The period covered by this week’s COT report is June 4-June 10. Interestingly, in 3 commodities, which had strong advances from June 4-12  (WTI crude oil, live cattle, lean hogs), the COT report revealed that managed money was not adding to their long positions in any significant way and in two cases were liquidating. See the respective reports.

Soybeans: 

For the week, July soybeans lost 31.25 cents, August -31.50, new crop November +2.50. The COT report revealed that managed money liquidated 11,500 contracts of their long positions and added 13,195 contracts to their short positions. Commercial interests liquidated 8,802 contracts of their long positions and also liquidated 26,875 contracts of their short positions. As of the latest report, managed money is long soybeans by ratio of 2.94:1, which is down significantly from the previous week of 4.22:1 and the ratio of 2 weeks ago of 6.29:1.

Soybean meal: On June 11, July soybean meal generated a short-term sell signal, but remains on an intermediate term buy signal.

For the week, July soybean meal lost $19.70, August -18.30, new crop December + 2.50. The COT report revealed that managed money liquidated 2,790 contracts of their long positions and also liquidated 236 contracts of their short positions.Commercial interests added 289 contracts to their long positions and liquidated 4,901 contracts of their short positions. As of the latest report, managed money is long soybean meal by ratio of 4.67:1, which is down slightly from the previous week of 4.76:1 and the ratio of 2 weeks ago of 4.84:1.

Soybean oil:

For the week, July soybean oil gained 68 points, August + 64, new crop December +31. The COT report revealed that managed money liquidated 2,508 contracts of their long positions and added 2,065 contracts to their short positions. Commercial interests added 7,012 contracts to their long positions and also added 8,736 contracts to their short positions. As of the latest report, managed money is short soybean oil by ratio of 1.28:1, which is up from the previous week of 1.20:1 and a complete reversal from 2 weeks ago when managed money was long soybean oil by ratio of 1.02:1.

Corn:

For the week, July corn lost 12.00 cents, September -13.25, new crop December -10.25. The COT report revealed that managed money added 1,140 contracts to their long positions and also added 27,520 contracts to their short positions. Commercial interests added 17,191 contracts to their long positions and liquidated 8,269 contracts of their short positions. As of the latest report, managed money is long corn by ratio of 2.07:1, which is down from the previous week of 2.54:1 and the ratio of 2 weeks ago of 2.86:1.

Chicago wheat:

For the week, July Chicago wheat lost 32.25 cents, September – 33.75, new crop December -34.00. The COT report revealed that managed money liquidated 9,050 contracts of their long positions and added 18,264 contracts to their short positions. Commercial interests added 3,821 contracts to their long positions and liquidated 7,602 contracts of their short positions. As of the latest report, managed money is now short Chicago wheat by ratio of 1.20:1, which is a complete reversal from the previous week when managed money was long by ratio of 1.11:1 and the ratio of 2 weeks ago when they were long by 1.44:1.

The last time managed money was net short Chicago wheat occurred in the March 4, 2014 COT report when managed money was short by ratio of 1.08:1

Kansas City wheat:

For the week, July Kansas City wheat lost 22.25 cents, September -24.75, new crop December -25.50. The COT report revealed that managed money liquidated 3,467 contracts of their long positions and added 1,542 contracts to their short positions. Commercial interests liquidated 2,846 contracts of their long positions and also liquidated 5,789 contracts of their short positions. As of the latest report, managed money is long Kansas City wheat by ratio of 2.95:1, which is down significantly from the previous week of 3.66:1 and the ratio of 2 weeks ago of 3.94:1.

Thus far in the 2nd quarter, November soybeans is the out performer with a gain of 2.86%, July soybean meal +0.93%, July soybeans -0.26%, July soybean oil -2.31%, July Kansas City wheat -6.80%, July corn -11.79%, July Chicago wheat -16.46%.

Year to date, July soybean meal is the out performer with a gain of 16.71%, July soybeans +12.75%, July Kansas City wheat +10.84%, November soybeans +7.60%, July corn + 2.29%, July soybean oil -0.43%, July Chicago wheat -4.99%.

Cotton:

For the week, July cotton gained 2.20 cents, December -25 points, March 2015 +48 points. The COT report revealed that managed money liquidated 4,794 contracts of their long positions and added 4,106 contracts to their short positions. Commercial interests liquidated 2,525 contracts of their long positions and also liquidated 11,765 contracts of their short positions. As of the latest report, managed money is long cotton by ratio of 2.09:1, which is down dramatically from the previous week of 2.85:1 and the ratio of 2 weeks ago of 3.20:1.

Sugar #11:

For the week, July sugar gained 12 points, October + 13, March 2015 +13. The COT report revealed that managed money liquidated 2,408 contracts of their long positions and added 20,352 contracts to their short positions. Commercial interests liquidated 2,861 contracts of their long positions and also liquidated 31,710 contracts of their short positions. As of the latest report, managed money is long sugar by ratio of 1.84:1, which is down from the previous week of 2.34:1 and the ratio of 2 weeks ago of 2.43:1.

Coffee:

For the week, July coffee advanced 1.60 cents, September +1.80, December +1.85. The COT report revealed that managed money added 373 contracts to their long positions and also added 309 contracts to their short positions. Commercial interests added 2,915 contracts to their long positions and also added 3,743 contracts to their short positions. As of the latest report, managed money is long coffee by ratio of 6.31:1, which is down from the previous week of 6.53:1 and the ratio of 2 weeks ago of 7.34:1.

Cocoa:

For the week, July cocoa gained $43.00, September +24.00, December +21.00. The COT report revealed that managed money added 6,702 contracts to their long positions and also added 2,635 contracts to their short positions. Commercial interests liquidated 7,142 contracts of their long positions and also liquidated 6,891 contracts of their short positions. As of the latest report, managed money is long cocoa by ratio of 4.25:1, which is down from the previous week of 4.50:1 , but up slightly from the ratio of 2 weeks ago of 4.04:1.

Thus far in the 2nd quarter, July cocoa is the out performer with a gain of 5.19%, July coffee -3.50%, July sugar -6.01%, July cotton -7.02%.

Year to date, July coffee is the out performer with a gain of 50.91%, July cocoa +14.61%, July cotton +3.57%, July sugar +1.85%.

Live cattle:

For the week, June live cattle advanced 7.48 cents, August +5.32, October +5.35. The COT report revealed that managed money liquidated 248 contracts of their long positions and added 81 contracts to their short positions. Commercial interests liquidated 7,986 contracts of their long positions and added 2,844 contracts to their short positions. As of the latest report, managed money is long live cattle by ratio of 15.37:1, which is down slightly from the previous week of 15.55:1 and the ratio of 2 weeks ago of 16.31:1.

During the period covered by the COT report (June 4-June 10), managed money liquidated 248 contracts of long positions while during this time frame, August live cattle advanced 3.60 cents. Our report of June 10 pointed out the decline of open interest as prices advanced and the June 12 report stated this was positive for the market. In essence it confirmed a degree of skepticism by market participants as prices rose.With this in mind, OIA will be looking for a day when volume spikes and open interest increases massively. This may signal a top, or temporary top.

From the June 10 report:

“We are becoming concerned about the very negative pattern of open interest declines while August cattle advances. During the past three-day period, August cattle advanced 2.075 cents while total open interest declined by 15,766 contracts. Most important, the August contract lost 3,514 contracts during this time.”

From the June 12 report:

“In short, during 2 days when cattle prices advanced strongly,(June 9 and June 12) open interest totals have been unimpressive.As a contrary indicator, we think this bodes well for higher prices. Additionally, the open interest decline in the August contract during the past 5 days confirms skepticism on the part of longs that cattle can move higher.”

Lean hogs:

For the week, July lean hogs advanced 2.03 cents, August +1.97, October +3.98. The COT report revealed that managed money added 120 contracts to their long positions and also added 1,894 contracts to their short positions. Commercial interests liquidated 1,557 contracts of their long positions and also liquidated 1,457 contracts of their short positions. As of the latest report, managed money is long hogs by ratio of 6.47: 1, which is down dramatically from the previous week of 7.97:1 and the ratio of 2 weeks ago of 9.92:1.

During the COT reporting period, July lean hogs advanced 2.85 cents and yet managed money added only 120 contracts to their long positions. Again, this confirms our view that market participants are skeptical of the hog rally. This increases the likelihood that prices will continue to advance.

Thus far in the 2nd quarter, August live cattle is the out performer with a gain of 9.12%, June live cattle +7.21%, July lean hogs +2.63%.

Year to date, July hogs is the out performer with a gain of 28.48%, August live cattle +14.77%, June live cattle +13.94%.

WTI crude oil:

For the week, July WTI crude oil advanced $4.25, August +4.23, September +4.02. The COT report revealed that managed money liquidated 6,495 contracts of their long positions and added 273 contracts to their short positions. Commercial interests added 16,956 contracts to their long positions and also added 19,947 contracts to their short positions. As of the latest report, managed money is long WTI crude oil by ratio of 13.20:1, which is down from the previous week of 13.54:1, but above the ratio of 2 weeks ago of 12.16:1.

Apparently, there is some skepticism about crude oil’s ability to advance based upon our reading of the latest COT report. For example, during the reporting period of June 4 through June 10, July WTI crude oil advanced $1.72, yet managed money liquidated 6,495 contracts and even added a small number of contracts to their short positions (273).

Heating oil: On June 12, July heating oil generated a short and intermediate term buy signal.

For the week, July heating oil advanced 11.64 cents, August +11.65, September + 11.80. The COT report revealed that managed money added 332 contracts to their long positions and also added 4,143 contracts to their short positions. Commercial interests added 9,628 contracts to their long positions and also added 5,400 contracts to their short positions. As of the latest report, managed money is long heating oil by ratio of 1.87:1, which is down significantly from the previous week of 2.39:1 and the ratio of 2 weeks ago of 2.80:1.

Heating oil has been the laggard compared to gasoline in the 2nd quarter and year to date. However, on June 12, when July heating oil advanced 8.50 cents, total open interest increased by a hefty 6701 contracts on volume of 182,888 contracts, which relative to volume is approximately 40% above average. Compare this to the performance of July gasoline when it advanced 8.29 cents on June 12 on volume of 173,499 contracts and open interest increased only 2382 contracts, or 45% less than average.

Gasoline:

For the week, July gasoline advanced 11.87 cents, August +11.36, September +11.40. The COT report revealed that managed money liquidated 924 contracts of their long positions and added 2,030 contracts to their short positions. Commercial interests liquidated 1,259 contracts of their long positions and also liquidated 6,674 contracts of their short positions. As of the latest report, managed money is long gasoline by ratio 3.24:1, which is down from the previous week of 3.56:1 and the ratio of 2 weeks ago of 3.74:1.

It appears professional money managers have fallen out of love with gasoline. And the remarkable thing about this is it’s occurring during the time that gasoline prices usually advance strongly and speculators pile in to the market. Yet, the current ratio is the lowest since the COT tabulation date of February 18, 2014 when managed money was long gasoline by ratio of 3.14:1. During the current reporting period of June 4-June 10, July gasoline advanced 2.58 cents, yet money managers liquidated 924 contracts of their long positions and got increasingly bearish by adding 2,030 contracts to their short positions. The wariness about gasoline’s ability to advance was most recently manifested by the June 12 advance of 8.29 cents in the July contract and yet open interest increased only 2,382 contracts on total volume of 173,499 contracts, which relative to volume is approximately 45% less than average. As it stands, July gasoline made a new high for the move at $3.1123 on June 13, which almost matches the April 24 high of 3.1128. July gasoline remains on a short and intermediate term buy signal.

Natural gas:

For the week, July natural gas advanced 2.9 cents, August +4.8, September +5.8. The COT report revealed that managed money added 16,751 contracts to their long positions and also added 21,354 contracts to their short positions. Commercial interests added 11,683 contracts to their long positions and also added 4,252 contracts to their short positions. As of the latest report, managed money is long natural gas by ratio of 1.33:1, which is down from the previous week of 1.39:1 and the ratio of 2 weeks ago of 1.39:1.

The current ratio is the lowest since the COT report of December 10, 2013 when managed money was long natural gas by ratio of 1.24:1. 

Beginning with the May 11 Weekend Wrap, we wrote about the nearby months inverting over the distant months, in particular the November contract. We said that this was an indication of higher prices in the offing, which occurred prior to natural gas generating a short-term buy signal on June 6. The market has rallied, but we are concerned that the July 2014-November 2014 spread has moved from a premium to a discount. For example, on Friday, the spread closed at 3 cents premium to November, which broke below the most recent low of 2.8 cents premium to November on June 11, which was support going back to May 12 when the spread closed at 2.8 cents premium to November.

At the close on Friday, the July-November 2014 spread closed at the lowest level since April 16 (3.4 cents premium to November). In short, the July-November 2014 spread has gone from a high 4.5 cents premium to July on May 28 to a low of 3 cents premium to November on June 13. This may signify the rally in natural gas is temporary, and that the seasonal low, which is usually seen in July is yet the come. We have no recommended position in natural gas. However, if long protective sell stops (actual or mental) should be in place.

Thus far in the 2nd quarter, July WTI crude oil is the out performer with a gain of 7.05%, July natural gas +7.02%, July gasoline + 6.22%, August Brent crude oil +5.03%, July heating oil +2.18%, July ethanol -3.14%.

Year to date, July ethanol is the out performer with a gain of 26.24%, July natural gas +14.40%, July WTI crude oil +10.74%, July gasoline +5.80%, August Brent crude oil +3.60%, July heating oil -1.03%.

Copper:

For the week, July copper lost 2.15 cents. The COT report revealed that managed money liquidated 7,241 contracts of their long positions and added 3,907 contracts to their short positions. Commercial interests added 2,130 contracts to their long positions and also added 433 contracts to their short positions. As of the latest report, managed money is long copper by ratio of 1.19:1, which is down dramatically from the previous week of 1.74:1 and the ratio of 2 weeks ago of 1.98:1.

The ratio of 2 weeks ago was the highest that we had seen in a couple of months, and the current ratio is the lowest since the COT tabulation date of May 6 when managed money was long copper by ratio of 1.02:1.

Palladium:

For the week, September palladium lost $31.60. The COT report revealed that managed money liquidated 573 contracts of their long positions and added 253 contracts to their short positions. Commercial interests liquidated 140 contracts of their long positions and also liquidated 616 contracts of their short positions. As of the latest report, managed money is long palladium by ratio of 5.10:1, which is down from the previous week of 5.50:1 and the ratio of 2 weeks ago of 5.99:1.

Platinum:

For the week, July platinum lost $18.00. The COT report revealed that managed money liquidated 238 contracts of their long positions and added 859 contracts to their short positions. Commercial interests added 765 contracts to their long positions and liquidated 418 contracts of their short positions. As of the latest report, managed money is long platinum by ratio of 13.00:1, which is down dramatically from the previous week of 18.17:1 and the ratio of 2 weeks ago of 14.95:1. The reason for the ratio’s decline this week was the addition of short positions..

Gold:

For the week, August gold advanced $21.60. The COT report revealed that managed money added 550 contracts to their long positions and also added 678 contracts to their short positions. Commercial interests liquidated 3,384 contracts of their long positions and also liquidated 3,885 contracts of their short positions. As of the latest report, managed money is long gold by ratio of 1.52:1, which is exactly the same as the previous week of 1.52:1, but below the ratio of 2 weeks ago of 2.07:1.

Although it appears that everyone in the financial press is talking about what gold will or will not do, the nascent stealth bull market may well be in silver. In the silver report, we calculated open interest performance from June 2 through June 12 and performed the same with gold. For example, from June 2 through June 12, August gold advanced +2.04%, and open interest increased by 3,722 contracts. Whereas silver open interest increased by 4,435 contracts from June 2-June 12  while July silver advanced 4.68%. In summary, July silver is out performing gold in terms of the price advance and the open interest increase.

Silver: On June 13, July silver generated a short-term buy signal, but remains on an intermediate term sell signal.

For the week, July silver advanced 66.4 cents. The COT report revealed that managed money added 289 contracts to their long positions and liquidated 3,534 contracts of their short positions. Commercial interests liquidated 41 contracts of their long positions and added 1,338 contracts to their short positions. As of the latest report, managed money is short silver by ratio of 1.11:1, which is down from the previous week of 1.22:1 and the ratio of 2 weeks ago of 1.12:1.

Ever since July silver bottomed on May 30 making a low of $18.615 and closing at 18.682, the market has rallied smartly to close above the 50 day moving average. On Friday, the low the day was above the 50 day moving average, which is very bullish, however, this indicates that silver is likely to have a correction of the June move.It wouldn’t surprise us to see this begin on June 16. Additionally, after a buy signal is generated, the market has a tendency to correct from 1-3 days. This is the opportunity to enter bullish positions.

At this juncture, we think silver has much going for it: (1) July silver has been outperforming the other metals since it made its bottom on May 30. For example, from June 2 through June 12, July silver has rallied 88 cents or +4.68% while August gold has rallied $25.50, or +2.04%. During this time, July platinum lost $19.20 or -1.32% while September palladium lost 22.35, or -3.41%. (2) Silver has a seasonal tendency to bottom in June and rally through July.(3) From June 2 through June 12, total open interest has increased by 4,435 contracts, which is positive open interest action relative to the price advance.During the past 2 sessions, (June 12 and 13), July silver has closed near the highs, which has not been the case during the slide in prices. For example, on June 12, the high in July silver was 19.565 and closed at 19.533 while on June 13, the high made was 19.720 and silver closed at 19.655. 

With managed money net short, there is an additional source of buying power once these professionals realize they are on the wrong side of the trade. Often, silver leads the precious metals higher and the out performance thus far in June coupled with increases of open interest leads us to think that a continued advance is on the horizon after silver has corrected.

Thus far in the 2nd quarter, September palladium is the out performer with a gain of 4.72%, July platinum +1.11%, July copper +0.12%, August gold – 0.55%, July silver -0.93%.

Year to date, September palladium is the out performer with a gain of 12.98%, August gold +6.05%, July platinum +4.34%, July silver +1.22%, July copper -10.26%.

Canadian dollar:

For the week, the September Canadian dollar advanced 65 pips. The COT report revealed that leveraged funds liquidated 399 contracts of their long positions and also liquidated 1,504 contracts of their short positions. As of the latest report, leveraged funds are short the Canadian dollar by ratio of 1.59:1, which is down from the previous week of 1.62:1, and slightly above the ratio of 2 weeks ago of 1.55:1.

Australian dollar:

For the week, the September Australian dollar advanced 63 pips. The COT report revealed that leveraged funds added 3,791 contracts to their long positions and liquidated 488 contracts of their short positions. As of the latest report, leveraged funds are long the Australian dollar by ratio of 2.57:1, which is up from the previous week of 2.37:1 and the ratio of 2 weeks ago of 2.10:1.

Swiss franc:

For the week, the September Swiss franc lost 92 pips. The COT report revealed that leveraged funds liquidated 2,211 contracts of their long positions and also liquidated 1,323 contracts of their short positions. As of the latest report, leveraged funds are short the Swiss franc by ratio of 1.76:1, which is up from the previous week of 1.55:1 and exactly the same as the ratio of 2 weeks ago of 1.76:1.

British pound:

For the week, the September British pound advanced 1.57 cents. The COT report revealed that leveraged funds added 7,632 contracts to their long positions and also added 12,742 contracts to their short positions. As of the latest report, leveraged funds are long the British pound by ratio of 3.37:1, which is down sharply from the previous week of 4.40:1 and the ratio of 2 weeks ago of 4.50:1. The reason for the drop in this week’s ratio is due to the significant addition of new short positions.

Euro:

For the week, the September euro lost 1.11 cents. The COT report revealed that leveraged funds liquidated 9,094 contracts of their long positions and added 12,424 contracts to their short positions. As of the latest report, leveraged funds are short the euro by ratio of 2.85:1, which is up dramatically from the previous week of 1.78:1 and the ratio of 2 weeks ago of 1.28:1.

Yen:

For the week, the September yen advanced 49 pips. The COT report revealed that leveraged funds liquidated 610 contracts of their long positions and added 5,978 contracts to their short positions. As of the latest report, leveraged funds are short the yen by ratio of 3.41:1, which is up from the previous week of 3.10:1 and the ratio of 2 weeks ago of 2.84:1.

Dollar index:

For the week, the September dollar index advanced 22 points. The COT report revealed that leveraged funds added 1,796 contracts to their long positions and liquidated 2,168 contracts of their short positions. As of the latest report, leveraged funds are short the dollar index by ratio of 3.18:1, which is down significantly from the previous week of 3.99:1 and the ratio of 2 weeks ago of 5.13:1.

Thus far in the 2nd quarter, the September Canadian dollar is the out performer with a gain of 1.94%, September Australian dollar +1.85%, September British pound +1.83%, September yen +1.15%, September dollar index +0.38%, September euro -1.71%, September Swiss franc -1.90%.

Year to date, the September Australian dollar is the out performer with a gain of 6.39%, September yen +3.10%, September British pound +2.57%, September dollar index +0.25%, September Swiss franc -1.45%, September Canadian dollar -1.70%, September euro -1.84%.

S&P 500 ( x 250):

For the week, the September S&P 500 futures contract lost 13.60 points. The COT report revealed that leveraged funds added 4,270 contracts to their long positions and liquidated 1,855 contracts of their short positions. As of the latest report, leveraged funds are short the S&P 500 futures contract by ratio of 1.37:1, which is down dramatically from the previous week of 2.06:1 and the ratio of 2 weeks ago of 1.92:1.

Thus far in the 2nd quarter, the NASDAQ 100 cash index is the out performer with a gain of 5.00%, S&P 500 cash index +3.41%, New York Composite cash index +3.12%, Dow Jones Industrial Average cash index + 1.93%, S&P 400 cash index +1.73%, Russell 2000 cash index -0.88%.

Year to date, the NASDAQ 100 cash index is the out performer with a gain of 5.11%, S&P 500 cash index +4.75%, S&P 400 cash index +4.46%, New York Composite index +4.38%, Dow Jones Industrial Average +1.20%, Russell 2000 cash index – 0.08%.

10 Year Treasury notes: On June 10, September Treasury Notes generated a short-term sell signal, but remains on an intermediate term buy signal.