels last week.

Natural gas: We will not be reporting on natural gas until such time that we see a trading opportunity.

Platinum:

January platinum advanced $7.20 on volume of 7,122 contracts. Total open interest increased by 151 contracts, which relative to volume is approximately 20% below average. As this report is being compiled on November 13, January platinum is trading $6.90, but has not taken out the low of 1425.30 made on November 11. Although platinum remains on a short and intermediate term buy signal, we advise against initiating long positions because of the poor performance of gold and silver, and the likelihood of continued dollar strength and higher interest rates on the 10 year note.

Copper: On November 12, December copper generated a short and intermediate term sell signal.

Euro:

The December euro advanced 24 points on heavier than normal volume of 230,939 contracts. Total open interest declined by 4,557 contracts, which relative to volume is approximately 20% below average. As this report is being compiled on November 13, the December euro is trading 36 points higher and has made a new high for the move at 1.3472. The euro is getting close to the area in which we think bearish position should be considered. The 50 day moving average on the December euro is 1.3519, and the euro is trading approximately 54 points below it. We recommend the use of options as opposed to futures because clients have greater control of risk they are willing to take and also options avoid being stopped out prematurely.

British pound: On November 14, we will begin coverage of the British pound.

Australian dollar:

The December Australian dollar lost 47 points on volume of 78,435 contracts. Total open interest increased by 1,343 contracts, which relative to volume is approximately 25% below average. The Australian dollar continues to exhibit all the signs of the market that is in a downtrend, and the open interest action relative to price has been bearish on a consistent basis. Although the Australian dollar has not generated an intermediate term sell signal, we consider this to be inevitable.We recommend that clients wait for a rally to the 93.90 area, which is the 50 day moving average on the December chart before initiating new bearish positions.

S&P 500 E mini:

The December S&P 500 E mini lost 2.50 points on volume of 1,423,485 contracts. Total open interest declined by 20,891 contracts, which relative to volume is approximately 40% less than average. As this report is being compiled on November 13, the E mini has made high of 1773.75, which is its highest price since November 7 when it made its all-time high of 1774.50. On November 7, after making the new high, the E mini reversed and lost 20.25 points on very heavy volume of 2,469,000 contracts and open interest increased by 15,547 contracts. We continue to advocate the initiation of long put protection for those clients holding long equity positions.