We will report the highlights of the USDA WASDE report in the upcoming Weekend Wrap.

Soybeans:

November soybeans advanced 37.75 cents on huge total volume of 320,575 contracts. Volume was the highest since August 26 when 359,207 contracts were traded and November soybeans advanced 61.50 cents while total open interest declined 3,995 contracts. The September contract lost 242 of open interest. On September 12, open interest increased by 10,866 contracts, which relative to volume is approximately 35% above average. As this report is being compiled on September 13, November beans are trading 11 cents lower. Soybeans remain on a short and intermediate term buy signal.

Soybean meal:

December soybean meal advanced $19.20 on heavy volume of 125,136 contracts. Volume exceeded that of August 27 when 120,580 contracts were traded and December soybean meal closed at $430.40. On September 12, total open interest increased by 4,966 contracts, which relative to volume is approximately 55% above average. The September contract lost 278 of open interest. As this report is being compiled on September 13, December meal is trading $2.10 lower. Soybean meal remains on a short and intermediate term buy signal.

Corn:

December corn lost 6.25 cents on heavy volume of 300,395 contracts. Volume was the highest since August 26 when 445,229 contracts were traded and corn advanced 30.50 cents while open interest declined 8,488 contracts. Total open interest increased by a massive 14,536 contracts, which relative to volume is approximately 85% above average, meaning that new shorts were aggressively entering the market and driving prices lower. The market action in corn was extremely bearish, and this confirms the downtrend. Interestingly, volume in soybeans exceeded that of corn, which is highly unusual. In summation, longs are strongly committed to soybeans while shorts are strongly committed to corn. As this report is being compiled on September 13, December corn is trading 7.25 cents lower, but has not broken below of September 12 of $4.56 1/4. Corn remains on a short and intermediate term sell signal.

Wheat:

December Chicago wheat advanced 5 cents while Kansas City wheat gained 7. Total volume in Chicago wheat was 72,280 contracts and open interest increased by 4,103 contracts, which relative to volume is approximately 120% above average, meaning that new longs were aggressively entering the market and driving prices higher. The market action in wheat was positive while the action in corn was negative. As this report is being compiled on September 13, Chicago wheat is trading 11.75 cents lower, but has not taken out the low made on September 12 of $6.37. Kansas City wheat is trading 9.75 cents lower on September 13, but has not taken out yesterday’s low of $6.88. Both Chicago and Kansas City wheat remain on short and intermediate term sell signals.

Cotton:

December cotton gained 40 points on heavier than normal volume of 17,371 contracts. Volume was the highest since August 30 when 21,508 contracts were traded. On September 12, total open interest increased by 2,316 contracts, which relative to volume is approximately 320% above average, meaning that new longs were aggressively entering the market and driving prices higher. This is the second day in a row that open interest has increased, and the first time in nearly a month that open interest has increased substantially relative to volume. Although we think the current rally is temporary, we advise clients to use the August 26 high of 85.54 as an exit point for bearish positions. The market is entering an area of major resistance. Cotton remains on a short and intermediate term sell signal.

Live cattle:

October live cattle lost 22 1/2 points on heavy volume of 58,867 contracts. Total open interest declined by 635 contracts, which relative to volume is approximately 50% less than average. The October contract lost 8,813 of open interest, and there were open interest increases in the December forward contracts. October cattle closed at 1.24825, which was the lowest close since August 7 when October cattle closed at 1.24675. Cattle remains on a short-term sell signal, but an intermediate term buy signal, but a break lower would generate an intermediate term sell signal. We have advised clients to stand aside and continue to maintain this stance.

WTI Crude oil:

October crude oil advanced $1.04 on volume of 579,068 contracts. Total open interest increased by 13,615 contracts, which relative to volume is average. However, the October contract lost 18,044 of open interest, which makes the total open interest increase more impressive (bullish). Unless the situation in Syria changes for the worse, we think crude oil has topped and that lower prices are in the offing. Crude remains on a short and intermediate term buy signal.

Natural gas:

October natural gas advanced 7.1 cents on heavy volume of 382,173 contracts. Volume was the highest since August 14 when 391,154 contracts were traded and October natural gas closed at $3.365. On September 12, total open interest increased by 8,846 contracts, which relative to volume is approximately 5% below average, but a healthy number nonetheless. Making the total open interest increase even more impressive was that the October contract lost 11,169 of open interest. Taking into account the volume, open interest increase and price advance, trading on September 12 was the most positive in over a month. Last night, during the evening session, we recommended to clients who subscribe to OIA Direct that they should initiate new bullish positions, or write out of the money puts. We continue to recommend these positions on September 13.

Gold: On September 12, December gold generated a short and intermediate term sell signal.

December gold lost $33.20 on fairly heavy volume of 197,153 contracts. Total open interest increased by 4,790 contracts, which relative to volume is average. The open interests build on a substantial decline is very negative and confirms that lower prices are in the offing. As of last week’s COT report, managed money is long gold by a ratio of 3.34:1, which is the highest reading in at least a couple of months. This means that as prices move lower, stubborn managed money longs will be forced to liquidate adding more fuel to the downside.

Silver: On September 12, December silver generated a short-term sell signal, and is getting close to generating an intermediate term sell signal.

December silver lost $1.023 on fairly light volume of 54,014 contracts. Volume was the highest since September 3 when silver advanced 91.6 cents on volume of 73,099 contracts and total open interest increased by 526 contracts. On September 4, December silver declined $1.0 14 on volume of 51,944 contracts while open interest declined 1455 contracts. In short, we see a pattern of shrinking volume when silver has precipitous declines. This is positive. As we have been saying for a number of weeks with respect to gold and silver, even though both were on a short and intermediate term buy signals, the markets have much backing and filling to do before a base is formed. Due to this posture, at no time did we recommend bullish positions in the precious metals.

Euro:

The September euro lost 6 points on heavy volume of 300,442 contracts. Total open interest increased by 2,927 contracts, which relative to volume is approximately 50% below average. On September 11 and 12, the high in the September euro was 1.3325, and as this report is being compiled on September 13, the high in the September euro has been 1.3322. Keep an eye on this area as a possible point of resistance. The euro remains on a short and intermediate term buy signal.

Australian dollar:

The September Australian dollar lost 64 points on very heavy volume of 147,810 contracts. Volume exceeded trading on September 11 of 146,169 contracts when the Australian dollar advanced 22 points and open interest declined by 1,085 contracts. On September 12, total open interest increased by a huge 9,375 contracts, which relative to volume is approximately 145% above average, meaning that new shorts were entering the market aggressively and driving prices lower. The Australian dollar made a new high for the move at 93.53 on the 12th, and as we stated in the September 8 Weekend Wrap, it would have trouble at the 93.30 area. Before recommending bearish positions, would like to see a retest of the upper end of the recent trading range. The Australian dollar is on a short-term buy signal, but an intermediate term sell signal.

S&P 500 E mini:

The S&P 500 E mini lost 3.75 points on healthy volume of 1,950,747 contracts. Total open interest increased by 10,719 contracts, which relative to volume is approximately 75% below average. The September contract accounted for loss of 295,711 contracts. As we said in yesterday’s report, price and open interest action has been positive and the volume has been healthy. Despite this, we think there are numerous problems on the horizon, and advise that clients have long put protection, especially if they hold long equity positions.