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The time frame for the current Commitments of Traders report is from Wednesday, December 31 through Tuesday, January 6.

On Monday January 12, the USDA will release its grain stocks and World Agriculture Supply Demand report at 12 noon Eastern Standard Time.

Do not enter new positions prior to the USDA report. Additionally, if you are carrying positions into the report, they should be significantly profitable prior to the report. Have stop loss protection in place prior to the report.

Soybeans:

For the week, March soybeans advanced 44.75 cents, May +42.75, July +41.50. The COT report revealed that managed money added 2,665 contracts to their long positions and liquidated 1,053 of their short positions. Commercial interests added 1,289 contracts to their long positions and also added 3,532 to their short positions. As of the latest report, managed money is long soybeans by ratio of 1.87:1, which is up slightly from the previous week of 1.80:1, but down from the ratio of 2 weeks ago of 1.96:1.

Soybean meal:

For the week, March soybean meal advanced $8.70, May +10.00, July +9.20. The COT report revealed that managed money liquidated 5,668 contracts of their long positions and added 1,541 to their short positions. Commercial interests liquidated 2,360 contracts of their long positions and also liquidated 9,299 of their short positions. As of the latest report, managed money is long soybean meal by ratio 2.71:1, which is down from the previous week of 3.05:1 and the ratio of 2 weeks ago of 2.83:1.

Soybean oil: On January 6, March soybean oil generated a short-term buy signal and on January 9 generated an intermediate term buy signal.

For the week, March soybean oil advanced 1.59 cents, May +1.56, July +1.57. The COT report revealed that managed money added 1,824 contracts to their long positions and liquidated 1,855 of their short positions. Commercial interests liquidated 967 contracts of their long positions and added 1,072 to their short positions. As of the latest report, managed money is long soybean oil by ratio of 1.93:1, which is up from the previous week of 1.80:1 and up substantially from the ratio of 2 weeks ago of 1.39:1.

The current ratio is stratospheric compared to the trading activity going back one year, especially when taking into account the current price level. For example, on the date of COT report of July 29, 2014, the March contract closed at 37.18, which is 4.31 cents above the January 6, 2015 close of 32.87 (the tabulation date of the COT report). However, in the July 29 report managed money was short by a ratio of 1.10:1.

On June 24, 2014, March 2015 soybean oil closed at 41.58 and the June 24 COT report showed that managed money was long by only 1.08:1. It is with the April 22, 2014 COT report when managed money was nearly as long as they are in the current report.

The April 22 report showed that managed money was long by ratio of 1.82:1, and on April 22 March 2015 soybean oil closed at 42.39, or 9.52 cents above the closing price of the January 6 report.On April 22, 2014 managed money was net long by 30,449 contracts and on January 6, 2015 were long 38,558 contracts.

In short, managed money has gotten considerably ahead of itself and has increased its net long position massively during the past 2 COT reporting periods.

The strong market for palm oil may continue due to floods in Malaysia. Additionally, Brazil has raised its bio-fuel mandate, which will increase soybean oil and sugar consumption. The change in fundamentals undoubtedly has been the catalyst for the aggressive move by managed money into soybean oil. Despite this, we think soybean oil is highly vulnerable to a major setback, especially with the USDA report release on January 12.

Corn:

For the week, March corn advanced 4.50 cents, May +3.75, July +3.25. The COT report revealed that managed money added 557 contracts to their long positions and added 10,854 to their short positions. Commercial interests added 26,215 contracts to their long positions and liquidated 19,051 of their short positions. As of the latest report, managed money is long corn by ratio of 3.87:1, which is down from the previous week of 4.50:1 and the high ratio of 4.75: 1 made 2 weeks ago.

Chicago wheat:

For the week, March Chicago wheat lost 17.50 cents, May -19.00, July – 16.50. The COT report revealed that managed money liquidated 4,547 contracts of their long positions and added 2,110 to their short positions. Commercial interests liquidated 1,034 of their long positions and also liquidated 7,666 contracts of their short positions. As of the latest report, managed money is long Chicago wheat by ratio of 1.23:1, which is down from the previous week of 1.33:1 and the ratio of 2 weeks ago of 1.34:1.

Kansas City wheat:

For the week, March Kansas City wheat lost 16.50 cents, May -16.75, July -15.00. The COT report revealed that managed money liquidated 1,160 contracts of their long positions and added 1,764 to their short positions. Commercial interests added 34 contracts to their long positions and liquidated 1,763 of their short positions. As of the latest report, managed money is long Kansas City wheat by ratio of 2.63:1, which is down from the previous week of 3.12:1 and the ratio of 2 weeks ago of 3.18:1.

Thus far in the 1st quarter, March soybean oil is the out performer with a gain of 4.79%, March soybeans +2.81%, March corn +0.82%, March soybean meal +0.43%, March Kansas City wheat -4.15%, March Chicago wheat -4.41%.

Cotton:

For the week, March cotton advanced 1.18 cents, May +1.10, July +1.06. The COT report revealed that managed money liquidated 1,870 contracts of their long positions and added 4,731 to their short positions. Commercial interests added 6,971 contracts to their long positions and liquidated 2,499 of their short positions. As of the latest report, managed money is long cotton by ratio 1.20:1, which is down from the previous week of 1.41:1 and the ratio of 2 weeks ago of 1.31:1.

Sugar #11:

For the week, March sugar advanced 74 points, May +63, July +57. The COT report revealed that managed money liquidated 1,655 contracts of their long positions and also liquidated 2,761 of their short positions. Commercial interests added 1,508 contracts to their long positions and also added 1,613 to their short positions. As of the latest report, managed money is short sugar by ratio of 1.39:1, which is the same as the previous week of 1.39:1, but up somewhat from the ratio of 2 weeks ago of 1.34:1.

Coffee: On January 9, 2014, March coffee generated a short-term buy signal, but remains on an intermediate term sell signal. Our report of January 8 explained why the action on January 9 was extremely positive

For the week, March coffee advanced 19.00 cents, May +18.95, July +18.80. The COT report revealed that managed money added 1,768 contracts to their long positions and also added 1,179 to their short positions. Commercial interests added 186 contracts to their long positions and also added 1,857 to short positions. As of the latest report, managed money is long coffee by ratio of 2.78:1, which is down slightly from the previous week of 2.90:1 and down substantially from the ratio of 2 weeks ago of 3.77:1.

The current ratio of 2.78:1 is the lowest recorded since February 25, 2014 when managed money was long coffee by ratio of 3.00:1.

From the 2014 Year End Review:

“December 30 was the 5th COT report in which commercials added to long positions and liquidated short positions. Combining the current stats with the previous 4 reports, commercial interests have added a total of 12,127 contracts to long positions and liquidated 7,380 of their short positions. We think this points to higher prices ahead and the extremely low bullish position of managed money bodes well for future price advances. Managed money has a tendency to the most bullish/bearish at major turning points.”

Cocoa:

For the week, March cocoa advanced $41.00, May +33.00, July +26.00. The COT report revealed that managed money liquidated 1,434 contracts of their long positions and also liquidated 2,934 of their short positions. Commercial interests added 1,575 contracts to their long positions and also added 2,965 to their short positions. As of the latest report, managed money is long cocoa by ratio of 4.54:1, which is up substantially from the previous week of 3.87:1 and the ratio of 2 weeks ago of 4.14:1.

Note the increase in this week’s ratio was due solely to the liquidation of short positions, which represented a significant percentage of outstanding short positions.

Thus far in the 1st quarter, March coffee is the out performer with a gain of 8.07%, March sugar +2.69%, March Cocoa +1.99%, March cotton +0.81%.

Live cattle:

For the week, February live cattle lost 5.07 cents, April -5.15, June -6.40. The COT report revealed that managed money added 1,546 contracts to their long positions and also added 2,299 to their short positions. Commercial interests added 424 contracts to their long positions and liquidated 3,199 of their short positions. As of the latest report, managed money is long live cattle by ratio of 8.98:1, which is down substantially from the previous week of 11.40:1, but above the ratio of 2 weeks ago of 8.93:1.

This past week, February cattle closed at 1.60600, which is a lower close than the previous lowest weekly close during the week of December 15 when February live cattle closed at 1.60750. OIA has been advising clients to stand aside live cattle until a short-term buy signal was generated. This never occurred, and clients remain on the sidelines.With managed money still massively long live cattle, there is plenty of fuel to fund the continued downside move.

February live cattle generated a short-term sell signal on December 3 and an intermediate term sell signal on December 15.

Lean hogs:

For the week, February lean hogs lost 2.28 cents, April -3.45, June -2.80. The COT report revealed that managed money added 644 contracts to their long positions and also added 1,907 to their short positions. Commercial interests added 106 contracts to their long positions and liquidated 6,773 of their short positions. As of the latest report, managed money is long lean hogs by ratio of 2.27:1, which is down from the previous week of 2.41:1 and the ratio of 2 weeks ago of 2.86:1.

The April 2015 contract made a new contract low of 79.12.

Thus far in the 1st quarter, February lean hogs is the out performer with a loss of 2.47%, April live cattle -2.61%, February live cattle -2.68%, April lean hogs -3.44%.

WTI crude oil:

For the week, February WTI crude oil lost $4.33, March -4.12, April -3.96. The COT report revealed that managed money added 10,757 contracts to their long positions and also added 16,990 to their short positions.Commercial interests added 11,537 contracts to their long positions and also added 16,595 contracts to their short positions. As of the latest report, managed money is long WTI crude oil by ratio of 3.30:1, which is down substantially from the previous week of 4.00:1 and the ratio of 2 weeks ago of 4.56:1.

The current ratio 3.30:1 is the lowest since the COT report of November 25, 2014 when managed money was long WTI crude oil by ratio of 3.19:1.

During the past week, February 2015, March 2015 and April 2015 WTI made new contract lows of 46.83, 47.35, and 48.05 respectively.

Heating oil:

For the week, February heating oil lost 9.27 cents, March -11.43, April -11.49. The COT report revealed that managed money added 3,744 contracts to their long positions and liquidated 123 of their short positions. Commercial interests added 500 contracts to their long positions and also added 5,968 to their short positions. As of the latest report, managed money is short heating oil by ratio of 1.66:1, which is down from the previous week of 1.86:1 and about the same as the ratio of 2 weeks ago of 1.67:1.

During the past week, February 2015, March 2015 and April 2015 heating oil contracts made new contract lows of 1.6715, 1.6396, 1.6231 respectively.

Gasoline:

For the week, February gasoline lost 11.02 cents, March -10.55, April -9.38. The COT report revealed that managed money added 3,894 contracts to their long positions and also added 3,808 to their short positions. Commercial interests liquidated 3,930 of their long positions and also liquidated 2,325 of their short positions. As of the latest report, managed money is long gasoline by ratio of 2.87:1, which is down from the previous week of 3.21:1 and the ratio of 2 weeks ago of 3.39:1.

The current ratio of 2.87:1 is the lowest since the November 25, 2014 COT report when managed money was long gasoline by ratio of 2.57:1

Natural gas:

For the week, February natural gas lost 5.7 cents, March -5.2, April -1.5. The COT report revealed that managed money added 4,911 contracts to their long positions and liquidated 4,193 of their short positions. Commercial interests added 3,802 contracts to their long positions and also added 85 to their short positions. As of the latest report, managed money is short natural gas by ratio of 1.19:1, which is down from the previous week of 1.24:1 and the same as the ratio of 2 weeks ago of 1.19:1.

During the past week, March 2015 and April 2015 natural gas made new contract lows 2.803, and 2.779 respectively.

Thus far in the 1st quarter, February natural gas is the out performer with a gain of 1.61%, February ethanol -5.07%, February heating oil -8.03%, February WTI crude oil -10.38%, February gasoline -10.60%, February Brent crude oil – 12.74%.

Copper:

For the week, March copper lost 6.30 cents. The COT report revealed that managed money liquidated 839 contracts of their long positions and added 5,585 to their short positions. Commercial interests added 7,254 to their long positions and liquidated 492 of their short positions. As of the latest report, managed money is short copper by ratio of 1.32:1, which is up substantially from the previous week of 1.13:1 and the ratio of 2 weeks ago of 1.12:1.

During the past week, March copper made a new contract low of 2.7385.

Palladium:

For the week, March palladium advanced $5.30. The COT report revealed that managed money liquidated 542 contracts of their long positions and also liquidated 298 of their short positions. Commercial interests liquidated 26 contracts of their long positions and also liquidated 7 contracts of their short positions. As of the latest report, managed money is long palladium by ratio 15.47: 1, which is up from the previous week of 12.99:1 and the ratio of 2 weeks ago of 14.74:1.

Platinum:

For the week, April platinum advanced $26.20.The COT report revealed that managed money added 857 contracts to their long positions and also added 1,591 to their short positions. Commercial interests 178 contracts of their long positions and added 307 to their short positions.As of the latest report, managed money is long platinum by ratio of 2.11:1, which is down from the previous week of 2.30:1 and the ratio of 2 weeks ago of 2.20:1.

Gold:

For the week, February gold advanced $29.90. The COT report revealed that managed money added 3,397 contracts to their long positions and liquidated 3,749 of their short positions. Commercial interests added 3,979 contracts to their long positions and also added 9,130 to their short positions. As of the latest report, managed money is long gold by ratio of 3.76:1, which is up from the previous week of 3.30:1 and the ratio of 2 weeks ago of 3.01:1. Four weeks ago the ratio stood at 3.57:1.

We have been surprised by the sturdy performance of gold in the face of a sharply rising dollar and declining petroleum prices. The rising dollar index was only blunting the advance of gold during calendar year 2014, not sending it sharply lower. During 2014, the dollar index rose by 13.40% while gold on the continuation chart lost 1.98%, or $21.50. Additionally, WTI crude oil lost 40.96% during 2014 and the Greenhaven Continuous Commodity index (an indication of future commodity deflation) lost 11.05%. The 10 year Treasury Note gained 1.40 %. In short, the stats which generally are cited for negatively affecting the price of gold did not have a major adverse impact on the yellow metal..This is one reason why we think the worst is over for gold and that higher prices are ahead.

Thus far in the 1st quarter, we are seeing a familiar pattern of a rising dollar, a declining crude oil price and yet gold continues to rally, up 3.39% year to date. Silver, which has been the weak sister has shown new strength in 2015 having gained 5.42% year to date.

The ECB is meeting on January 22 , and we anticipate that precious metals will continue to advance. If The ECB fails to take strong action to stimulate European economies, we think the euro will rally sharply and the dollar will fall just as dramatically.This could cause a spike move higher in the precious metals. On the other hand, if the ECB decides upon vigorous stimulus, we think this could be a positive development for the precious metals as well. It appears the euro is discounting additional stimulus.

Additionally, the Greek elections will be held shortly after the ECB meeting and this will be another event that will have a major impact on the precious metals.This may decide whether Greece remains a member of the eurozone. As we have said in previous reports, February gold must make lows above our key pivot points of $1212.60 and 1218.30 to continue its advance. This may come in the form of a major move to the upside in which volatility increases dramatically.

Silver:

For the week, March silver advanced 65.1 cents. The COT report revealed that managed money added 1,248 contracts to their long positions and liquidated 1,233 contracts of their short positions. Commercial interests added 1,166 contracts to their long positions and also added 1,241 contracts to their short positions. As of the latest report, managed money is long silver by ratio of 2.11:1, which is up from the previous week of 1.92:1 and the ratio of 2 weeks ago of 1.77:1.

Thus far in the 1st quarter, March silver is the out performer with a gain of 5.42%, February gold +3.39%, April platinum +1.67%, March Palladium +0.73%, March copper -2.39%.

Canadian dollar:

For the week, the March Canadian dollar lost 77 pips. The COT revealed that leveraged funds added 925 contracts to their long positions and also added 2,682 to their short positions. As of the latest report, leveraged funds are short the Canadian dollar by ratio of 2.23:1, which is up from the previous week of 2.19:1 and the ratio of 2 weeks ago of 2.02:1.

During the past week, the March Canadian dollar made a new contract low of 83.98.

Australian dollar:

For the week, the March Australian dollar advanced 90 pips. The COT report revealed that leveraged funds liquidated 9,228 contracts of their long positions and added 422 to their short positions. As of the latest report, leveraged funds are short the Australian dollar by ratio of 2.97:1, which is a big jump from the previous week of 1.97:1 and the ratio of 2 weeks ago of 1.84:1.

During the past week, the March Australian dollar made a new contract low of 79.93.

Swiss franc:

For the week, the March Swiss franc lost 1.30 cents.The COT report revealed that leveraged funds liquidated 3,315 contracts of their long positions and added 4,789 to their short positions. As of the latest report, leveraged funds are short the Swiss franc by ratio of 3.73:1, which is up dramatically from the previous week of 2.18:1 and the ratio of 2 weeks ago of 2.06:1.

During the past week, the March Swiss franc made a new contract low of 97.99.

British pound:

For the week, the March British pound lost 1.69 cents. The COT report revealed that leveraged funds added 10,317 contracts to their long positions and also added 6,484 to their short positions. As of the latest report, leveraged funds are short the British pound by ratio of 1.02:1, which is down from the previous week of 1.15:1 and the ratio of 2 weeks ago of 1.05:1.

During the past week, the March British pound made a new contract low of 1.5027.

Euro:

The March euro lost 1.65 cents. The COT report revealed that leveraged funds added 2,318 contracts to their long positions and also added 6,228 to their short positions. As of the latest report, leveraged funds are short the euro by ratio 6.07:1, which is down from the previous week of 6.40:1 and the ratio of 2 weeks ago of 644:1.

Yen:

For the week, the March yen advanced 124 pips. The COT report revealed that leveraged funds added 1,776 contracts to their long positions and liquidated 3,028 of their short positions. As of the latest report, leveraged funds are short the yen by ratio of 5.17:1, which is down from the previous week of 5.86:1 and the ratio of 2 weeks ago of 5.40:1.

Dollar index:

For the week, the March dollar index advanced 76 points. The COT report revealed that leveraged funds added 9,262 contracts to their long positions and liquidated 4,956 of their short positions. As of the latest report, leveraged funds remain short the dollar index by ratio 1.02:1, which is down dramatically from the previous week of 1.47:1 and the ratio of 2 weeks ago of 1.15:1.

During the past week, the March dollar index made a new contract high of 92.76. 

Thus far in the 1st quarter, the March dollar index is the out performer with a gain of 1.72%, March yen +1.10%, March Australian dollar +0.49%, March Swiss franc -2.02%, March euro -2.14%, March Canadian dollar – 2.14%, March British pound -2.65%.

S&P 500 (250 x): On January 6, the March S&P 500 E mini generated a short-term sell signal, but remains on an intermediate term buy signal.

For the week, the March S&P 500 futures contract lost 11.00 points. The COT report revealed that leveraged funds added 517 contracts to their long positions and also added 4,096 to their short positions. As of the latest report, leveraged funds are short the S&P 500 futures contract by ratio of 1.31:1, which is a complete reversal from the previous week when they were long by ratio of 1.31:1. Two weeks ago, leveraged funds were long the S&P 500 futures contract by ratio 1.73:1.

After generating a short-term sell signal on January 6, the March S&P 500 E mini rallied 25.00 points on January 7 and 35.50 on January 8. This is typical behavior after the generation of a sell signal because markets usually have a counter trend rally after the generation of a sell signal. However, during the 2 day advance, total open interest declined each day. For example on January 7, total open interest declined by 18,429 contracts and declined 1,339 contracts on January 8.

In short, market participants were liquidating as the E mini rallied 60.50 points in 2 days. On January 9, the day of the release of the employment report, the E mini was only able to rally to a high of 2062.00, which is only fractionally higher than the January 8 high of 2058.50.The employment report is released at 8:30 a.m. Eastern standard time, one hour before the opening of the cash equity markets. In other words, the employment report did nothing to boost equity prices and short sellers saw a terrific opportunity to drive prices lower.This should be troubling for anyone long equities, and equity indices. From November 1 through January 9, the S&P 500 cash index has rallied only 26.76 points, or 1.33%.The New York Composite cash index fared worse losing 1.23% while the Russell 2000 cash index gained 1.04% and the NASDAQ 100 cash index advanced 1.32% This is an unimpressive performance considering that November December and January is prime time for equity advances.

In order for the rally in the E mini to continue, the March contract must make a daily low above OIA’s key pivot point for January 9 of 2048.10 On Friday, the March E mini closed at 2035.25.

Thus far in the 1st quarter, the Dow Jones Industrial Average cash index is the out performer with a loss of 0.48%, NASDAQ 100 cash index -0.54%, S&P 500 cash index -0.68%, S&P 400 cash index -0.77%, New York Composite cash index -1.18%, Russell 2000 cash index -1.58%.

10 Year Treasury Note: On January 5, 2015 the March 10 year treasury note generated a short and intermediate term buy signal.