The World Agriculture Supply Demand Report will be issued by the USDA on September 12.

Soybeans:

September soybeans advanced 14 cents while the November contract gained 0.25 cents on total volume of 172,634 contracts. Total open interest increased by 1,538 contracts, which relative to volume is approximately 55% below average. The September contract accounted for loss of 623 of open interest. As this report is being compiled on September 9, September soybeans are trading 14.75 cents lower while the November contract is trading -9.50. Soybeans remain on a short and intermediate term buy signal, but we discourage long positions and advise against shorting the market.

Soybean meal:

September soybean meal advanced $2.60 while the October contract gained 10 cents on total volume of 70,056 contracts. Total open interest declined 291 contracts, which relative to volume is approximately 80% less than average. The September contract accounted for loss of 642 of open interest. As this report is being compiled on September 9, September soybean meal is trading 15.10 lower while the October contract is -4.90. Soybean meal remains on a short and intermediate term buy signal, but we discourage long positions and advise again short positions.

Soybean oil:

December soybean oil gained 19 points on volume of 79,955 contracts total open interest increased by 1,885 contracts, which relative to volume is average. The September contract accounted for loss of 268 of open interest. As this report is being compiled on September 9, December soybean oil is trading 46 points lower. On August 27, December soybean oil generated a short-term buy signal, but this signal has proven to be very weak, which is confirmed by an intermediate term sell signal. There is no reason to be involved in soybean oil or the soybean complex in general.

Corn:

December corn advanced 7.25 cents on extremely light volume of 139,716 contracts. Total open interest declined by 3,439 contracts, which relative to volume is average. The September contract accounted for loss of 1,195 of open interest. The action on Friday from a volume, price and open interest standpoint was extremely negative. As this report is being compiled on September 9, December corn is trading 5.50 cents lower. Corn remains on a short and intermediate term sell signal.

Wheat:

December Chicago wheat advanced 7.50 cents while the KC December contract gained 6.25. Total volume in Chicago wheat was 59,219 contracts and total open interest declined by 1,829 contracts, which relative to volume is approximately 20% above average. As this report is being compiled on September 9, December Chicago wheat is trading 6.25 cents lower and the KC December contract is trading – 5.25. In the September 8 and September 2 Weekend Wrap, we discussed the dynamic of the heavy managed money long position KC wheat, and its potential impact for lower prices. We think KC wheat will be a terrific buy once managed money longs get blown out, and KC generates a short-term buy signal. We think the December KC contract will penetrate the July 5 low of $6.84 1/2 on the continuation chart, which would likely accelerate selling on the part of managed money. Once this occurs, the next area support will be the July 1 low of 6.71 3/4. Until then, stand aside.

Cotton:

December cotton gained 91 points on volume of 13,851 contracts. Total open interest declined by 905 contracts, which relative to volume is approximately 160% above average. Ever since cotton topped out at 93.54 on August 19, open interest has declined for 15 consecutive sessions. On August 19, total open interest stood at 214,987 contracts and by September 6 had declined 45,553 contracts to a total of 169,434 contracts. This is nothing short of the collapse, and in the August 26 report, we recommended that clients initiate bearish positions with an exit point for futures contracts at 85.54. Stay with bearish positions because we think cotton is headed much lower.

Live cattle:

October live cattle gained 45 points on volume of 54,221 contracts. Total open interest declined by 1,119 contracts, which relative to volume is approximately 20% below average. The October contract lost 4,722 of open interest. We think more liquidation is ahead for live cattle and the lofty long to short ratio of managed money suggests that prices are going to have to move lower before we see a turnaround. Despite this, cattle remains on a short and intermediate term buy signal.

Crude oil:

October crude oil advanced $2.16 on volume of 602,870 contracts. Volume in crude oil has been declining during the rally, which suggests that many market participants are on the sidelines. On September 6, total open interest increased by a massive 30,344 contracts, which relative to volume is approximately 100% above average. This is a huge number for crude oil. In short there was reduced participation, but those who were involved were willing to make strong commitments. With a big spike higher in open interest, a case could be made for a temporary top. However, with the geopolitical situation in the Middle East and Syria in particular potentially worsening, this may not mean much. Although WTI crude remains on a short and intermediate term buy signal, we suggest that clients remain on the sidelines.

Natural gas:

October natural gas lost 4.5 cents on light volume of 196,746 contracts. Total open interest declined by 3635 contracts, which relative to volume is approximately 25% below average. As this report is being compiled on September 9, October natural gas is trading 5.2 cents higher on low volume. As the extract from the September 5 report shows, we have been skeptical about natural gas’ ability to move significantly higher at this juncture. The market needs to prove to us that it has the wherewithal to support higher prices with strong open interest increases and decent volume. Natural gas remains on a short-term buy signal, but an intermediate term sell signal.

From the September 5 report:

“The performance of natural gas during September 5 and as we compile this on September 6 has been abysmal. Previously, we have commented on the unimpressive open interest action on the advance, and this has been of major concern. In yesterday’s report, we advised clients to hold back on entering new long positions to see how natural gas would trade during today’s session.”

“It appears that natural gas may have generated a false buy signal on August 29. Additionally, our concern is that the decline to the 50 day moving average of $3.570 should have been a natural point of stasis, but instead, natural gas has made a new low of $3.518. We suggest that any bullish positions that may have been initiated upon the generation of the short-term buy signal be liquidated. Additionally no new positions should be entered on the long side.”

Gold:

December gold advanced $13.50 on volume of 173,082 contracts. Total open interest increased by 2,698 contracts, which relative to volume is approximately 40% below average. On August 9, December gold generated a short-term buy signal and on August 26 generated an intermediate term buy signal. We think the market has turned, but gold must do more backing and filling, and we want to see the 50 day moving average ($1321.00) rise above the 150 day moving average ($1436.00).

Silver:

December silver advanced 63.6 cents on volume of 42,360 contracts. Total open interest increased only 24 contracts, which is extremely negative, and confirms the poor open interest action of September 3 when December silver advanced 91.6 cents on volume of 73,099 contracts and open interest increased only 526 contracts. In short, large rallies are not attracting new commitments, which confirms our view that more backing and filling must occur to inspire confidence of new longs. Like gold, it is important that the 50 day moving average of silver ($21.05) rise above the 150 day moving average of $24.11. Silver remains on a short and intermediate term buy signal.

Euro: 

The September euro advanced 62 points on volume of 247,430 contracts. Total open interest declined by 3,303 contracts, which relative to volume is approximately 45% less than average. As this report is being compiled on September 9, the euro is trading 85 points higher and has made a new high for the move at 1.3281 on low volume. The euro remains on a short and intermediate term buy signal.

S&P 500 E mini:

The S&P 500 E mini gained 0.50 points on heavy volume of volume 2,638,817 contracts. Open interest increased by 23,840 contracts, which relative to volume is approximately 50% below average. As this report is being compiled on September 9, the E mini is trading 16.75 points higher and has made a new high for the move at 1671.75. In the September 8 report, we stated that we were very bearish on the E mini and suggested that clients put on bearish positions in accordance with their risk tolerance coupled with tactical exit points in the event the trade moves against them. Although the E mini remains on a short-term sell signal, and an intermediate term buy signal, conceivably the short-term sell signal could be reversed to a buy signal with tomorrow’s action. If this occurs, it does change our bearish view, rather it suggests a retest of the August 2 high of 1705 may be in the offing. The rally in the Shanghai Composite Index today produced a gain of 3.39%. Also, it appears that an olive branch is being extended by Russia pertaining to the storage and inspection of chemical weapons. This is an obvious relief to the market, and its effect on crude oil has been bearish.