The USDA planting intentions report will be released on March 28.

Soybeans: 

For the week, May soybeans lost 14.50 cents, July +7.25. The COT report showed that managed money liquidated 21,341 contracts of their long positions and added 5,142 contracts to their short positions. Commercial interests added 4,450 contracts to their long positions and liquidated 22,795 contracts of their short positions. As of the latest report, managed money is long soybeans by a ratio of 5.05:1, which is down significantly from the previous week of 7.38:1 and the ratio of 2 weeks ago of 6.47:1.

Soybean meal:

For the week, May soybean meal gained 50 cents, July +80. The COT report showed that managed money liquidated 11,964 contracts of their long positions and added 515 contracts to their short positions. Commercial interests added 3,029 contracts to their long positions and liquidated 10,524 contracts of their short positions. As of the latest report, managed money is long soybean meal by a ratio of 3.91:1, which is down from the previous week of 4.68:1 and the ratio of 2 weeks ago of 4.42:1.

Soybean oil:

For the week, May soybean oil gained 52 points, July +54. The COT report showed that managed money added 2,138 contracts to their long positions and added 706 contracts to their short positions. Commercial interests added 5,750 contracts to their long positions and also added 5,492 contracts to their short positions. As of the latest report, managed money is short soybean oil by a ratio of 2.16:1, which is down slightly from the previous week of 2.25:1 and the ratio of 2 weeks ago of 2.53:1.

The logistic issues in Brazil with respect to corn and soybeans muddle the US demand picture. The following is from the US Farm Journal:

Huge corn and soybean crops are causing a complex logistic problem in Brazil, which is dramatically hurting their export shipping. The problem is complex. Brazil’s corn crop was large and most of it was or is being exported. The country’s soybean crop is record large, soybean harvest has been delayed, and Brazil’s logistics infrastructure is having trouble accommodating both crops. “Corn exports have more than doubled compared to last year,” says Luis Neves, director of logistics for CHS in São Paulo, Brazil. CHS is a Minneapolis-based farmer-owned cooperative with operations in Brazil. “And there will be 6 million tons more soybeans exported this year compared with last year,” he adds

“There is much more product, but the infrastructure, which has always been below current needs, is the same,” says Neves. “What was poor is now unsustainable in terms of flow capacity.” The sheer size of this year’s corn exports from Brazil is also working to delay soybean exports. Corn exports, which are typically completed by December, are still moving out of Brazilian ports. Adding to the problem, Brazil recently enacted a law reducing the number of hours truck drivers can work in a given day. Drivers are required to rest for at least 11 hours a day and take breaks after every four-hour driving shift.

“Certainly in the next three to four months, the pressure will be intense because there is a huge soybean crop that has to be exported and the logistics flow capacity is limited,” he says. “The market is at such a large inverse that everyone wants to be first to load product.” Brazilian soybeans, f.o.b. the port, are priced at a 25-cent discount to the Chicago Board of Trade front-month contract.

The backup at the country’s two largest ports is lengthy. At Paranaguá, the second most important shipping port for agricultural products, the wait is about 55 days to get a ship loaded and moving. At the port of Santos, the wait is closer to 35 days, says Neves.”The rural logistics are poor,” he says. “There is no Mississippi River that crosses the production area, and rail in Brazil is much less efficient than it is in the United States.” He estimates that it costs $150 per ton to move corn or soybeans from Sorriso in Mato Grosso to the ports.

Despite the difficulties in Brazil, soybeans remain on a short and intermediate term sell signal. Beans would have to rally significantly to nullify the signals. Soybean meal and soybean oil remain on a short and intermediate term sell signals.

Corn:

For the week, May corn gained 9.25 cents, July +8.25. The COT report showed that managed money added 37,629 contracts to their long positions and liquidated 16,793 contracts of their short positions. Commercial interests added 16,422 contracts to their long positions and also added a massive 72,225 contracts to their short positions. As of the latest report, managed money is long corn by a ratio of 2.79:1, which is up substantially from the previous week of 2.06:1 and the ratio of 2 weeks ago of 1.73:1.

From the March 21 report on corn:

“During the past 6 days beginning on March 14, May corn has advanced 23.00 cents while open interest has increased a total of 86,983 contracts. The massive increase in open interest relative to the rather minor advance during the past 6 days is becoming troubling. Like natural gas, when a huge increase in open interest occurs and the price advance is relatively tepid, a correction, or perhaps a reversal in trend may be on the horizon.”

According to the preliminary report, open interest in corn increased 12,358 contracts on volume of 243,106 contracts. On Friday, corn lost 6.75 cents, and based upon the very large increase of open interest during the previous several days, it would have been very positive if open interest had declined. Although the final stats may show a much smaller build, we doubt that open interest will decline. The COT report showed that commercial interests added a massive 72,225 contracts to their short positions, and this would explain the muted advance. Corn remains on a short and intermediate term buy signal.

Wheat:

For the week, May Chicago wheat gained 6.75 cents, July +8.00. May Minneapolis wheat gained 11.25 cents, July +10.25. May Kansas City wheat gained 10.00 cents, July +10.75. The COT report showed that managed money added 1,995 contracts to their Chicago wheat positions and liquidated 6,658 of their short positions. Commercial interests liquidated 11,472 contracts of their Chicago wheat positions and also liquidated 1,188 contracts of their short positions. As of the latest report, managed money is short Chicago wheat by a ratio of 1.45:1, which is down slightly from the previous week of 1.56:1 and the ratio of 2 weeks ago of 1.66:1. Stand aside.

Performance COT tabulation period of March 13-March 19    Year to Date
May wheat     +2.63%                                                                                 -7.36%
May corn        +2.00%                                                                                +3.71%
May bean oil   -1.00%                                                                                +0.50%
May beans      -4.22%                                                                                 +2.95%
May meal        -5.64%                                                                                 +1.82%

Crude oil:

For the week, May crude oil lost 11 cents. The COT report showed that managed money liquidated 3,879 contracts of their long positions and also liquidated 9,163 contracts of their short positions. Commercial interests liquidated 18,150 of their long positions and also liquidated 17,488 contracts of their short positions. As of the latest report, managed money is long crude oil by a ratio of 3.99:1, which is up from the previous week of 3.34:1 and the ratio of 2 weeks ago of 3.50:1. Crude oil remains on a short and intermediate term sell signal.

Heating oil:

For the week, May heating oil lost 5.47 cents. The COT report showed that managed money liquidated 2,166 contracts of their long positions and also liquidated 3,218 contracts of their short positions. Commercial interests liquidated 14,796 contracts of their long positions and also liquidated 10,355 contracts of their short positions. As of the latest report, managed money is long heating oil by a ratio of 1.34:1, which is up slightly from the previous week of 1.27:1, but down substantially from the ratio of 2 weeks ago of 1.71:1.

Gasoline:

For the week, May gasoline lost 9.91 cents. May ethanol lost 6.1 cents. The COT report showed that managed money liquidated 1,245 contracts of their long positions and also liquidated 2,316 contracts of their short positions. Commercial interests liquidated 58 contracts of their long positions and added 1,887 contracts to their short positions. The latest report showed that managed money was long gasoline by a ratio of 12.28:1, which is up substantially from the previous week of 9.32:1 and the ratio of 2 weeks ago of 9.70:1.

Natural gas:

For the week, May natural gas advanced 4.3 cents. The COT report showed that managed money added a massive 45,320 contracts to their long positions and also added 2,730 contracts to their short positions. Commercial interests liquidated 16,697 contracts of their long positions and also liquidated 6,780 contracts of their short positions. As of the latest report, managed money is long natural gas by a ratio of 1.18:1, which is a dramatic shift from the previous week when managed money was short by a ratio of 1.01:1 and the ratio of 2 weeks ago when managed money was short by a ratio of 1.15:1. Natural gas remains on a short and intermediate term buy signal.

From the March 21 report:

“For the past 4 trading sessions beginning on March 18, open interest has increased 56,309 contracts while natural gas has advanced 4.7 cents. The massive open interest increase compared to the relatively paltry advance, is troubling. In short, there is heavy selling as the market reaches the upper end of its trading range, which is capping the price advance. As indicated in previous reports, we think it is wise to take some money off the table due to the heavy increase of open interest and the tepid price response. Another approach, is to write out of the money calls against any remaining long futures, or long call positions.”

We are reprinting the above paragraph because we have seen the preliminary stats for natural gas for trading on March 22, and it confirms the disappointing price action relative to the massive increases of open interest. The preliminary stats show that open interest increased 27,975 contracts on low volume of 340,600 contracts. The volume stats in the preliminary report are very accurate, whereas open interest numbers can fluctuate significantly between the preliminary and final report, which will be issued on Monday morning. However, even if the open interest number is reduced by 50%, the open interest increase in relation to volume would be approximately 70% above average. Since natural gas was essentially unchanged on March 22, this would mean that open interest has increased by approximately 70,000 contracts over 5 days while May natural gas advanced only 4.7 cents in a period of 5 days. During the past 3 sessions beginning on March 20, natural gas has declined 3 cents and open interest for March 20 and 21 has increased a total of 33,088 contracts. In short, the recent increases of open interest show that the bears are in control. The 50 day moving average for the May contract is $3.55, and it is over bought. Natural gas has had some considerable resistance at the $4.00 level.

We strongly encourage clients to take partial profits, or at least write calls that are out of the money, in order to protect bullish positions. Managed money has moved strongly to the long side, and we suspect that much of the selling is from commercial interests and speculators who are trying to pick a top. Regardless, the selling is capping the advance, and clients should exercise extreme caution. We recommend that sell stops be placed slightly below $3.89. Holders of long calls should liquidate if the market penetrates the 3.89 level.

Performance COT tabulation period of March 13-March 19    Year to Date
May natural gas  +8.58%                                                                             +14.60%
May ethanol        +2.84%                                                                              +13.08%
May crude oil       -0.43%                                                                                +0.77%
May Brent crude  -1.63%                                                                                  -0.68%
May heating oil    -2.67%                                                                                  -1.72%
May gasoline        -3.10%                                                                                  +5.29% 

Copper:

For the week, May copper lost 5.45 cents. The COT report showed that managed money liquidated 2,476 contracts of their long positions and added 6,479 contracts to their short positions. Commercial interests added 4,688 contracts to their long positions and also added 1,778 contracts to their short positions. As of the latest report, managed money is short copper by a ratio of 2.17:1, which is up substantially from the previous week of 1.68:1 and the ratio of 2 weeks ago when managed money was short 1.67:1. Copper remains on a short and intermediate term sell signal

Gold:

For the week, April gold gained $13.50. The COT report showed that managed money added 8,422 contracts to their long positions and liquidated 12,033 contracts of their short positions. Commercial interests liquidated 1,988 contracts of their long positions and added 2,195 contracts to their short positions. As of the latest report, managed money is long gold by a ratio of 2.14:1, which is up from the previous week of 1.65:1 and the ratio of 2 weeks ago of 1.61:1. Gold remains on a short and intermediate term sell signal.

Platinum:

For the week, April platinum lost $10.70. The COT report showed that managed money liquidated 1,575 contracts of their long positions and added 1,927 contracts to their short positions. Commercial interests added 649 contracts to their long positions and liquidated 377 contracts of their short positions. As of the latest report, managed money is long platinum by a ratio of 5.69:1, which is down dramatically from the previous week of 9.62:1 and the ratio of 2 weeks ago of 16.29:1. Platinum remains on a short and intermediate term sell signal.

Palladium:

For the week, June Palladium lost $14.10. The COT report showed that managed money liquidated 100 contracts of their long positions and added 269 contracts to their short positions. Commercial interests liquidated 78 contracts of their long positions and also liquidated 10 contracts of their short positions. As of the latest report, managed money is long Palladium by a ratio of 20.09:1, which is down significantly from the previous week of 25.59:1, but substantially higher than the ratio of 2 weeks ago of 16.09:1.

Silver:

For the week, May silver lost 15.3 cents. The COT report showed that managed money added 768 contracts to their long positions and also added 3,041 contracts to their short positions. Commercial interests added 708 contracts to their long positions and liquidated 778 contracts of their short positions. According to the latest report, managed money is long silver by a ratio of 1.19:1, which is down significantly from the previous week of 1.35:1 and the ratio of 2 weeks ago of 1.44:1. Silver remains on a short and intermediate term sell signal.

Performance COT tabulation period of March 13-March 19    Year to Date
April gold            +1.24%                                                                            -4.11%
May silver           -1.03%                                                                             -5.25%
April platinum   -2.50%                                                                            +2.63%
May copper        -4.35%                                                                             -5.30%
June palladium -4.68%                                                                             +8.35%

Canadian dollar:

For the week, the June Canadian dollar lost 29 points. The COT report showed that leveraged funds added 5,993 contracts to their long positions and also added 14,750 contracts to their short positions. As of the latest report, leveraged funds are short the Canadian dollar by a ratio of 2.00:1, which is up slightly from the previous week of 1.95:1 and the ratio of 2 weeks ago when leveraged funds were short by a ratio of 1.67:1. Three weeks ago leveraged funds were short by a ratio of 1.28:1, and this was tabulated on Tuesday, February 26.

The table below covers March 1 through March 22 and it shows that leveraged funds have gotten increasingly bearish despite the Canadian dollar advancing over three-quarters of 1% in this time frame. We are not suggesting that bullish positions be implemented because the Canadian dollar remains on a short and intermediate term sell signal. However, the high net short position of leveraged funds in the Canadian dollar when it is moving sideways to higher over a period of 3 weeks is a warning to shorts not to over stay these positions. Interestingly, the short to long ratio in the Canadian dollar is about equal to the euro (2.02:1) despite the Canadian dollar’s outperformance during the past 3 weeks. Open interest in the Canadian dollar decreased from 209,518 contracts on March 1 to 163,651 on March 21. The March contract was going off the board,  and the decline of open interest is, for the most part, attributable to contract expiration.

                                                                                                                       March 1-March 22                Year to Date

AD/M3 Australian Dollar June 2013 1.04 0.024 2.337% 0.012 1.130%
CD/M3 Canadian Dollar June 2013 0.98 0.0075 0.7745% -0.026 -2.566%
BP/M3 British Pound June 2013 1.52 0.0056 0.3692% -0.10 -6.24%
DX/M3 Dollar Index June 2013 82.47 0.26 0.32% 2.48 3.10%
SF/M3 Swiss Franc June 2013 1.06 -0.0052 -0.4865% -0.033 -3.018%
E./M3 Euro (Electronic). June 2013 1.30 -0.0073 -0.5582% -0.021 -1.574%
JY/M3 – Japanese Yen June 2013 1.06 -0.020 -1.889% -0.097 -8.349%

Australian dollar:

For the week, the June Australian dollar gained 44 points. The COT report showed that leveraged funds added 18,784 contracts to their long positions and liquidated 3,503 contracts of their short positions. As of the latest report, leveraged funds are long by a ratio of 2.35:1, which is up substantially from the previous week of 1.79:1 and the ratio of 2 weeks ago of 1.45:1. The Australian dollar remains on a short and intermediate term buy signal.

Swiss franc:

For the week, the June Swiss franc lost 10 points. The COT report showed that leveraged funds liquidated 3,872 contracts of their long positions and added 1,653 contracts to their short positions. As of the latest report, leveraged funds are short by a ratio of 1.65:1, which is up substantially from the previous week when they were short by a ratio of 1.13:1, and a dramatic reversal from 2 weeks ago when leveraged funds were long by a ratio of 1.06:1.

British pound:

For the week, the June British pound gained 1.50 cents. The COT report showed that leveraged funds added 11,702 contracts to their long positions and added 23,073 contracts to their short positions. As of the latest report, leveraged funds are short by a ratio of 3.36:1, which is down substantially from the previous week of 4.05:1, but up significantly from the ratio of 2 weeks ago when leveraged funds were short by a ratio of 2.72:1.

Euro:

For the week, the June euro lost 71 points. The COT report showed that leveraged funds liquidated 8,457 contracts of their long positions and added 3,973 contracts to their short positions. As of the latest report, leveraged funds are short by a ratio of 2.02:1, which is up significantly from the previous week of 1.55:1 and the ratio of 2 weeks ago of 1.54:1. The euro remains on a short and intermediate term sell signal.

Japanese yen:

For the week, the June Japanese yen gained 110 points. The COT report showed that leveraged funds added 8,828 contracts to their long positions and liquidated a hefty 26,134 contracts of their short positions. As of the latest report, leveraged funds are short by a ratio of 2.82:1, which is down dramatically from the previous week of 4.41:1 and the ratio of 2 weeks ago when leveraged funds were short by a ratio of 3.89:1.

Dollar index:

For the week, the June dollar index gained 6 points. The COT report showed that leveraged funds added a hefty 8,846 contracts to their long positions and liquidated a hefty 8,751 contracts of their short positions. As of the latest report, leveraged funds are long the dollar index by a ratio of 1.11:1, which is a dramatic shift from the previous week when they were short by a ratio of 1.27:1, and the ratio of 2 weeks ago when they were short by a ratio of 1.21:1.  The dollar index remains on a short and intermediate term buy signal.

From the March 3 Weekend Wrap:

“It is odd that leveraged funds went from a net long to a net short position just as the dollar index rallied strongly. For example, during the 2 reporting periods of the COT report which span the dates of February 13 through February 26, the March dollar index advanced 1.78 points, or 2.22%, while funds increased their net short position. Since the rally began on February 1, through February 28, the dollar index advanced 2.70 points or 3.41%. Additionally, the fund short position is occurring when major currencies that comprise the dollar index also have moved to a net short position: Canadian dollar, Swiss franc, and Euro. Leveraged funds have been net short in the British pound and Japanese yen for a number of weeks.”

Remarkably, just as the dollar index moves to a new high for the move, leveraged funds decide they are bullish on the dollar and shift to a net long position. This is occurring when the Euro and British pound are beginning to rally, and the June Canadian dollar is trading sideways to higher after making its initial low at 96.46 on March 1 and a retest at 96.50 on March 6 (see report on Canadian dollar). The June yen made its initial low at 103.63 on March 8, and broke slightly below that on March 12 to 103.45. It is been trading sideways to higher ever since.

Performance COT tabulation period of March 13-March 19    Year to Date
June British pound    +1.30%                                                                     -6.24%
June Japanese yen    +0.85%                                                                     -8.35%
Australian dollar       + 0.53%                                                                    +1.13%
June Dollar Index      +0.39%                                                                    +3.10%
June Swiss franc         -0.04%                                                                    -3.02%
June Canadian dollar -0.10%                                                                     -2.57%
June euro                     -1.10%                                                                     -1.57%

S&P 500 E mini:

For the week, the June S&P 500 E mini lost 1.60 points. The COT report showed that leveraged funds liquidated 124,574 contracts of their long positions and also liquidated 131,572 contracts of their short positions. As of the latest report, leveraged funds are short the E mini by a ratio of 1.63:1, which is slightly higher than the previous week of 1.52: 1, and the ratio of 2 weeks ago of 1.50:1.

There is some significant weakness in the markets of Brazil and India. On Friday, the Sensex 30 and the Brazilian Bovespa closed at  their lowest level since last November. The weakness in the emerging markets is best manifested by the series of lower highs in the Shanghai Composite Index beginning in the 4th quarter of 2011. On Friday, the Shanghai Composite Index closed at 2328.28 .
The Shanghai Composite highs are as follows (rounded off):

October 31,2011    2536
March 5, 2012      2469
April 30, 2012      2453
February 4, 2013  2443

The last time the number of stocks trading above their 50 day moving average on NYSE stocks traded above their 50 day moving average occurred on February 19. The current number of stocks above their 50 day moving average on the NYSE is 1556 and the 50 day moving average is currently 1819. The number of stocks trading above their 50 day moving average on the NYSE peaked on January 22 at 2115 stocks. From January 22 through March 22, the S&P 500 has gained 70.91 points. In short, despite the massive rally, stocks trading above their 50 day moving averages have been declining as the S&P 500 has been moving higher.

 American Association of Individual Investors survey

Recent week     2 weeks ago     3 weeks ago

Bullish   38.9%      45.4%                31.1%
Bearish  33.3%      32.0%               38.5%
Neutral  27.7%      22.6%               30.4%