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The time frame for the current Commitments of Traders report is from Wednesday, April 29 through Tuesday, May 5.

On May 12, the USDA will release its World Agriculture Supply Demand report (WASDE), We recommend against initiating new positions in grains prior to the report. Profitable positions should have stop protection and those with losses should be liquidated before the report.

Soybeans:

For the week, July soybeans advanced 11.50 cents, August +10.50, new crop November +11.25. The COT report revealed that managed money added 4,510 to their long positions and liquidated 1,696 contracts of their short positions. Commercial interests liquidated 6,940 of their long positions and also liquidated 2,554 of their short positions. As of the latest report, managed money is short soybeans by a ratio of 1.19:1, which is down from the previous week of 1.27:1 and the ratio of two weeks ago of 1.36:1.

Four weeks ago, managed money was short soybeans by a ratio of 1.81:1, which has been the highest short ratio recorded during the entire course of the bear market going back to 2014. 

Although, July soybeans remain on a short and intermediate term sell signal, we have advised a stand aside posture due to the very bullish spread action in the July-August contracts. On May 5, the spread closed at a high of 7.75 cents premium to July, which is the highest close for the spread since 10.50 cent premium to July made on June 30, 2014. The July contract closed at $11.80 3/4 on that day.

While we do not think that a bull market is ahead, the market could have a sharp rally to blowout weak shorts before resuming the downtrend. Therefore, we advise a sideline stance even though soybean fundamentals are clearly bearish. Also, it would not take much of a rally for a short term buy signal to be generated

Soybean meal:

For the week, July soybean meal advanced $1.50, August +40 cents, new crop December -60. The COT report revealed that managed money liquidated 2,979 contracts of their long positions and added 295 to their short positions. Commercial interests liquidated 1,433 of their long positions and added 154 to their short positions.As of the latest report, managed money is short soybean meal by ratio of 1.002:1, which is a reversal from the previous week when they were long by ratio of 1.06:1. Two weeks ago, managed money was short by a ratio of 1.20:1.

Four weeks ago, managed money was short by ratio of 1.38:1, which has been the highest short ratio recorded during the entire course of the bear market going back to 2014.

Soybean oil: On May 5, July soybean oil generated an intermediate term buy signal after generating a short term buy signal on April 16.

For the week, July soybean oil advanced 1.38 cents, August +1.36, new crop December +1.29. The COT report revealed that managed money added 9,308 contracts to their long positions and liquidated 10,464 their short positions. Commercial interests liquidated 15,267 contracts of their long positions and added 15,836 to their short positions. As of the latest report, managed money is long soybean oil by a ratio of 1.80:1, which is up substantially from the previous week of 1.30:1 and the ratio two weeks ago of 1.40:1.

Corn:

For the week, July corn closed unchanged, September -1.25 cents, new crop December -2.00. The COT report revealed that managed money added 14,858 contracts to their long positions and also added 39,057 to their short positions. Commercial interests added 18,252 contracts to their long positions and liquidated 2,616 of their short positions. As of the latest report, managed money is short corn by a ratio of 1.73:1, which is up from the previous week of 1.66:1 and the ratio two weeks ago of 1.51:1.

The current short ratio of 1.73:1 is the highest recorded in the bear market going back to 2014 and is complete reversal from the COT report of October 7, 2014 when December 2014 corn made its contract low of 3.47 and managed money was long by a ratio of 1.22:1. July corn made a new low for the move on May 5 of 3.55 3/4, however, manage money is massively net short even though the July 2015 contract has not taken out the continuation contract low made on October 1, 2014.

Chicago wheat:

For the week, July Chicago wheat advanced 7.50 cents, September +6.50, new crop December +5.50. The COT report revealed that managed money liquidated 1,066 of their long positions and added 2,892 to their short positions. Commercial interests added 5,924 to their long positions and also added 114 contracts to their short positions. As of the latest report, managed money is short Chicago wheat by a ratio of 3.28:1, which is up from the previous week up 3.15:1 and the ratio of two weeks ago of 2.95:1.

The current short ratio of 3.28:1 is the highest recorded during the entire course of the bear market going back to 2014. During the COT reporting period of September 30, 2014, December 2014  Chicago wheat made a contract low  of 4.66 1/4, and managed money was short by a ratio of 1.77:1.

On May 5, July Chicago wheat made a contract low of 4.60 3/4, and managed money has dramatically increased their short positions over the past several weeks even though wheat prices are at about the same level as they were in late September 2014. To put a finer point on the stats, consider that the COT report of September 30, 2014 showed managed money net short by 66,611 contracts and in the current report net short by 111,373. We strongly advise against being short this market at this juncture.

Kansas City wheat:

For the week, July Kansas City wheat advanced 8.00 cents, September +7.50, new crop December +4.50. The COT report revealed that managed money liquidated 653 contracts of their long positions and added 659 to their short positions. Commercial interests liquidated 293 contracts of their long positions and also liquidated 3,974 their short positions. As of the latest report, managed money is short Kansas City wheat by a ratio of 1.48:1, which is up from the previous week up 1.43:1 and the ratio of two weeks ago of 1.42:1.

Year to date, July soybean oil is the out performer with a gain of 1.26%, July soybeans -5.86%, July soybean meal -7.63%, July corn -12.00%, July Chicago wheat -19.41%, July Kansas City wheat -20.02%.

Thus far in the second quarter, July soybean oil is the out performer with a gain of 7.64%, July soybeans -0.15%, July soybean meal -3.63%, July corn -5.53%, July Chicago wheat -6.32%, July Kansas City wheat -9.80%.

Cotton:

For the week, July, lost 45 points, new crop December -51, March 2016 -15. The COT report revealed that managed money added 10,452 contracts to their long positions and also added 2,643 to their short positions. Commercial interests liquidated 810 contracts of their long positions and added 9,965 to their short positions. As of the latest report, managed money is long cotton by ratio of 3.44:1, which is up from the previous week up 3.37:1 and up substantially from the ratio of two weeks ago of 2.44:1.

Sugar #11:

For the week, July sugar advanced 51 points, October +45, March 2016 +46. The COT report revealed that managed money liquidated 2,463 of their long positions and added 6,158 to their short positions. Commercial interests liquidated 32,952 contracts of their long positions and also liquidated 43,351 of their short positions. As of the latest report, managed money is short sugar by a ratio of 1.33:1, which is up from the previous week of 1.26:1, but down from the ratio two weeks ago of 1.49:1.

Coffee:

For the week, July coffee advanced 45 points, September +45, December +30. The COT report revealed that managed money liquidated 1,670 contracts of their long positions and added 1,026 to their short positions. Commercial interests liquidated 680 contracts of their long positions and also liquidated 1,842 of their short positions. As of the latest report, managed money a short coffee by ratio of 1.24:1, which is up from the previous week of 1.15:1 and the ratio of two weeks ago of 1.12:1.

Cocoa:

For the week, July cocoa advanced $68.00, September +62.00, December +65.00. The COT report revealed that managed money liquidated 227 contracts of their long positions and added 2,717 to their short positions. Commercial interests liquidated 249 contracts of their long positions and added 2,947 to their short positions. As of the latest report, managed money is long cocoa by a ratio of 2.00:1, which is down from the previous week of 2.27:1 on the ratio of two weeks ago a 2.15:1.

Year to date, July cotton is the out performer with a gain of 6.71%, July cocoa +1.94%, July sugar -12.00%, July coffee -21.67%.

Thus far in the second quarter, July sugar is the out performer with a gain of 11.28%, July cocoa +9.11%, July cotton +4.25%, July coffee -21.07%.

Live cattle:

For the week, June live cattle advanced 2.33 cents, August +2.00, October +1.60. The COT report revealed that managed money added 256 contracts to their long positions and liquidated 605 of their short positions. Commercial interests liquidated 1,353 of their long positions and added 3,833 to their short positions. As of the latest report, managed money is long live cattle by a ratio of 7.10:1, which is up from the previous week of 6.76:1 and the ratio of two weeks ago of 6.12:1.

Although the current ratio of 7.10:1 is certainly not the highest recorded, it is at the highest level since the January 27, 2015 COT report when managed money was long live cattle by a ratio of 9.73:1.During the span of the January 27 COT report, February 2015 cattle traded in a range of 1.48375-1.54950, or above the range traded during the past week for the June 2015 contract.

Lean hogs:

For the week, June lean hogs advanced 3.57 cents, August +2.25, October +1.53. The COT report revealed that managed money added 3,352 contracts to their long positions and liquidated 1,361 of their short positions. Commercial interests liquidated 3,388 of their long positions and added 2,821 to their short positions. As of the latest report, managed money is long lean hogs by ratio of 1.53:1, which is up from the previous week of 1.38:1 and the ratio of two weeks ago of 1.25:1.

We wanted to bring to your attention that lean hog bull spreads have exploded to the upside. For example, the June-July 2015 spread made a low at 1.925  cents premium to July on April 22, 2015. On Friday, the spread closed at a 90 point (10 points shy of one cent) premium to June. The Friday high took out the previous high of 87.5 point premium to June made on January 15, 2015 when the June contract closed at 87.925. On May 8, June lean hogs closed at 84.825.

On April 24, OIA announced that June and July lean hogs generated short term buy signals and intermediate term buy signals on April 29. As we have pointed out in previous reports, the open interest action lean hogs has been abysmal, but price action has been outstanding, which is the complete opposite of live cattle where open interest action has been outstanding and price-performance has been abysmal. On April 13, OIA announced that June live cattle generated a short-term sell signal.

Year to date, August live cattle is the out performer with a loss of 1.77%, June live cattle -2.62%, August lean hogs -6.60%, June lean hogs -7.35%.

Thus far in the second quarter, June lean hogs is the out performer with a gain of 11.54%, August lean hogs +8.26%, August live cattle unchanged, June live cattle -0.70%.

WTI crude oil:

For the week, June WTI crude oil advanced 24 cents, July -1, August -24. The COT report revealed that managed money added 1,464 contracts to their long positions and liquidated 7,493 of their short positions. Commercial interests added 11,941 contracts to their long positions and also added 5,822 to their short positions. As of the latest report, managed money is long WTI crude oil by a ratio of 4.58:1, which is up from the previous week of 4.15:1 and the ratio of two weeks ago of 4.21:1.

The current ratio is the highest since the COT report of December 23, 2014 when managed money was long WTI crude oil by a ratio of 4.56:1.The trading range encompassed by the COT report of December 23, 2014 was 54.08 – 58.98, or below the range of prices traded during the current COT report of 56.54-61.10.

As the ratios clearly indicate, the net long position of managed money has been going up, but at a minor rate considering the magnitude of the move during the past three weeks. For example, the net long position of managed money per the April 21 COT report was 259,286 contracts and this expanded to just 266,310 in the current report tabulated on May 5.

During this time, June WTI advanced $5.53, or 10.61% and yet managed money only added 7,024 contracts to their net long position. Commercial interests reduced their net short position from 171,934 contracts on April 21 to 164,848 on May 5 (-7086). Swap dealers increased their net short position by 10,752, which basically offsets most of the reduction of short positions by commercial interests.

In summary, we think the bull move in WTI is likely to stall at current levels because in order for prices to move considerably higher from here new buyers have to be willing to pay ever increasing prices, and based upon the history of the past three weeks, we think this is highly unlikely.On May 6, the June contract made a high of 62.58 on extremely heavy volume and sold off sharply to a low of 58.14 made on Friday.

We think that a tradable high for bearish positions may be in place near the May 6 print of 62.58 and a move up to this level could present a relatively low risk proposition for writing out of the money calls. However, this will depend upon market action as it approaches the May 6 high. OIA Direct subscribers should call us for tactical advice if the market nears the $62.00 level. On April 7, June WTI crude oil generated a short-term buy signal and an intermediate term buy signal on April 14.

From the May 6 report:

“As we pointed out in yesterday’s report, the volume traded in the 10 minute period after the release of the EIA report in the June contract was 30,578 contracts and the range traded was 61.96-62.58, closing at 62.03 on the 10 minute chart. In short, volume traded in that 10 minute period in the June contract represented 3.3% of the total volume traded in all contracts.”

“From time to time we mention that massive volume spikes as prices approach a new high or low can be a sign of capitulation and a possible major high or low. The high of 62.58 should be on every speculators watch list.On April 7, OIA announced that June WTI generated a short-term buy signal and an intermediate term buy signal on April 14.”

Heating oil:

For the week, June heating oil lost 2.85 cents, July -2.77, August -2.74. The COT report revealed that managed money added 2,165 to their long positions and liquidated 2,581 of their short positions. Commercial interests liquidated 4,009 of their long positions and added 471 to their short positions. As of the latest report, managed money is short heating oil by a ratio of 1.24:1, which is down from the previous week of 1.39:1 and the ratio of two weeks ago of 1.66:1.

Gasoline:

For the week, June gasoline lost 5.35 cents, July -4.28, August -3.63. The COT report revealed that managed money liquidated 665 contracts of their long positions and also liquidated 18 of their short positions. Commercial interests added 3,393 to their long positions and also added 4,332 to their short positions. As of the latest report, managed money is long gasoline by a ratio of 1.68:1, which is down slightly from the previous week of 1.70:1, but up from the ratio two weeks ago of 1.60:1.

Natural gas:

For the week, June natural gas advanced 10.4 cents, July +9.7, August +9.9. The COT report revealed that managed money added 3,837 contracts to their long positions and liquidated 32,388 of their short positions. Commercial interests added 11,913 contracts to their long positions and also added 15,475 to their short positions.As of the latest report, managed money is short natural gas by a ratio of 1.56:1, which is down from 1.75:1 (the high short ratio thus far in the bear market)  and down from the ratio of two weeks ago of 1.66:1.

Year to date, June gasoline is the out performer with a gain of 14.45%, June Brent crude oil +13.81%, June heating oil +7.89%,June WTI crude oil +5.48%, June ethanol +1.41%, June natural gas -2.78%.

Thus far in the second quarter, June WTI crude oil is the out performer with a gain of 20.54%, June Brent crude oil +18.57%, June heating oil +14.05%, June gasoline +13.50%, June ethanol +10.96%, June natural gas +6.73%.

Copper:

For the week, July copper lost 90 points. The COT report revealed that managed money added 12,115 contracts to their long positions and liquidated 5,562 of their short positions. Commercial interests liquidated 900 contracts of their long positions and added 9,770 to their short positions. As of the latest report, managed money is long copper by a ratio of 2.77:1, which is a dramatic increase from the previous week when they were long by a ratio of 1.59:1 and the ratio of two weeks ago of 1.55:1.

Palladium:

For the week, June palladium advanced $28.60. The COT report revealed that managed money liquidated 145 contracts of their long positions and also liquidated 130 of their short positions. Commercial interests added 156 contracts to their long positions and also added 392 to their short positions. As of the latest report, managed money is long palladium by a ratio of 7.96:1, which is  above the previous week of 7.60:1 and the ratio two weeks ago of 7.77:1.

Platinum:

For the week, July platinum advanced $13.80. The COT report revealed that managed money added 493 contracts to their long positions and liquidated 1,876 of their short positions. Commercial interests added 82 contracts to their long positions and also added 554 to their short positions. As of the latest report, managed money is long platinum by a ratio of 1.83:1, which is up from the previous week of 1.64:1 and the ratio of two weeks ago of 1.78:1.

Gold:

For the week, June gold advanced $14.40. The COT report revealed that managed money liquidated 15,995 contracts of their long positions and added 11,731 to their short positions. Commercial interests added 2,013 contracts to their long positions and liquidated 11,537 of their short positions. As of the latest report, managed money is long gold by a ratio of 1.30:1, which is down substantially from the previous week of 1.79:1 and the ratio of two weeks ago 1.80:1.

Silver:

For the week, July silver advanced 33.00 cents. The COT report revealed that managed money added 1,861 to their long positions and liquidated 3,806 of their short positions. Commercial interests liquidated 151 contracts of their long positions and added 1,681 to their short positions. As of the latest report, managed money is long silver by a ratio of 1.36:1, which is above the previous week of 1.17:1 and the ratio two weeks ago of 1.31:1.

Year to date, July silver is the out performer with the gain of 5.59%, July copper +3.19%, June gold +0.19%, June palladium -0.09%, July platinum -5.49%.

Thus far in the second quarter, June palladium is the out performer with the gain of 8.48%, July copper +6.35%, June gold +0.34%, July platinum -0.04%, July silver -0.88%.

Canadian dollar:

For the week, the June Canadian dollar advanced 52 pips. The COT report revealed that leverage funds liquidated 4,995 contracts of their long positions and also liquidated 16,058 of their short positions. As of the latest report, leverage funds are short the Canadian dollar by a ratio of 2.04:1, which is down from the previous week of 2.30:1 and the ratio of two weeks ago of 2.42:1.

Australian dollar:

For the week, the June Australian dollar advanced 97 pips. The COT report revealed that leverage funds added 5,457 contracts to their long positions and liquidated 17,775 of their short positions. As of the latest report, leverage funds are short the Australian dollar by a ratio of 2.05:1, which is down dramatically from the previous week of 4.42:1 and the ratio of two weeks ago of 4.80:1.

Swiss Franc:

For the week, the June Swiss franc advanced 31 pips. The COT report revealed that leverage funds added 2,591 contracts to long positions and liquidated 819 of their short positions. As of the latest report, leverage funds are long the Swiss franc by a ratio of 1.03:1, which is a reversal from the previous week when they were short by a ratio of 1.46:1. Two weeks ago, leverage funds were short the Swiss franc by a ratio of 1.69:1.

British Pound:

For the week, the June British pound advanced 3.21 cents. The COT report revealed that leverage funds added 8,691 contracts to long positions and liquidated 14,385 of their short positions. As of the latest report, leverage funds are long the British pound by a ratio of 1.10:1 which is a reversal from the previous week when they were short by a ratio of 1.74:1. Two weeks ago, leverage funds were short the British pound by a ratio of 1.57:1.

Euro:

For the week, the June euro advanced 12 pips. The COT report revealed that leverage funds added 2,475 contracts to long positions and liquidated 3,456 of their short positions. As of the latest report, leverage funds are short the euro by a ratio of 4.32:1, which is down from the previous week of 4.74:1 and the ratio of two weeks ago of 5.89:1.

Four weeks ago, leverage funds were short the euro by a record 11.23:1.

Yen: On May 4, the June yen generated a short and intermediate term sell signal.

For the week, the June yen advanced 34 pips. The COT report revealed that leverage funds liquidated 8,373 of their long positions and added 14,896 to their short positions. As of the latest report, leverage funds are short the yen by a ratio of 3.09:1, which is up dramatically from the previous week of 1.85:1 and the ratio of two weeks ago of 2.21:1.

Dollar index: On May 6, the June dollar index generated an intermediate term sell signal after generating a short term sell signal on April 27.

For the week, the June dollar index lost 54 points. The COT report revealed that leverage funds added 2,692 contracts to their long positions and liquidated 7,494 of their short positions. As of the latest report, leverage funds are short the dollar index by a ratio of 1.13:1, which is down from the previous week of 1.81:1 and substantially below the ratio of two weeks ago of 2.75:1.

Year to date, the June Swiss Franc is the out performer with a gain of 6.50%, June dollar index +5.00%, June yen -0.01%, June British pound -0.78%, June Australian dollar -2.71%, June Canadian dollar -3.67%, June euro -7.46%.

Thus far in the second quarter, the June Canadian dollar is the out performer with a gain of 4.83%, June euro +4.29%, June Swiss franc +4.23%, June Australian dollar +4.23%, June British pound +4.12%, June yen +0.24%, June dollar index -3.67%.

S&P 500 (250 x):

For the week, the June S&P 500 futures contract advanced 6.80 points. The COT report revealed that leverage funds added 457 contracts to their long positions and also added 1,508 to their short positions. As of the latest report, leverage funds are short the S&P 500 futures contract by a ratio of 1.08:1, which is a reversal from the previous week when they were long by a ratio of 1.15:1. Two weeks ago, leverage funds were long the S&P 500 futures contract by a ratio of 1.17:1.

Year to date, the NASDAQ 100 cash index is the out performer with the gain of 5.25%, S&P 400 cash index +4.57%, New York Composite cash index +3.30%, S&P 500 cash index +2.78%, Russell 2000 cash index +2.51%, Dow Jones Industrial Average cash index +2.07%.

Thus far in the second quarter, the NASDAQ 100 cash index is the out performer with the gain of 2.88%, New York Composite cash index +2.73%, S&P 500 cash index +2.33%, Dow Jones Industrial Average +2.32%, S&P 400 cash index -0.35%, Russell 2000 cash index -1.42%.

10 Year Treasury Note: On May 5, the June 10 year treasury note generated an intermediate term sell signal after generating a short term sell signal on April 29.

For the week, the June 10 year treasury note advanced 1.5 ticks. The COT report revealed that leverage funds liquidated 45,659 contracts of their long positions and also liquidated 5,745 of their short positions. As of the latest report, leverage funds are short the 10 year note by a ratio of 1.95:1, which is above the previous week of 1.75:1 and the ratio of two weeks ago of 1.76:1.

We think the short 10 year note trade is becoming very crowded, and although an aggressive bearish stance made sense after the generation of the short-term sell signal on April 29, it doesn’t make much sense today. The market is highly vulnerable to a good-sized short covering rally. Additionally, the 20 day moving average stands at 128-225, which is above the 50 day moving average of 128-105, and this is above the 200 day moving average of 126-125.