Soybeans:

For the week, July soybeans lost 22.25 cents, August -21.00, new crop November -32.00. The COT report revealed that managed money added 353 contracts to their long positions and liquidated 6,991 contracts of their short positions. Commercial interests added 6,121 contracts to their long positions and also added 9,032 contracts to their short positions. As of the latest report, managed money is long soybeans by ratio 6.29:1, which is up substantially from the previous week of 5.00:1, but the same as the ratio of 2 weeks ago of 6.27:1.

Soybean meal:

For the week, July soybean meal lost $2.40, August -1.50, new crop December -5.80. The COT report revealed that managed money added 1,291 contracts to their long positions and liquidated 549 contracts of their short positions. Commercial interests added 2,321 contracts to their long positions and also added 3,418 contracts to their short positions. As of the latest report, managed money is long soybean meal by ratio of 4.84:1, which is up slightly from the previous week of 4.64:1 and the same as 2 weeks ago of 4.82:1.

Soybean oil:

For the week, July soybean oil lost 1.88 cents, August -1.80, new crop December-1.60. The COT report revealed that managed money added 602 contracts to their long positions and also added 1,309 contracts to their short positions. Commercial interests added 1,107 contracts to their long positions and liquidated 1,817 contracts of their short positions. As of the latest report, managed money is long soybean oil by ratio of 1.02:1, which is about the same as the previous week of 1.03:1, but down substantially from the ratio of 2 weeks ago of 1.37:1.

Corn:

For the week, July corn lost 12.25 cents, September -17.50, new crop December -17.75. The COT report revealed that managed money liquidated 3,556 contracts of their long positions and added 23,346 contracts to their short positions. Commercial interests added 10,163 contracts to their long positions and liquidated 24,019 contracts of their short positions. As of the latest report, managed money is long corn by ratio 2.86:1, which is down substantially from the previous week of 3.77:1 and the ratio of 2 weeks ago of 5.32:1.

Chicago wheat: On May 27, July Chicago wheat generated an intermediate term sell signal after generating a short-term sell signal on May 14.

For the week, July Chicago wheat lost 25.25 cents, September -24.00, December -21.75. The COT report revealed that managed money added 1,832 contracts to their long positions and also added 6,004 contracts to their short positions. Commercial interests added 6,038 contracts to their long positions and also added 5,060 contracts to their short positions. As of the latest report, managed money is long Chicago wheat by ratio of 1.44:1, which is down from the previous week of 1.56:1 and the ratio of 2 weeks ago of 2.05:1.

Kansas City wheat:

For the week, July Kansas City wheat lost 22.00 cents, September -21.50, new crop December -21.25. The COT report revealed that managed money liquidated 3,199 contracts of their long positions and also liquidated 403 contracts of their short positions. Commercial interests added 2,172 contracts to their long positions and liquidated 1,297 contracts of their short positions. As of the latest report, managed money is long Kansas City wheat by ratio 3.94:1, which is down slightly from the previous week of 4.08:1 and the ratio of 2 weeks ago of 4.55:1.

Although Chicago and Kansas City wheat have fallen precipitously since early May, the bad news is managed money remains heavily long considering despite the collapse in prices. In our view, this means lower prices are ahead, although the market is overdue for a countertrend rally. However, prices should not get far due to longs who entered positions at higher prices. They will be looking to sell into any rally to recover losses/lost profits, and this will cap the duration of rallies. Another important factor: harvest pressure will begin to weigh on wheat prices, which will further exacerbate declines.

Thus far in the 2nd quarter, July soybean meal is the out performer with a gain of 7.89%, July soybeans +4.46%, July soybean oil -5.24%, July Kansas City wheat -5.52%, July corn -8.09%, July Chicago wheat -10.58%.

Year to date, July soybean meal is the out performer with a gain of 24.77%, July soybeans +18.09%, July Kansas City wheat +12.35%, July corn +6.58%, July Chicago wheat +1.70%, July soybean oil -3.41%.

Cotton:

For the week, July cotton lost 4 points, new crop December -2.00 cents, March -1.42. The COT report revealed that managed money liquidated 5,236 contracts of their long positions and added 4,263 contracts of their short positions. Commercial interests added 3,635 contracts to their long positions and liquidated 6,536 contracts of their short positions. As of the latest report, managed money is long cotton by ratio 3.20:1, which is down dramatically from the previous week of 4.65:1 and the ratio of 2 weeks ago of 5.88:1.

Sugar #11: On May 28, July sugar generated an intermediate term sell signal, after generating a short-term sell signal on May 22.

For the week, July sugar advanced 1 point, October unchanged, March 2015 unchanged. The COT report revealed that managed money liquidated 15,571 contracts of their long positions and added 17,156 contracts to their short positions. Commercial interests added 5,901 contracts to their long positions and liquidated 35,542 contracts of their short positions. As of the latest report, managed money is long sugar by ratio 2.43:1, which is down substantially from the previous week of 3.38:1 and the ratio of 2 weeks ago of 3.08:1.

Coffee:

For the week, July coffee lost 4.40 cents, September -4.35, December -4.30. The COT report revealed that managed money added 317 contracts to their long positions and also added 1,589 contracts to their short positions. Commercial interests added 558 contracts to their long positions and liquidated 622 contracts of their short positions. As of the latest report, managed money is long coffee by ratio of 7.34:1, which is down substantially from the previous week’s ratio of 9.65:1 and the ratio of 2 weeks ago of 10.25:1.The current ratio is the lowest since the COT tabulation date of April 8, 2014.

Cocoa:

For the week, July cocoa lost $49.00, September -39.00, December -37.00. The COT report revealed that managed money added 6,085 contracts to their long positions and liquidated 1,824 contracts of their short positions. Commercial interests added 1,901 contracts to their long positions and also added 9,328 contracts to their short positions. As of the latest report, managed money is long cocoa by ratio of 4.04:1, which is up significantly from the previous week of 3.40:1 and the ratio of 2 weeks ago of 3.30:1.

Thus far in the 2nd quarter, July cocoa is the out performer with a gain of 3.47%, July coffee -1.39%, July sugar -4.14%, July cotton -7.78%.

Year to date, July coffee is the out performer with a gain of 54.21%, July cocoa +12.74%, July sugar +3.89%, July cotton +2.73%.

Live cattle:

For the week, June live cattle gained 1.50 cents, August +1.48, October +1.45. The COT report revealed that managed money liquidated 9,114 contracts of their long positions and added 779 contracts to their short positions.Commercial interests added 1,699 contracts to their long positions and liquidated 7,282 contracts of their short positions. Note that commercials and managed money did the exact opposite. As of the latest report, managed money is long live cattle by ratio of 16.31:1, which is down from the previous week of 19.30:1 The ratio of 19.30:1 is the highest ratio recorded during 2014. 

Lean hogs:

For the week, June lean hogs lost 3.50 cents, July -3.25, August -2.15. The COT report revealed that managed money liquidated 591 contracts of their long positions and added 2,098 contracts to their short positions. Commercial interests liquidated 868 contracts of their long positions and also liquidated 2,436 contracts of their short positions. As of the latest report, managed money is long lean hogs by ratio of 9.92:1, which is down dramatically from the previous week of 14.51:1 and the ratio of 2 weeks ago of 14.62:1.

The current ratio is the lowest since the COT report of March 4, 2014 when managed money was long by a ratio of 9.41:1. The trading range encompassed by the March 4 report was 1.0790-1.1440. The trading range covered by this week’s report is 1.2340-1.2720, or approximately 10.00 15.00 cents above the trading range of the March 4 report. In short, managed money is far less bullish in the May 27 COT report than the March 4 report. The highest ratio recorded during the span of the hog bull market occurred in the April 22 report when managed money was long hogs by ratio of 49.42:1. 

Thus far in the 2nd quarter, August cattle is the out performer with a gain of 3.01%, July hogs -2.65%.

Year to date, July hogs is the out performer with a gain of 21.88%, August cattle +8.34%.

WTI crude oil:

For the week, July WTI crude oil lost $1.64, August -1.45, September -1.32. The COT report revealed that managed money added 20,254 contracts to their long positions and liquidated 3,380 contracts of their short positions. Commercial interests liquidated 13,301 contracts of their long positions and also liquidated 14,408 contracts of their short positions.As of the latest report, managed money is long WTI crude oil by ratio of 12.16:1, which is significantly above the previous week’s ratio of 10.33:1 and the ratio of 2 weeks ago of 11.34:1. The current ratio is the highest since the COT tabulation date of March 11, 2014 when managed money was long WTI crude oil by ratio of 12.49:1.

Managed money has gotten very bullish on WTI crude oil, because oil has been trading near the highs going back to early March. For example the first major high of 2014 occurred on March 3 when April crude oil made a high of $105.22 . The secondary high occurred on April 16 when the June contract made a high of 104.99 . The third high for the year occurred on May 23 at 104.50 and again on May 27 when July WTI tested 104.50, but was unable to break above it. With managed money significantly long WTI, it remains vulnerable to a sharp downside move.

However, there is another reason for longs to be to be very concerned about WTI crude oil. For the past 4 COT reporting periods (including the most recent one), commercials have been liquidating both long and short positions. For example, in the COT report of May 6, commercials liquidated 7,169 contracts of their long positions and also liquidated 9,487 contracts of their short positions. In the May 13 report, commercials liquidated 13,692 contracts of their long positions and also liquidated 4,351 contracts of their short positions. The May 20 report saw commercials liquidate 19,654 contracts of their long positions and also liquidated 16,184 contracts of their short positions.

In summary, from April 30 through May 27 (4 COT tabulation periods), commercials have liquidated 53,816 contracts of long positions while liquidating 44,430 contracts of their short positions. During this time, July WTI has advanced $3.78, or 3.77%. This is not a vote of confidence by commercials when they are liquidating en masse as prices advance. July WTI remains on a short and intermediate term buy signal, but we advise clients to avoid the market at this juncture.

Heating oil:

For the week, July heating oil lost 6.67 cents, August -6.16, September -5.63. The COT report revealed that managed money liquidated 1,289 contracts of their long positions and liquidated 327 contracts of their short positions.. Commercial interests liquidated 3,410 contracts of their long positions and added 1,750 contracts to their short positions. As of the latest report, managed money is long heating oil by ratio of 2.80:1, which is about the same as the previous week of 2.82:1, but up from the ratio of 2 weeks ago of 2.51:1.

Gasoline:

For the week, July gasoline lost 3.47 cents, August -3.51, September -3.67. The COT report revealed that managed money added 4,253 contracts to their long positions and also added 1,978 contracts to their short positions. Commercial interests liquidated 10,040 contracts of their long positions and also liquidated 17,665 contracts of their short positions. As of the latest report, managed money is long gasoline by ratio of 3.74:1, which is down slightly from the previous week of 3.89:1 and the ratio of 2 weeks ago of 4.17:1.

Natural gas:

For the week, July natural gas advanced 13.7 cents, August +13.1, September +12.9. The COT report revealed that managed money added 1,095 contracts to their long positions and liquidated 5 contracts of their short positions. Commercial interests liquidated 2,892 contracts of their long positions and also liquidated 4,193 contracts of their short positions. As of the latest report, managed money is long natural gas by ratio of 1.39:1, which is the same as the previous week (1.39:1) and slightly below the ratio of 2 weeks ago of 1.43:1.

We hate to sound like a broken record, but the July-November 2014 natural gas spread continues to widen. On Friday, it closed at 2.4 cents premium to July, which is up from the close on the previous Friday (May 23) of 1 cent premium to July. Additionally, the spread is trading at new high territory and broke above the February 21, 2014 high of 1.3 cents premium to July. This continues to be a very bullish indicator that prices are headed higher, but July natural gas has not generated a short or intermediate term buy signal. IsAs we have said in previous reports, being long the nearby and short November is an excellent way to participate in a bullish natural gas scenario, even though buy signals have not been generated.

Thus far in the 2nd quarter, July gasoline is the out performer with a gain of 3.36%, July WTI crude oil +3.09%, July natural gas +2.38%, July Brent crude oil +2.03%, July ethanol +0.72%, July heating oil -1.14%.

Year to date, July ethanol is the out performer with a gain of 31.27%, July natural gas +9.45%, July WTI crude oil +6.65%, July gasoline +2.91%, July Brent crude oil +0.50%, July heating oil -4.24%.

Copper:

For the week, July copper lost 4.40 cents. The COT report revealed that managed money added 897 contracts to their long positions and liquidated 1,625 contracts of their short positions. Commercial interests liquidated 291 contracts of their long positions and added 655 contracts to their short positions. As of the latest report, managed money is long copper by ratio of 1.98:1, which is up from the previous week of 1.80:1 and substantially higher than the ratio of 2 weeks ago of 1.48:1. The current ratio is the highest since the COT tabulation date of January 21, 2014 when managed money was long copper by ratio of 2.51:1.

As the two extracts from the May 12 and May 18 weekend report indicate, OIA has been less than enthusiastic about the long side of copper. Approximately 2 weeks has past since the writing of the May 18 report, and our analysis of open interest from May 14 through May 29 (final stats only) indicate that short sellers have been capping the advance.

For example, from May 14 through May 29, total open interest increased by 7,191 contracts, but in this time frame July copper fell 1.1 cents, or – 0.35%. In summary, short sellers have been selling into the rally, which has been fueled by fairly heavy speculative buying. If one examines the weekly chart for July copper, the rally, which began in late March was only a countertrend move, that occurred in reaction to the massive decline that began in early January (high $3.3970) through the low of 2.8700 made on March 21.

In short, copper has been experiencing a rally in a bear market. Adding further credence to this is the bearish moving average set up, which shows the 20 day moving average of 3.1229 below the 100 day moving average of 3.1332. Additionally, the 50 day moving average of 3.0625 is below the 100 and 200 day (3.2133) moving averages. With managed money significantly long copper, once the market generates a short-term sell signal, there will be plenty of fuel to fund a further downside move. Although OIA has been bearish on copper, a short-term buy signal was generated on April 24.

From the May 18 Weekend Wrap:

“As the extract from the May 12 report shows, OIA stated that in order for July copper to generate an intermediate term buy signal, it had to make a low above 3.1670. After making a new high for the move on May 14 of 3.1780, the July contract has been unable to make a low above OIA’s key pivot point.We cannot determine with any degree of certainty whether copper has the wherewithal to continue its move higher, but the high of May 14 was the highest print since March 7, 2014 (3.2160).”

“In short, we see nothing compelling about being long copper. Until the July contract trades above OIA’s pivot point, copper will trade sideways to lower. A market that is trading near its year to date moving average is nothing to get excited about. In short, copper is trading within a normal range considering price and time frame.”

From the May 12 report:

“On April 24, July copper generated a short-term buy signal, and as of May 13 remains on an intermediate term sell signal. For July copper to generate an intermediate term buy signal, the low the day must be above $3.1670.”

Palladium:

For the week, September palladium advanced $4.15. The COT report revealed that managed money added 1,922 contracts to their long positions and liquidated 97 contracts of their short positions. Commercial interests liquidated 353 contracts of their long positions and also liquidated 298 contracts of their short positions. As of the latest report, managed money is long palladium by ratio of 5.99:1, which is up substantially from the previous week of 5.42:1 and the ratio of 2 weeks ago of 5.14:1.

On May 28, September palladium made a high of $845.00, which matches the highs made in early and mid-2011. Yet remarkably, managed money is long platinum by a ratio of 14.95:1 whereas they are long palladium by 5.99:1.

From the May 26 Weekend Wrap:

“We suspect that most people would be surprised to know that palladium is approaching highs last seen in 2011 when palladium made its high of 845.00 on February 15, 2011 and a secondary high on July 27, 2011 at 842.00.”

Platinum:

For the week, July platinum lost $20.10. The COT report revealed that managed money liquidated 439 contracts of their long positions and also liquidated 184 contracts of their short positions. Commercial interests added 240 contracts to their long positions and also added 260 contracts to their short positions. As of the latest report, managed money is long platinum by a stratospheric 14.95:1, which is up significantly from the previous week of 14.14:1 and the ratio of 2 weeks ago of 12.48:1.The current ratio is the highest of 2014.

If platinum is to resume its advance, the low for the day must be above OIA’s key pivot point of 1460.00. If July platinum is unable to accomplish this, the market will trade sideways to lower. Due to the dismal performance of gold and silver, we think gravity will take platinum prices lower and that a short-term sell signal will be generated shortly.With managed money extremely long platinum, there will be plenty of fuel to fund the downside move.

Gold: On May 28, August gold generated an intermediate term sell signal after the June contract generated a short-term sell signal on April 17.

For the week, August gold lost $45.90. The COT report revealed that managed money liquidated 1,239 contracts of their long positions and added 22,345 contracts to their short positions. Commercial interests liquidated 10,795 contracts of their long positions and also liquidated 21,972 contracts of their short positions. As of the latest report, managed money is long gold by ratio of 2.07:1, which is dramatically below the previous week of 3.60:1 and the ratio of 2 weeks ago of 3.57:1. The current ratio is the lowest since the COT tabulation date of February 11, 2014 when managed money was long gold by ratio of 1.80:1.

From the May 26 Weekend Wrap:

“One of the compelling reasons to buy puts is that volatility as measured by the gold volatility index GVZ Is close to its 52-week low of 12.81 made on January 6, 2014 and is dramatically below the 52-week high of 33.60 made on June 27, 2013. The 50 day moving average of GVZ is 15.73 and the 200 day moving average is 19.28. The volatility index closed at 14.52 on May 23.”

“Option volatility is trading at the low-end of the range which makes options inexpensive. For example, as of May 23, a put option on a 1290 strike in the August contract (at the money) is $2760.00.We recommend the initiation of long puts immediately. June gold remains on a short-term sell signal and for an intermediate term sell signal to be generated, the high of the day in the June contract must be below 1286.00.”

Silver:

For the week, July silver lost 73.6 cents. The COT report revealed that managed money added 114 contracts to their long positions and also added 5,177 contracts to their short positions. Commercial interests added 553 contracts to their long positions and liquidated 442 contracts of their short positions. As of the latest report, managed money is short silver by ratio of 1.12:1, which is a dramatic 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 1.14:1.

In all the years that we have followed silver, rarely do we ever see managed money net short, therefore this week’s ratio is something of a milestone.

This week, July silver closed at $18.682, which is the lowest close since the week of July 1, 2013 when July silver closed at 18.726. The previous week (June 24, 2013), July silver made a low of 18.185 and this appears to be the next downside target. We have no idea whether silver will find support at this level, and will not speculate about what may or may not happen. However, the fact that managed money is significantly net short silver, may be an indicator that we are closer to a low than many people think. The 500 week moving average for silver is $19.02.

Thus far in the 2nd quarter, September palladium is the out performer with a gain of 7.60%, July copper +3.65%, July platinum +2.46%, August gold -2.65%, July silver -5.36%.

Year to date, September palladium is the out performer with a gain of 16.07%, July platinum +5.74%, August gold +3.93%, July silver -3.31%, July copper -7.08%.

Canadian dollar:

For the week, the June Canadian dollar advanced 23 pips. The COT report revealed that leveraged funds added 6,362 contracts to their long positions and also added 2,270 contracts to their short positions. As of the latest report, leveraged funds are short the Canadian dollar by ratio of 1.55:1, which is down from the previous week of 1.82:1 and the ratio of 2 weeks ago of 1.85:1.The current ratio is the lowest of 2014 and broke below the previous low of 1.65:1 made on March 25.

Australian dollar:

For the week, the June Australian dollar gained 71 pips. The COT report revealed that leveraged funds added 1,525 contracts to their long positions and also added 5,130 contracts to their short positions. As of the latest report, leveraged funds are long the Australian dollar by ratio of 2.10:1, which is down significantly from the previous week of 2.54:1 and the ratio of 2 weeks ago of 2.33:1. The substantial increase in short positions accounted for the decrease in the ratio.

Swiss franc:

For the week, the June Swiss franc advanced 12 pips. The COT report revealed that leveraged funds liquidated 5,492 contracts of their long positions and also liquidated 2,060 contracts of their short positions. As of the latest report, managed money is short the Swiss franc by ratio of 1.76:1, which is up significantly from the previous week of 1.31:1 and the ratio of 2 weeks ago of 1.21:1.

British pound: On May 29, the June British pound generated a short-term sell signal, but remains on an intermediate term buy signal

For the week, the June British pound lost 54 pips. The COT report revealed that leveraged funds added 1,679 contracts to their long positions and liquidated 3,093 contracts of their short positions. As of the latest report, leveraged funds are long the British pound by ratio of 4.50:1, which is up from the previous week of 4.08:1, but down from the ratio of 2 weeks ago of 4.80:1.

Euro:

For the week, the June euro advanced 8 pips. The COT report revealed that leveraged funds liquidated 6,929 contracts of their long positions and added 3,445 contracts to their short positions. As of the latest report, leveraged funds are short the euro by ratio of 1.28:1, which is up substantially from the previous week of 1.06:1, and a complete reversal from the ratio of 2 weeks ago when leveraged funds were long the euro by a ratio of 1.14:1.

Last week was the first time since at least September 2013 that leveraged funds have been short the euro and this week’s COT reading signals that clients should be cautious about being overly bearish at current levels. The European Central Bank meets on June 5 and we advise against taking any position in the euro prior to the meeting.

Yen:

For the week, the June yen advanced 27 pips. The COT report revealed that leveraged funds added 133 contracts to their long positions and also added 4,708 contracts to their short positions. As of the latest report, leveraged funds are short the yen by ratio of 2.84:1, which is up from the previous week of 2.66:1, but down from the ratio of 2 weeks ago of 3.03:1.

Dollar index:

For the week, the June dollar index lost 5 points. The COT report revealed that leveraged funds added 24 contracts to their long positions and also added 2,357 contracts to their short positions. As of the latest report, leveraged funds are short the dollar index by ratio of 5.13:1, which is up from the previous week of 4.80:1 and the ratio of 2 weeks ago of 3.96:1.

Thus far in the 2nd quarter, the June Canadian dollar is the out performer with a gain of 2.01%, June yen +1.39%, June Australian dollar +0.76%, June pound +0.60%, June dollar index +0.21%, June Swiss franc -1.27%, June euro -1.31%.

Year to date, the June Australian dollar is the out performer with a gain of 5.28%, June yen +3.36%, June pound +1.30%, June dollar index +0.08%, June Swiss franc -0.83%, June euro -1.42%, June Canadian dollar – 1.62%.

S&P 500 futures contract (250 x):

For the week, the June S&P 500 futures contract gained 24.60 points. The COT report revealed that leveraged funds added 595 contracts to their long positions and liquidated 3,337 contracts of their short positions. As of the latest report, leveraged funds are short the S&P 500 by ratio of 1.92:1, which is down significantly from the previous week of 2.46:1, but above the ratio of 2 weeks ago of 1.48:1.

Thus far in the 2nd quarter, the NASDAQ 100 cash index is the out performer with a gain of 3.92%, S&P 500 cash index + 2.74%, New York Composite cash index +2.17% Dow Jones Industrial Average cash index +1.58%, S&P 400 cash index -0.04%, Russell 2000 cash index -3.29%.

Year to date the S&P 500 cash index is the out performer with a gain of 4.07%, NASDAQ 100 cash index +4.03%, New York Composite cash index +3.42%, S&P 400 cash index +2.64%, Dow Jones Industrial Average cash index +0.85%, Russell 2000 cash index -2.51%.

In order to put the current rally of the major indices in perspective, we are providing a breakdown of sector performance. For example, the financial sector of the S&P 500 made its 52-week high on March 21 , and as of May 30 is down 1.86% from that high. Healthcare is another disappointing sector having made its 52-week high on March 6 and closed 1.21% lower on Friday. Energy made its 52-week high on May 7 , and closed -0.44% on May 30. Telecommunications, which made its 52-week high on November 1, 2013 closed down 1.41% lower. Consumer discretionary is the worst performing sector having made its 52-week high on March 7 and on May 30 closed 3.07% lower

The only sectors that have rallied with the S&P 500 are consumer staples, having made their high on May 30, materials, the 52-week high made on May 29 and information technology, which also made its 52-week high on May 30. Industrials made their 52-week high on May 13 and closed -0.13% on May 30. In short, only 3 sectors made their 52-week highs at the same time that the S&P 500 was making new all-time highs.We consider it to be a major negative that financials made their 52-week high nearly 3 months ago. Despite this, it appears that many indices are headed higher, until there is a countervailing force that pushes it in the opposite direction.