Soybeans:

January soybeans lost 1.50 cents on light volume of 128,278 contracts. Open interest increased by 4,973 contracts, will which relative to volume is approximately 50% above average. The USDA reported export sales of 848.5 thousand metric tons and total commitments to date are 1.252 billion bushels versus the USDA export projection for the entire season of 1.450 bb. The export pace to date is the highest since the 2007-2008 season. As this report is being compiled on November 15, January soybeans are trading 25.25 cents lower and has taken out the low of $12.8 8 1/4, which is the exit point for long futures positions. Although we were expecting a pullback after the generation of the short and intermediate term buy signal on November 11, this appears to be something more than that. We suggest all bullish positions be liquidated and that clients move to the sidelines. Soybeans remain on a short and intermediate term buy signal as of November 15, and it is likely that the buy signals could be reversed. Stand aside.

Soybean meal:

December soybean meal gained $1.30 on volume of 69,447 contracts. Total open interest declined 74 contracts. The December contract lost 4,972 of open interest, and there were open interest increases in the forward months to bring down total open interest to a minor number. The USDA reported sales of soybean meal total 283.16 thousand metric tons, which brings total commitments to date of 5244.7 tmt versus the USDA projection for the season of 9299 tmt. The export pace to date is the best since the 2008-2009 season. As this report is being compiled on November 16, December soybean meal is trading $9.70 lower and has made a daily low of 412.10. For those clients who took our advice and initiated enter futures positions, we have recommended exiting those at $417.30. All bullish position should be liquidated today and clients should move to the sidelines. Like soybeans, soybean meal will remain on a short and intermediate term buy signal on November 16, but we are concerned that buy signals mat be reversed.

Corn:

December corn lost 3.25 cents on volume of 351,339 contracts. Total open interest declined by 644 contracts, which is minuscule and dramatically below average. The December contract lost 27,730 of open interest and there were open interest increases in the forward months which brought down total open interest to a minor number. The USDA reported that 1202.9 thousand metric tons were sold in the most recent reporting week bringing total commitments to date to 923.4, million bushels versus USDA projections of 1.40 billion bushels. Season to date, exports of corn are moving at the highest pace since the 2007-2008 season. As this report is being compiled on November 15, December corn is trading unchanged on the day. Corn remains on a short and intermediate term sell signal. Stand aside

Wheat:

December Chicago wheat lost 0.75 cents on heavy volume of 149,346 contracts. Total open interest increased by 6,854 contracts, which relative to volume is approximately 75% above average meaning that longs and shorts were aggressively initiating new positions, but short sellers were able to move prices only fractionally lower. The USDA reported that 287.8 thousand metric tons in all wheat categories were sold in the most recent reporting period, bringing total commitments to date of 778.2 million bushels versus USDA projections of 1.100 billion bushels. The export pace to date is the best since 2010-2011.

Beginning on November 4 through November 14, open interest in Chicago wheat has increased by a massive 57,258 contracts and wheat has declined only 23.00 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. Stand aside.

December Kansas City wheat advanced 1.00 cents on volume of 32,413 contracts. Total open interest increased by 827 contracts, which relative to volume is average. The December contract lost 4,428 of open interest, which makes the total open interest increase much more impressive (bearish). November 14 was the 3rd day out of the past 4 that open interest increased. As this report is being compiled on November 15, December Kansas City wheat is trading 5.00 cents lower and has made a new low for the move at $6.98 while December Chicago wheat is trading unchanged on the day. Both Chicago and KC wheat remain on short and intermediate term sell signals.

Live cattle:

December live cattle advanced 22.5 points on volume of 46,578 contracts. Volume was the lightest since November 6 when 44,813 contracts were traded and December cattle lost 2.5 points while open interest increased 616 contracts. On November 14, total open interest increased by 3,955 contracts, which relative to volume is approximately 225% above average meaning that longs and shorts were heavily initiating new positions, but longs were only able to move prices fractionally higher. The December contract lost 3,182 of open interest, which makes the total open interest increase much more impressive (bullish). As this report is being compiled on, November 15, February cattle is trading 7.5 points higher on very low volume. We continue to think the market is vulnerable to a sharp setback before resuming its uptrend. If the long to short ratio increases in the COT report, which will be released today, we would become even more cautious about the long side. Stand aside.

Sugar: On November 14, March 2014 sugar generated an intermediate term sell signal and had generated a short-term sell signal on October 29.

From the October 27 Weekend Wrap:

On October 18, March sugar topped out at 20.16 on extremely heavy volume of 399,832 contracts. This was the heaviest volume day of 2013. On that day, open interest increased by 5,887 contracts. On October 1, total open interest open interest in all contracts reached its low point of 787,891 contracts before it started to climb beginning on October 2. On October 2, March sugar closed at 18.51 and total open interest was 794,083 contracts. On October 22, total open interest increased to 830,021 contracts, or an increase of 35,938 contracts from October 2. On October 24, total open interest stood at 826,193 contracts and March sugar closed at 18.97. In short, as of October 24, open interest had increased 35,938 contracts from October 2, but since then, March sugar advanced only 46 points through October 24.

Unfortunately, we do not have the COT stats for the most recent week to determine the extent to which managed money is long, but we would bet it is a significant number. The massive increase in volume on October 18, accompanied by an increase of open interest as the market made a new high for the move, tells us that a top or temporary top is in, which means that selling by speculative longs who have small profits is likely in the period just ahead.

Gasoline: on November 14, December gasoline generated a short-term buy signal, but remains on an intermediate term sell signal.

Crude oil:

December crude oil lost 12 cents on extremely heavy volume of 894,849 contracts. Volume was the highest since July 11 when 934,688 contracts were traded and December crude oil closed at $100.33. On November 14, total open interest declined by 4,125 contracts, which relative to volume is approximately 75% below average. The December contract lost 17,946 of open interest. With gasoline on a short-term buy signal, and the likelihood of Brent crude generating an intermediate term buy signal on November 15, there would appear to be some support for crude oil at current levels. We have mentioned this before, but it is worth mentioning again. We have not seen open interest increases on price declines, especially after October 21 when December crude oil generated an intermediate term sell signal. If there are not fairly substantial numbers of new short sellers, the market will decline only by further liquidation by old longs and shorts. Depending upon the numbers coming out of today’s COT report, crude oil may have already shaken out large numbers of speculative longs. The market is long overdue for a rally, and we recommend a sideline stance.

Platinum:

January platinum gained $12.10 on volume of 10,496 contracts. Total open interest declined by 368 contracts, which relative to volume is approximately 50% more than average meaning that longs and shorts were heavily liquidating as the market advanced. As this report is being compiled on November 15, January platinum is trading $3.70 lower and has made a daily high of 1457.50, which is 40 cents below yesterdays high of 1457.90. Platinum remains on a short and intermediate term buy signal, but we recommend a sideline stance.

Euro:

The December euro advanced 8 points on light volume of 193,601 contracts. Total open interest declined by 3,291 contracts, which relative to volume is approximately 30% below average. As this report is being compiled on November 15, the December euro is trading 29 points higher and has made a new high for the move at 1.3507, which takes out the high made on November 13 of 1.3499.

As we said in yesterday’s report, there are couple of ways of trading a bearish euro position. Clients can initiate short futures positions in the euro, write out of the money calls or buy puts. One other way that makes perfect sense is to initiate bullish positions in the dollar index. One of our favorite trades involving the dollar is long USDJPY. This currency pair just generated a short and intermediate term buy signal. The 50 day ma is 98.51, 150 ma 98.70 and 200 ma 97.68. 

British pound:

The British pound advanced 3 points on volume of 103,255 contracts. Total open interest increased by 2,467 contracts, which relative to volume is approximately 5% below average. As this report is being compiled on November 15, the December British pound is trading 47 points higher and has made a new high for the move at 1.6132. As we said in yesterday’s report, for the pound to reverse its short-term sell signal, its daily range must not dip below 1.6014 and then 1.6117 on the December contract. As this report is being compiled, the daily low for the December British pound has been 1.6042, which is above the 1st benchmark, but below the 2nd benchmark. Therefore, the December British pound will not generate a short-term buy signal on November 15.

Australian dollar:

The December Australian dollar lost 4 points on volume of 89,008 contracts.Total open interest increased by 1,446 contracts, which relative to volume is approximately 35% below average. We continue to wait for a bounce to at least the 50 day moving average (93.99) before recommending bearish positions. We would prefer to see managed money shorts get chased out of the market before initiating bearish positions.

S&P 500 E mini:

The S&P 500 E mini gained 9.00 points on volume of 1,589,506 contracts.Total open interest increased by 17,302 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on November 15, the E mini is trading 4.25 points higher and has made another new high for the move at 1792.75 on very low volume. Clients who are long equity should maintain long put protection.