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The time frame for this week’s the Commitments Of Traders Report is Wednesday August 13 – Tuesday August 19.

On Friday, Pro Farmer, released its estimate for the 2014 corn and soybean crops. They pegged 2014 U.S. corn crop at 14.093 billion bushels with an average yield of 169.3 bushels per acre. For soybeans, Pro Farmer is predicting a 2014 U.S. soybean crop of 3.812 billion bushels with an average yield of 45.35 bushels per acre. The projections are based upon ideal weather through September. 

Soybeans:

For the week, September soybeans advanced 63.50 cents, November -10.00, January 2015 -12.25. The COT report revealed that managed money liquidated 2,557 contracts of their long positions and added 2,501 contracts to their short positions. Commercial interests added 4,561 contracts to their long positions and also added 4,325 contracts to their short positions. As of the latest report, managed money is long soybeans by ratio of 1.39:1, which is down from the previous week of 1.46:1 and the ratio of 2 weeks ago of 1.42:1.

Soybean meal:

For the week, September soybean meal advanced $45.00, October +9.20, December – 80 cents. The COT report revealed that managed money added 3,866 contracts to their long positions and liquidated 1,017 contracts of their short positions. Commercial interests liquidated 2,603 contracts of their long positions and added 6,091 contracts to their short positions. As of the latest report, managed money is long soybean meal by ratio of 3.24:1, which is up from the previous week of 2.91:1 and the ratio of 2 weeks ago of 2.30:1.

From the August 17 Weekend Wrap:

“For December soybean meal to generate a short-term buy signal, the low of the day must be above OIA’s key pivot point of $353.00. The fact that December soybean meal closed at 353.50 on August 15 is very positive and increases the likelihood of a short-term buy signal.”

Although it appeared that December soybean meal was on the verge of generating a short-term buy signal, the market didn’t have the momentum to accomplish it. However, soybean meal is in basically the same position as of the close of business Friday (close 352.70) as it was the previous Friday (close 353.50).While the September contract has rocketed higher on very tight supplies of soybeans and soybean meal, this has not  helped the December contract, which has been trading sideways since July 11.

First notice day in the September contract is approximately one week away, and if the September contract continues its strength, the December contract may generate a short-term buy signal. However, as we have pointed out in previous reports, weather has been nearly ideal and unless there is a major weather event, the short-term buy signal in the December contract may be temporary. In order for December soybean meal to generate a short-term buy signal, the low the day must be above OIA’s key pivot point of 353.10. Stand aside.

Soybean oil:

For the week, September soybean oil lost 51 points, October -55, December -61. The COT report revealed that managed money added 245 contracts to their long positions and also added 410 contracts to their short positions. Commercial interests added 7,164 contracts to their long positions and also added 5,447 contracts to their short positions. As of the latest report, managed money is short soybean oil by ratio of 1.22:1, which is the same as the previous week of 1.22:1, but above the ratio of 2 weeks ago of 1.05:1.

Corn:

For the week, September corn lost 0.25 cents, December -5.50, March 2015 -6.00. The COT report revealed that managed money liquidated 694 contracts of their long positions and added 1,569 contracts to their short positions. Commercial interests liquidated 24,176 contracts of their long positions and also liquidated 15,179 contracts of their short positions. As of the latest report, managed money is long corn by ratio of 1.33:1, which is about the same as the previous week of 1.34:1, but below the ratio of 2 weeks ago of 1.41:1.

Chicago wheat:

For the week, September Chicago wheat advanced 0.75 cents, December -1.25, March 2015 -3.25. The COT report revealed that managed money added 1,967 contracts to their long positions and liquidated 9,245 of their short positions. Commercial interests liquidated 3,895 contracts of their long positions and added 930 to their short positions. As of the latest report, managed money is short Chicago wheat by ratio of 1.65:1, which is down from the previous week of 1.82:1 and the ratio of 2 weeks ago of 1.90:1.

The current ratio of 1.65:1 is the lowest since the COT tabulation date of July 15 when managed money was short Chicago wheat by ratio of 1.60:1.

Kansas City wheat:

For the week, September Kansas City wheat advanced 13.75 cents, December +9.75, March 2015 +8.25. The COT report revealed that managed money added 1,238 contracts to their long positions and liquidated 1,206 contracts of their short positions. Commercial interests liquidated 116 contracts of their long positions and added 165 contracts to their short positions. As of the latest report, managed money is long Kansas City wheat by ratio of 1.72:1, which is up from the previous week of 1.57:1 and the ratio of 2 weeks ago of 1.60:1.

Thus far in the 3rd quarter, December soybean meal is the out performer with a loss of 4.00%, December Chicago wheat -6.02%, December Kansas City wheat – 8.85%, November soybeans -9.96%, December corn – 12.64%, December soybean oil -16.73%.

Year to date, December soybean meal is the out performer with a gain of 0.83%, December Kansas City wheat -3.77%, November soybeans -8.19%, December Chicago wheat -12.22%, December corn -17.49%, December soybean oil -18.64%.

Cotton: On August 22, December cotton generated a short-term buy signal, but remains on an intermediate term sell signal. 

For the week, December cotton advanced 1.83 cents, March 2015 +1.32, May 2015+1.41. The COT report revealed that managed money liquidated 3,706 contracts of their long positions and added 876 contracts to their short positions. Commercial interests added 1,160 contracts to their long positions and also added 858 contracts to their short positions. As of the latest report, managed money is short cotton by ratio of 1.10:1, which is a complete reversal from the previous week when managed money was long by ratio of 1.03:1 and the ratio of 2 weeks ago when they were long by 1.13:1.

The current short ratio of 1.10:1 is the first time managed money has been short cotton since the COT report of November 27, 2012 when managed money was short cotton by ratio of 1.29:1.The trading range for December 2012 contract during the tabulation period of November 21-November 27 2012 was 69.50-72.85. On Tuesday November 27, the day of the tabulation, December cotton closed at 71.04.

In other words, managed money was far more bearish during the 4th quarter of 2012 when cotton was trading at higher prices than they have been during the current report. The current net short position almost coincided with the contract low in December cotton of 62.02 made on August 1.The print made on August 1 was the lowest on the weekly chart since the week of October 5, 2009 when the December 2012 contract made a low of 59.83 during the depths of the depression. From May 5, 2014 through the week of July 28, 2014, December cotton closed lower each week, with the exception of the week of June 2.In short, December cotton closed lower in 12 out of 13 weeks until it made its contract low on August 1.Large amounts of selling pressure have been removed, and in our view it will not take much to keep cotton prices heading north. Another positive factor for cotton is from August 1 when it made its contract low at 62.02 and closed at 62.49 through August 21 when the December contract closed at 66.50, total open interest has increased by 5,911 contracts, which is bullish open interest action relative to the price advance.

This is not to say that the fundamentals for cotton are bullish, because they’re not. According to the USDA global ending stocks for the 2014-2015 season will total 105.1 million bales, which is 5.1 million bales above 2013-2014. To put ending stocks in perspective consider that during the 2010-2011 season when cotton made all-time high and broke the Civil War record of $1.89 of 1864, ending stocks totaled 50.4 million bales. We want to point out that cotton had a substantial rally from 73.79 beginning the week of November 18, 2013 through a high of 97.35 during the week of March 24, 2014. Keep in mind those prices reflected ending stocks just 5.1 million bales less than current season’s projected ending stocks. The only difference is prices have bottomed at a much lower level in the current season than in November 2013. From a seasonal point of view, cotton bottoms in August then rallies into early fall and makes a subsequent low in November. From there, it rallies into spring.

Now that December cotton is on a short-term buy signal, it should have a pullback lasting a day or 2, and this would be the opportunity to establish bullish positions. However, we think the rally is not likely to be a barn burner and therefore clients should not make major commitments. When initiating new bullish positions we recommend using a bull put spread or bull call spread. The first sign of danger for December cotton would be a close below 63.97. In order for cotton to continue to move higher, the December contract needs to close above OIA’s  pivot point 66.64 and then make a daily low above the pivot. After this, closes above OIA’s pivot points of 67.73 and 68.54. As long as cotton continues to advance above these pivot points, the uptrend is intact.

Sugar #11:

For the week, October sugar lost 28 points, March 2015 -26, May 2015-16. The COT report revealed that managed money added 5,978 contracts to their long positions and also added 15,121 contracts to their short positions. Commercial interests added 8,926 contracts of their long positions and liquidated 1,847 contracts of their short positions. As of the latest report, managed money is short sugar by ratio of 1.08:1, which is up from the previous week of 1.04:1 and a complete reversal from 2 weeks ago when managed money was long by a ratio of 1.04:1.

Coffee:

For the week, September copper lost 7.15 cents, December -5.80, March 2015 -5.65. The COT report revealed that managed money added 11 contracts to their long positions and liquidated 134 of their short positions. Commercial interests liquidated 293 contracts of their long positions and added 1,767 contracts to their short positions. As of the latest report, managed money is long coffee by ratio 7.42:1, which is up slightly from the previous week of 7.26:1, but down from the ratio of 2 weeks ago of 9.04:1.

Coffee has been a disappointment because of its inability to rally. Additionally, open interest has been in a liquidation mode, which is pressuring prices, though this is positive because prices have been declining. For example, when December coffee made its recent high at 1.9875 on July 31 through August 21 when it closed at 1.8960, total open interest has declined by 14,983 contracts. It has become apparent that coffee is not ready to make its move, but because the market can turn on a dime, we have recommended a small bullish position, which should be liquidated upon penetration of the August 20 low of 1.8285. A close below OIA’s key pivot point of 1.8060, would increase the likelihood of December coffee generating a short-term sell signal.

Cocoa:

For the week, September cocoa lost $31.00, December -49.00, March 2015 -46.00. The COT report revealed that managed money liquidated 2,222 contracts of their long positions and also liquidated 1,578 contracts of their short positions. Commercial interests added 492 contracts to their long positions and liquidated 982 contracts of their short positions. As of the latest report, managed money is long cocoa by ratio 3.97:1, which is up from the previous week of 3.69:1 and the ratio of 2 weeks ago of 3.78:1.

Thus far in the 3rd quarter, December coffee is the out performer with a gain of 4.84%, December cocoa +2.21%, December cotton -9.97%, October sugar -13.16%.

Year to date, December coffee is the out performer with a gain of 56.00%, December cocoa +17.77%, October sugar -8.27%, December cotton -15.62%.

Live cattle: On August 20, October live cattle generated an intermediate term sell signal after generating a short-term sell signal on August 7.

For the week, October cattle lost 0.75 cents, December -1.05, February 2015 -1.63. The COT report revealed that managed money liquidated 7,940 contracts of their long positions and added 2,956 contracts to their short positions. Commercial interests added 5,235 contracts to their long positions and liquidated 3,641 contracts of their short positions. As of the latest report, managed money is long live cattle by ratio of 10.67:1, which is down dramatically from the previous week of 16.05:1 and the ratio of 2 weeks ago of 19.27:1.

Although we envision cattle prices moving higher, we continue to be concerned about the very large net long position of managed money. We hate to sound like a broken record, but to put this in perspective consider the following: On July 29 when the COT report was tabulated, October cattle closed at 1.59075 and had made its contract high the day before at 1.60750. The net long position of managed money per the July 29 report was 102,387 contracts.

By the tabulation of the August 19 report, October cattle closed at 1.47225, and yet the net long position of managed money had fallen only 2,806 contracts to 99,581. During this time October cattle lost 11.85 cents. In short, there are undoubtedly large numbers of speculators who are showing losses or minor gains and will look for every opportunity to liquidate positions on any rally. This will keep a lid on advances despite the bullish scenario going forward. October cattle remains on a short and intermediate term sell signal. Stand aside.

Lean hogs:

For the week, October lean hogs lost 2.08 cents, December -1.90, February -83 points. The COT report revealed that managed money liquidated 2,751 contracts of their long positions and added 3,792 to their short positions. Commercial interests liquidated 191 of their long positions and also liquidated 4,342 contracts of their short positions. As of the latest report, managed money is long lean hogs by ratio of 4.16:1, which is down dramatically from the previous week of 6.01:1 and the ratio of 2 weeks ago of 6.83:1.

Thus far in the 3rd quarter, December live cattle is the out performer with a loss of 2.73%, October live cattle -4.22%, December lean hogs -11.61%, October lean hogs -18.46%.

Year to date, December live cattle is the out performer with a gain of 13.67%, October live cattle +12.13%, October lean hogs +10.90%, December lean hogs + 9.62%.

WTI crude oil:

For the week, October WTI crude oil lost $1.67, November -1.57, December -1.47. The COT report revealed that managed money liquidated 6,911 contracts of their long positions and added 14,871 contracts to their short positions. Commercial interests liquidated 17,585 contracts of their long positions and also liquidated 20,237 contracts of their short positions. As of the latest report, managed money is long WTI crude oil by ratio of 4.07:1, which is down sharply from the previous week of 5.44:1 and the ratio of 2 weeks ago of 6.08:1.

The current ratio of  4.07:1 is the lowest since the COT tabulation date of January 21, 2014 when managed money was long WTI crude oil by ratio of 4.21:1.

Heating oil:

For the week, September heating oil lost 2.01 cents, October -1.99, November – 2.09. The COT report revealed that managed money added 1,909 contracts to their long positions and liquidated 4,269 contracts of their short positions. Commercial interests added 489 contracts to their long positions and also added 424 contracts to their short positions. As of the latest report, managed money is short heating oil by ratio of 1.16:1, which is down significantly from the previous week of 1.36:1 and down sharply from the ratio of 2 weeks ago of 1.62:1.

Gasoline:

For the week, October gasoline advanced 1.39 cents, November +.0027, December -.0039. The COT report revealed that managed money liquidated 5,046 contracts of their long positions and also liquidated 392 contracts of their short positions. Commercial interests added 3,934 contracts to their long positions also added 111 to their short positions. As of the latest report, managed money is long gasoline by ratio of 2.04:1, which is down from the previous week of 2.20:1, but up slightly from the ratio of 2 weeks ago of 2.01:1.

Natural gas:

For the week, October natural gas advanced 7.6 cents November +7.7, December +8.5. The COT report revealed that managed money added 11,067 contracts to their long positions and liquidated 7,441 contracts of their short positions. Commercial interests added 16,297 contracts to their long positions and also added 16,342 to their short positions. As of the latest report, managed money is long natural gas by ratio of 1.07:1, which is a complete reversal from the previous week when they were short by ratio of 1.01:1 and the ratio of 2 weeks ago when managed money was short by 1.02:1.

Thus far in the 3rd quarter, October ethanol is the out performer with a gain of 5.36%, October heating oil -5.24%, October Brent crude oil -8.49%, October gasoline -8.74%, October WTI crude oil -9.98%, October natural gas -12.45%.

Year to date, October ethanol is the out performer with a gain of 19.42%, October WTI crude oil – 0.47%, October gasoline -2.51%, October Brent crude oil -4.71%, October heating oil -5.40%, October natural gas -6.61%.

Copper: On August 22, December copper generated an intermediate term buy signal, but remains on a short-term sell signal.

For the week, December copper advanced 9.85 cents. The COT report revealed that managed money liquidated 6,654 contracts of their long positions and added 3,773 contracts to their short positions. Commercial interests added 2,169 contracts to their long positions and liquidated 3,003 contracts of their short positions. As of the latest report, managed money is long copper by ratio of 1.35:1, which is down dramatically from the previous week of 1.92:1 and the ratio of 2 weeks ago of 2.72:1.

The high for the ratio occurred on the COT tabulation date of July 15 when managed money was long copper by ratio of 3.79:1. The current ratio is the lowest since the COT tabulation date of June 17 when managed money was short copper by ratio of 1.01:1.

Despite the sharp move higher during 2 of the past 3 trading sessions, open interest has been declining, which is very negative for copper prices moving forward. For example, on August 20 when copper advanced 8.85 cents, total open interest declined by 3,772 contracts. On August 21 when copper declined fractionally by 10 points, total open interest declined by 2,686 contracts, and preliminary stats for August 22 show total open interest declined 593 contracts on volume of 54,971.We only use final numbers and these will not be released until Monday, therefore total open interest is subject to change. However, the picture for the past 3 days has not been one of a robust bull market, but rather one characterized by liquidation.

In order for copper to generate a short-term buy signal, the low the day must be above OIA’s key pivot point of 3.2180. If this does not occur, the market is likely to trade sideways and possibly test the lows of the past week. However, it is imperative that open interest action increase on future price advances, or any short-term buy signal will likely reverse. In summary, copper needs new buyers who are willing to pay ever higher prices in order to keep the rally going. Short covering has dominated the advance during the past couple of days.

Palladium:

For the week, December palladium lost $6.60. The COT report revealed that managed money added 924 contracts to their long positions and liquidated 3,665 contracts of their short positions.Commercial interests liquidated 329 contracts of their long positions and added 2,341 to their short positions. As of the latest report, managed money is long palladium by 10.30:1, which is up dramatically from the previous week of 4.11:1 and the ratio of 2 weeks ago of 4.07:1.

In last week’s report, we stated that palladium prices had reached their highest level in at least 10 years. Apparently, managed money saw this is an opportunity to get on board at the very high-end of the 10 year trading range. The massive increase in this week’s ratio was due primarily to the liquidation of short positions which represented a large percentage of outstanding short positions held by managed money.

Platinum: On August 18, October platinum generated an intermediate term sell signal after generating a short-term sell signal on August 1.

For the week, October platinum lost $38.70. The COT report revealed that managed money liquidated 3,527 contracts of their long positions and added 691 contracts to their short positions. Commercial interests added 744 contracts to their long positions and liquidated 1,168 contracts of their short positions. As of the latest report, managed money is long platinum by ratio of 17.17:1, which is down dramatically from the previous week of 27.95:1, but up from the ratio of 2 weeks ago of 16.14:1.

Gold:

For the week, December gold lost $26.00. The COT report revealed that managed money liquidated 9,959 contracts of their long positions and added 3,263 contracts to their short positions. Commercial interests added 584 contracts to their long positions and liquidated 689 contracts of their short positions. As of the latest report, managed money is long gold by a ratio of 5.10:1, which is down from the previous week of 6.31:1, but dramatically above the ratio of 2 weeks ago of 3.74:1.

Silver:

For the week, December silver lost 13.1 cents. The COT report revealed that managed money liquidated 575 contracts of their long positions and added a hefty 5,411 contracts to their short positions. Commercial interests added 1,262 contracts to their long positions and liquidated 1,405 contracts of their short positions. As of the latest report, managed money is long silver by ratio of 1.65:1, which is down significantly from the previous week of 2.14:1 and the ratio of 2 weeks ago of 2.99:1.

Thus far in the 3rd quarter, December palladium is the out performer with a gain of 5.46%, December copper (unchanged), December gold -3.60%, October platinum -4.45%, December silver -8.04%.

Year to date, December palladium is the out performer with a gain of 23.15%,  December gold +6.25%, October platinum +3.21%, December silver -0.39%, December copper -4.80%.

Canadian dollar:

For the week, the September Canadian dollar lost 43 pips. The COT report revealed that leveraged funds liquidated 95 contracts of their long positions and added a massive 9,053 contracts to their short positions.As of the latest report, leveraged funds are short the Canadian dollar by ratio of 1.27:1, which is a complete reversal from the previous week when they were long by ratio of 1.10:1 and the ratio of 2 weeks ago when leveraged funds were long by 1.29:1.

Australian dollar:

For the week, the September Australian dollar lost 4 pips. The COT report revealed that leveraged funds added 11,172 contracts to their long positions and also added 3,506 contracts to their short positions. As of the latest report, leveraged funds are long the Australian dollar by ratio of 2.78:1, which is up from the previous week of 2.70:1 and the ratio of 2 weeks ago of 2.72:1.

Swiss franc:

For the week, the September Swiss franc lost 1.37 cents. The COT report revealed that leveraged funds added 543 contracts to their long positions and liquidated 1,260 contracts of their short positions. As of the latest report, leveraged funds are short the Swiss franc by ratio of 2.59:1, which is down from the previous week of 2.93:1, but up somewhat from the ratio of 2 weeks ago of 2.44:1.

British pound:

For the week, the September British pound lost 1.19 cents. The COT report revealed that leveraged funds liquidated 6,463 contracts of their long positions and added 8,456 contracts to their short positions. As of the latest report, leveraged funds are long the British pound by ratio of 2.06:1, which is down significantly from the previous week of 2.51:1 and the ratio of 2 weeks ago of 2.38:1.

Euro:

For the week, the September euro lost 1.57 cents. The COT report revealed that leveraged funds added 4,648 contracts to their long positions and also added 17,472 contracts to their short positions. As of the latest report, leveraged funds are short the euro by a ratio of 2.97:1, which is up from the previous week of 2.91:1 and the ratio of 2 weeks ago of 2.81:1.

The current ratio of 2.97:1 is the largest short ratio since the beginning of the current bear market.

Yen:

For the week, the September yen lost 151 pips. The COT report revealed that leveraged funds added 6,612 contracts to their long positions and also added 10,462 contracts to their short positions. As of the latest report, leveraged funds are short the yen by ratio of 3.32:1, which is down from the previous week of 3.78:1 and the ratio of 2 weeks ago of 4.29:1.

It would likely surprise many who hold short positions in the yen that it is outperforming the pound during the 3rd quarter and year to date. Leveraged funds are short the yen by ratio 3.32:1, whereas they are long the British pound by a ratio of 2.06:1

Dollar index:

For the week, the September dollar index advanced 91 points. The COT report revealed that leveraged funds added 3,344 contracts to their long positions and also added 4,763 to their short positions. As of the latest report, leveraged funds remain short the dollar index by ratio 1.30:1, which is about the same as the previous week of 1.29:1 and the ratio of 2 weeks ago of 1.27:1.

Thus far in the 3rd quarter, the September dollar index is the out performer with a gain of 3.19%, September Australian dollar -0.79%, September Canadian dollar -2.44%, September yen -2.52%, September pound -3.05%, September Swiss franc -3.05%, September euro -3.32%.

Year to date, the September Australian dollar is the out performer with a gain of 5.98%, September dollar index +2.29%, September yen +1.18%, September British pound +0.26%, September Canadian dollar -2.35%, September Swiss franc -2.96%, September euro -3.98%.

S&P 500 (250 x):

For the week, the September S&P 500 futures contract advanced 35.40 points. The COT report revealed that leveraged funds liquidated 62 contracts of their long positions and added 487 contracts to their short positions. As of the latest report, leveraged funds remain short the S&P 500 futures contract by ratio of 1.60:1, which is up slightly from the previous week of 1.54:1, but down dramatically from the ratio of 2 weeks ago of 2.45:1.

Thus far in the 3rd quarter, the NASDAQ 100 cash index is the out performer with a gain of 5.28%, S&P 500 cash index +1.44%, Dow Jones Industrial Average cash index + 1.04%, New York Composite cash index -0.29%,S&P 400 cash index -0.49%, Russell 2000 cash index -2.73%.

Year to date, the NASDAQ 100 cash index is the out performer with a gain of 12.83%, S&P 500 cash index +7.58%, S&P 400 cash index +6.21%, New York Composite cash index +5.26%, Dow Jones Industrial Average cash index + 2.56%, Russell 2000 cash index – 0.28%.