Corn:
For the week, March corn closed 2 3/4 cents higher. Through Thursday open interest increased by 20,757 contracts. In my a February 2 analysis, I mentioned that I was reluctant bull. The price and open interest action for the month of January reinforces my caution. On January 3, corn closed at 6.58 and open interest totaled 1,176,009 contracts. On January 31, corn closed at 6.39 and open interest totaled 1,235,541 contracts, or an increase of 59,532 contracts. In other words, over 59,000 contracts were added, yet corn closed $.20 lower than it did on January 3.
Soybeans:
For the week, March soybeans closed 13 1/2 cents higher. For the month of January, price and open interest action was bearish. In January, soybeans were 8 3/4 cents lower and open interest increased by 50,773 contracts. The action on January 30 was very bearish when soybeans closed 33 3/4 cents lower and open interest increased by 15,120 contracts. However, the market turned positive on Tuesday and continued on a positive note for the rest of the week. On the rally, open interest increased 9851 contracts. The commitment of traders report showed that in the managed money category, they added 2440 contracts to their long positions and added 6970 contracts to their short positions. Commercial interests added 15,466 contracts to their long positions and added 11,648 contracts to their short positions. My bias in soybeans is turning somewhat positive. Although I thought there was going to be a retest of the 50 day moving average of 11.74, I now think the market will continue to rally. On February 2, March soybean’s low was above my key pivot point of 12.05 3/4. On Friday, the market continued to trade above that pivot point and closed at 12.32 1/2, which was the highest close since January 9. Pullbacks should be viewed as buying opportunities. There is tremendous support at the 11.83 and 11.84 level. Sell stops should be placed based upon risk tolerance and sound money management principles.
Sugar #11:
For the week, March sugar closed 27 points lower. During the Monday through Thursday time frame, sugar with 73 points lower and open interest increased by 28,874 contracts. I am friendly to the market, but in my opinion , it is too early to take a long position as I’ve said before, this is a weak period for sugar on a seasonal basis. In the latest commitment of traders report, managed money increased their long positions by 4454 contracts and decreased their short positions by 433 contracts. Commercial interests increased their long positions by 24,792 contracts and added 22,553 contracts to their short positions. Stand aside for now.
Crude oil:
For the week, March crude oil closed $1.72 lower. During the Monday through Thursday time frame, crude oil was $3.11 lower or 3.12%. Open interest Monday through Thursday increased by 62, 774 contracts. This is certainly bearish price and open interest action, but I would strongly suggest that any speculator should stand aside at this juncture. So far, the market has not responded to any of the geopolitical concerns regarding Iran. If the situation continues to heat up, or there is a confrontation, oil can turn on a dime. If tensions decrease we would likely see a further downward pressure in crude oil. In the commitment of traders report released on Friday, in the managed money category, they added 991 contracts to their long positions, and added 3447 contracts to their short positions. Commercial interests increased their long positions by 20,393 contracts and added 20,496 contracts of their short positions. Key downside pivot points are 96.70, 95.47, and 94.10.
Gasoline:
For the week March gasoline closed 9/10 of a cent lower. For the Monday through Thursday time frame gasoline closed a little more than $.04 lower and open interest declined 476 contracts. Additionally, the 50 day moving average is crossing up over the 150 day moving average and in the coming week, will most likely crossed up over the 200 day moving average. In the latest commitment of traders report, in the managed money category, they added 6705 contracts to their long positions and closed out 150 contracts of their short positions. Commercial interests, liquidated 11,647 contracts of their long positions and liquidated 4,285 of their short positions. I am very bullish on gasoline, but it is early February and therefore I believe it is too early to get long. Keep in mind that a very bullish gasoline market, is going to be very bad for the economy and will have a number of unintended effects, especially in the equities market.
Copper:
For the week, March copper closed 1.25 cents higher. For the time frame of Monday through Thursday, March copper decline 10.80 cents and open interest increased by 5,078 contracts. This is bearish price and open interest action and therefore existing longs should be cautious. In the commitment of traders report, in the money managed category, they added 1947 contracts to their long positions and added 1513 contracts of their short positions. Commercial interests added 4279 contracts to their long positions and added 5809 contracts to their short positions. Do not add new positions at these levels. The most recent high for copper occurred on January 27 when it reached approximately 3.94. That was the highest price for copper since September 16, 2011, when copper reached $4.00. There is a fair amount of resistance at the $4.00 level. In addition, there is some question about the Chinese economy’s strength and whether there will be a hard or soft landing. The economic slowdown in China will directly impact copper consumption. Also, any slide in equities will impact copper as well. If not long from significantly lower levels, stand aside.
Gold:
For the week, April gold closed $5.70 higher. During the Monday through Thursday time frame gold closed $2 7.20 higher and open interest increased a modest 3207 contracts. The caliber of open interest action relative to price continues to be dismal. On Friday, the market made a new high for the move at 1765.90 and then reversed. The last time the market got up to this area was on December 2, 2011 when the high was made at 1769.70. At that time, according to the commitment of traders report, in the managed money category, these speculators were long gold by 16.65 contracts to 1. As of the latest commitment of traders report released on Friday but tabulated as of Tuesday, January 31, managed money was long 25 contracts to 1. The conclusion being that speculators are even more bullish at this point than they were back in early December. The latest commitment of traders report shows that in the money managed category they added 22,409 contracts to their long positions and liquidated 4383 contracts of their short positions. I am friendly to gold, but want to see gold correct down closer to its 50, and, 200 day moving average of approximately 1665.00. If the open interest action was more positive, I would be more bullish on gold. Stand aside for now, and wait for a better buying opportunity.
