Soybeans:

January soybeans lost 2.50 cents on volume of 131,492 contracts. Total open interest increased by 2,249 contracts, which relative to volume is approximately 25% less than average. The January contract accounted for loss of 1,388 of open interest. The USDA reported that 1376.4 thousand metric tons of soybeans were sold in the recent reporting period. Total commitments are 1.303 billion bushels versus USDA projections for the entire season of 1.450 bb. The export pace season to date is the best since the crop year 2007-2008. As this report is being compiled on November 21, January soybeans are trading 7.75 cents higher and have made a high of 12.92 1/2, which is short of a high of 12.94 made on November 19. Soybeans remain on a short term sell signal, but an intermediate term buy signal. We think soybeans are headed lower, however they could rally somewhat further. A more conservative way of trading the market would be to write out of the money calls.

Soybean meal:

December soybean meal lost $1.90 while January declined 2.00 on total volume of 61,860 contracts. Total open interest increased by 2,493 contracts, which relative to volume is approximately 55% above average meaning that new short sellers were entering the market aggressively and driving prices lower. The December contract lost 3,558 of open interest, which makes the total open interest increase much more impressive (bearish). The USDA reported that 1252.6 thousand metric tons were sold bringing total commitments to 5360.7 tmt versus USDA projections for the season of 9299 tmt. As this report is being compiled on November 21, January soybean meal is trading $2.10 lower and has made a new low for the move at 399.60, which is the 100 day moving average. Soybean meal remains on a short term sell signal, but an intermediate term buy signal. We think soybean meal prices are headed lower, but we could see a rally to the 50 day moving average of 408.8. Like soybeans, we think a more conservative trade is to write out of the money calls.

Corn:

December corn lost 0.75 cents on volume of 291,736 contracts. Total open interest increased by 3,099 contracts, which relative to volume is approximately 50% below average. The December contract lost 17,525 of open interest, which makes the total open interest increase more impressive (bearish). The USDA reported that exports totaled 945.1 thousand metric tons and season to date, total commitments are 960.6 million bushels versus USDA projections of 1.40 billion bushels. The export pace season to date is the best since the crop year 2007-2008. As this report is being compiled on November 21, December corn is trading 5.00 cents higher and has made a high of 4.24, which is the highest price for December corn since November 15. We have been cautioning clients to avoid the short side of corn, not because we don’t think corn can go lower, but because of the massive short interest of speculators. Once a significant rally occurs, we will be looking for a place to recommend bearish positions.

Wheat:

December Chicago wheat declined 3.00 cents on volume of 105,867 contracts. Total open interest declined by 1,766 contracts, which relative to volume is approximately 30% less than average. The December contract lost 11,853 of open interest. The USDA reported that 618.1 thousand metric tons were sold bringing total commitments season to date of 801.5 million bushels versus USDA projections of 1.100 billion bushels. Approximately 73% of total USDA projections have already been committed for the season that ends on May 31, 2014. The export pace of wheat is the highest since 2010-2011, which was the best since 2007-2008. Although December Chicago wheat remains on a short and intermediate term sell signal, we think that a bottom is near, but we want to see a retest of the $6.42 level, which was its low on November 18. Also, we want to see what the COT report says about managed money and the extent to which they remain short.

December Kansas City wheat lost 3.00 cents on volume of 22,086 contracts. Total open interest declined by 1,579 contracts, which relative to volume is approximately 185% above average, meaning that liquidation was extremely heavy on the minor decline. The December contract accounted for loss of 4,423 of open interest. KC wheat is liquidation and we suspect that much of this is coming from managed money, who according to the COT report of last week were long by a ratio of 3.52:1. Conceivably, we may see Chicago wheat lead KC wheat, at least in the initial stages of the move higher, which we think is in the offing.

Live cattle:

February live cattle advanced 27.5 points on volume of 50,018 contracts. Total open interest declined by 1,509 contracts, which relative to volume is approximately 20% above average. The December contract accounted for loss of 3,614 of open interest. For the past 3 days, total open interest has declined 8,281 contracts while February cattle has declined 2.85 cents. As this report is being compiled on November 21, February cattle is trading 35 points higher and has made a high of 1.32575, which is above the high of 1.32250 made on November 19, but far below the high of 1.34650 on November 18. February cattle remain on a short and intermediate term sell signal. Stand aside because we think more liquidation is in store.

Crude oil:

January crude oil lost 4 cents on volume of 441,925 contracts. Total open interest declined by 9,371 contracts, which relative to volume is approximately 20% below average. The December contract accounted for loss of 18,080 of open interest. For number of reports, we have commented that crude oil has been unable to rally. However, this has changed on November 21 and January crude oil is trading $1.48 higher and has made a daily high of 95.63, which is its highest price since November 11 when it reached 95.71. January crude has been trading in the low $93 area since November 4, and appears to have found a bottom, at least temporarily. For this reason, we think it is premature to initiate bearish positions.  In addition and very important, January Brent will likely generate a short and intermediate term buy signal on November 21.

Euro:

The December euro lost 1.12 cents on heavy volume of 289,289 contracts. Volume was the highest since November 7 when 439,650 contracts were traded and the December euro lost 94 points while open interest declined 9,700 contracts. On November 20, open interest increased by 5,358 contracts, which relative to volume is approximately 20% below average. As this report is being compiled on November 21, the December euro is trading 42 points higher and has made a daily high of 1.3479. We suggest that clients take advantage of rallies and initiate short call positions or long puts. Alternatively, being long the dollar index is a more conservative way of trading the downtrend in the euro. The long USDJPY position looks good and we expect the advance to continue.

British pound:

The December British pound lost 2.7 pips on heavy volume of 124,344 contracts. Volume was the highest since November 13 when 127,823 contracts were traded and open interest increased by 3,762 contracts while the December British pound advanced 1.32 cents. On November 20, total open interest increased by 5,214 contracts, which relative to volume is approximately 55% above average meaning that new longs and shorts were aggressively entering the market but neither side was able to move the market strongly in either direction. From November 14 through November 20, open interest has increased for 5 consecutive days and totals 13,932 contracts while the December British pound advanced 2.3 pips. We consider the massive increase of open interest combined with a minor increase in price as potentially hazardous for longs. Additionally, the 20 day moving average of 1.6050, is below the 50 day moving average 1.6055. As we have been saying for the past couple of days, the December British pound is at a critical juncture and will not generate a short-term buy signal on November 21. However, the real test will come tomorrow and for the December pound to generate a short-term buy signal, the low on November 22 must be above 1.6121.

Australian dollar:

The December Australian dollar lost 87 pips on volume of 99,299 contracts. Volume was the highest since November 8 when 118,399 contracts were traded and open interest increased by 2,989 contracts while the December Australian dollar declined 83 pips. On November 20, total open interest increased by 1,939 contracts, which relative to volume is approximately 20% below average. There is an excellent chance that the December Australian dollar will generate an intermediate term sell signal on November 21.

S&P 500 E mini:

The S&P 500 E mini lost 5.50 points on heavy volume of 2,069,874 contracts. Total open interest declined by 24,204 contracts, which relative to volume is approximately 45% below average. As this report is being compiled on November 21, the E mini is trading 13.00 points higher, but it has not taken out the high of 1794.25 made on November 20. We continue to advise clients who hold long equity positions to have long put protection.