OIA will provide an analysis of the May 9 USDA report on May 12th.

Soybeans: On May 7, July soybeans generated a short-term sell signal, but remains on an intermediate term buy signal.

For the week, July soybeans advanced 16.25 cents, August +15.75, new crop November +3.75. The COT report revealed that managed money liquidated 20,730 contracts of their long positions and added 1,095 contracts to their short positions. Commercial interests liquidated 675 contracts of their long positions and also liquidated 31,020 contracts of their short positions. As of the latest report, managed money is long soybeans by ratio of 6.76:1, which is down significantly from the previous week of 7.88:1, but about the same as the ratio of 2 weeks ago of 6.63:1.

On Friday after the release of the USDA report, July soybeans advanced 17.50 cents on larger than normal volume of 172,535 contracts. Preliminary stats show that total open interest increased only 773 contracts, and that the July contract lost 2,797 of open interest. If these numbers hold in the final report, we would consider this to be neutral to negative. On May 7, July soybeans generated a short-term sell signal, and as of Friday, the July contract has rallied 2 days, which is consistent with OIA’s protocol for a 1-3 day countertrend rally after the generation of a sell signal. However, July soybeans are at a crucial juncture and could rally one more day and still not generate a short-term buy signal unless the low for the day is above $14.82. Conceivably, soybeans could have a follow-through rally on Monday and then have a disappointing close.

Soybean meal:

For the week, July soybean meal advanced $6.90, August +8.90, new crop December +1.10. The COT report revealed that managed money liquidated 6,646 contracts of their long positions and added 2,018 contracts to their short positions. Commercial interests liquidated 1,621 contracts of their long positions and also liquidated 11,512 contracts of their short positions. As of the latest report, managed money is long soybean meal by ratio of 4.01:1, which is down significantly from the previous week of 4.74:1 and the ratio of 2 weeks ago of 4.27:1.

Soybean oil:

For the week, July soybean oil lost 33 points, August -39, new crop December -15. The COT report revealed that managed money liquidated 3,004 contracts of their long positions and added 7,872 contracts to their short positions. Commercial interests added 4,137 contracts to their long positions and liquidated 4,891 contracts of their short positions. As of the latest report, managed money is long soybean oil by ratio of 1.56:1, which is down significantly from the previous week of 2.00:1 and the ratio of 2 weeks ago of 1.82:1.

Corn:

For the week, July corn advanced 8.00 cents, September +5.50, new crop December +4.75. The COT report revealed that managed money added 1,953 contracts to their long positions and liquidated 300 contracts of their short positions. Commercial interests liquidated 3,205 contracts to their long positions and also liquidated 4,763 contracts of their short positions. As of the latest report, managed money is long corn by ratio of 6.37:1, which is up slightly from the previous week of 6.29:1 and the ratio of 2 weeks ago of 6.09:1.

Chicago wheat:

For the week, July Chicago wheat advanced 6.50 cents, September +6.75, new crop December +7.50. The COT report revealed that managed money added 31 contracts to their long positions and liquidated 3,402 contracts of their short positions. Commercial interests liquidated 2,431 contracts of their long positions and added 2,608 contracts to their short positions. As of the latest report, managed money is long Chicago wheat by ratio of 2.03:1, which is up from the previous week of 1.90:1 and the ratio of 2 weeks ago of 1.60:1. The increase in this week’s ratio was due to the liquidation of short positions.

Kansas City wheat:

For the week, July Kansas City wheat advanced 7.00 cents, September +10.50, new crop December +16.00. The COT report revealed that managed money added 1,082 contracts to their long positions and liquidated 272 contracts of their short positions. Commercial interests added 1,639 contracts to their long positions and also added 5,045 contracts to their short positions. As of the latest report, managed money is long Kansas City wheat by ratio of 5.55:1, which is up slightly from the previous week of 5.24:1 but down from the ratio of 2 weeks ago of 6.50:1.

For the 2nd quarter, July Kansas City wheat is the out performer with a gain of 8.30%, July soybean meal +5.11%, July soybeans +4.02%, July Chicago wheat +2.99%, July soybean oil +1.35%, July corn +0.15%.

Year to date, July Kansas City wheat is the out performer with a gain of 28.79%, July soybean meal +21.55%, July soybeans +17.60%, July Chicago wheat +17.15%, July corn +16.13%, July soybean oil +3.31%.

Cotton:

For the week, July cotton lost 1.96 cents, new crop December -23 points, March 2015 -42. The COT report revealed that managed money added 3,681 contracts to their long positions and also added 546 contracts to their short positions. Commercial interests added 6,277 contracts to their long positions and also added 12,261 contracts to their short positions. As of the latest report, managed money is long cotton by ratio of 7.35:1, which is slightly down from the previous week of 7.38:1, but substantially above the ratio of 2 weeks ago of 6.69:1.

Sugar #11:

For the week, July sugar lost 25 points, October – 21 March 2015 -18. The COT report revealed that managed money added 5,589 contracts to their long positions and also added 764 contracts to their short positions. Commercial interests liquidated 9,261 contracts of their long positions and also liquidated 19,715 contracts of their short positions. As of the latest report, managed money is long sugar by ratio of 2.92:1, which is up slightly from the previous week of 2.87:1, but down slightly from the ratio of 2 weeks ago of 2.97:1.

Coffee:

For the week, July coffee lost 19.30 cents, September -19.10, December -18.85. The COT report revealed that managed money added 395 contracts to their long positions and liquidated 323 contracts of their short positions. Commercial interests added 4 contracts to their long positions and liquidated 1,026 contracts of their short positions. As of the latest report, managed money is long coffee by a stratospheric 13.38:1, which is up from the previous week of 12.20:1 and substantially above the ratio of 2 weeks ago of 10.05:1. The current ratio is the highest since the beginning of the bull market in late January.

Just as managed money got extremely bullish, the coffee market collapsed last week. It looks inevitable that a short-term sell signal will be generated, perhaps on Monday. If the high for the day in the July contract is below OIA’s key pivot point of 1.9080, a short-term sell signal will be generated. The downside target is OIA’s  support area of 1.6600, which is slightly above the 100 day moving average of 1.6460.

We think the move lower will accelerate due to the huge long position of managed money, and there is more bad news to come: Since topping out on April 23, July coffee has declined 8.39%, or 17.90 cents through May 8, yet open interest has increased by 7,640 contracts during this time. In short, despite the massive long position of managed money, there has not been liquidation as prices have declined. Because managed money is refusing to liquidate, significant selling is ahead.

Cocoa: On May 8, July Cocoa generated an intermediate term sell signal after generating a short-term sell signal on May 1.

For the week, July cocoa lost $53.00, September -52.00, December -52.00. The COT report revealed that managed money liquidated 3,610 contracts of their long positions and added 58 contracts to their short positions. Commercial interests added 1,947 contracts to their long positions and liquidated 2,369 contracts of their short positions. As of the latest report, managed money is long cocoa by ratio of 3.65:1, which is down from the previous week of 3.84:1 and the ratio of 2 weeks ago of 4.13:1.

For the 2nd quarter, July coffee is the out performer with a gain of 2.17%, July cotton -1.27%, July Cocoa -3.50%, July sugar -5.30%.

Year to date, July coffee is the out performer with a gain of 59.77%, July cotton +9.98%, July Cocoa +5.14%, July sugar +2.81%.

Live cattle:

For the week, June cattle was unchanged, August +85 points, October +73. The COT report revealed that managed money liquidated 708 contracts of their long positions and also liquidated 966 contracts of their short positions. Commercial interests liquidated 4,449 contracts of their long positions and also liquidated 10,605 contracts of their short positions. As of the latest report, managed money is long live cattle by ratio of 15.18:1, which is up from the previous week of 13.83: and the ratio of 2 weeks ago of 14.29:1.

Lean hogs:

For the week, June lean hogs lost 2.05 cents, July +2.58, August +85 points. The COT report revealed that managed money liquidated 2,418 contracts of their long positions and added 370 contracts to their short positions. Commercial interests liquidated 1,641 contracts of their long positions and also liquidated 4,065 contracts of their short positions. As of the latest report, managed money is long lean hogs by ratio of 24.60:1, which is down from the previous week of 29.14:1 and the ratio of 2 weeks ago of 49.42:1.

Since writing April 27 Weekend Wrap, June lean hogs have declined 4.35  cents or 3.49%.Until June hogs make a daily low above 1.25430, the market will continue to trade sideways to lower.

From the April 27 Weekend Wrap:

“We recommend against holding long positions in lean hogs until the June contract makes a daily low above 1.26200. Until this occurs, June hogs will trade sideways to lower. However, under no circumstances should anyone short this market.”

“On March 18, June hogs made their 52-week high at 1.33425, and as of Friday’s close is trading 6.67% below this high. Additionally, the 20 day moving average is 1.23675 and the 50 day is trading at 1.20875. In short, hogs have plenty of room to correct and yet continue to be in a bullish set up. With the current stratospheric long to short ratio, there is a surplus of funds to fuel a further downside move.” 

For the 2nd quarter, August cattle is the out performer with a gain of 2.86%, June cattle +0.69%, June hogs -5.55%.

Year to date, June hogs is the out performer with a gain of 20.00%, August cattle +8.9 teen percent, June cattle +7.01%.

WTI crude oil:

For the week, June WTI crude oil advanced 23 cents, July +27, August +27. The COT report revealed that managed money liquidated 30,910 contracts of their long positions and also liquidated 3,259 contracts of their short positions. Commercial interests liquidated 7,169 contracts of their long positions and also liquidated 9,487 contracts of their short positions. As of the latest report, managed money is long crude oil by ratio 10.48:1, which is slightly above the previous week of 10.38:1, but below the ratio of 2 weeks ago of 10.99:1. The slight increase in this week’s ratio was due to the liquidation of short positions.

Heating oil: On May 6, June heating oil generated a short and intermediate term sell signal.

For the week, June heating oil lost 1.55 cents, July -1.74, August -1.80. The COT fed report revealed that managed money liquidated 8,912 contracts of their long positions and added 2,034 contracts to their short positions. Commercial interests added 4,552 contracts to their long positions and liquidated 1,785 contracts of their short positions.As of the latest report, managed money is long heating oil by ratio of 2.25:1, which is down substantially from the previous week of 3.01:1 and the ratio of 2 weeks ago of 2.72:1.

Gasoline: On May 6, June gasoline generated a short-term sell signal, but remains on an intermediate term buy signal

For the week, June gasoline lost 4.85 cents, July -4.06, August -3.57. The COT report revealed that managed money liquidated 10,675 contracts of their long positions and added 1,275 contracts to their short positions. Commercial interests added 9,867 contracts to their long positions and liquidated 903 contracts of their short positions. As of the latest report, managed money is long gasoline by ratio of 4.59:1, which is down substantially from the previous week of 5.50:1 and the ratio of 2 weeks ago of 5.76:1.

Natural gas:

For the week, June natural gas lost 14.3 cents, July -16.4, August -16.6. The COT report revealed that managed money liquidated 1,719 contracts of their long positions and added 2,151 contracts to their short positions. Commercial interests liquidated 9,078 contracts of their long positions and also liquidated 11,123 contracts of their short positions. As of the latest report, managed money is long natural gas by ratio of 1.55:1, which is down slightly from the previous week of 1.58:1 and the ratio of 2 weeks ago of 1.65:1.

Although, it appears inevitable that natural gas is going to generate a short-term sell signal, we wanted to bring to your attention that near-term spreads have been acting in a very bullish fashion even as natural gas prices have declined. For example, the June 2014-September 2014 spread closed at a 2.3 cents premium to June on May 9, which is the highest close for the spread since February 21, 2014 when the June-September 2014 spread closed at 3.6 cents premium to June and the June contract closed at $4.773. The low for the spread occurred on April 17 when June sold at a 7 tick premium to the September 2014 contract and June natural gas closed at $4.754. Spreads widening out as the general price level declines is bullish. OIA thinks natural gas is going to be a terrific candidate on the long side once short-term selling is out-of-the-way and temperatures begin to rise throughout the US. Keep in mind that despite the decline seen this week, natural gas remains the out performer for the 2nd quarter and is the 2nd best performer year to date.

In last week’s reports, we mentioned the consistent liquidation on rallies and declines in natural gas. Based upon the current COT report, much of the liquidation came from the commercial side.

For the 2nd quarter, June natural gas is the out performer with a gain of 2.93%, June Brent crude oil +0.35%, June gasoline -0.26%, June heating oil -0.50%, June WTI crude oil -0.63%, June ethanol -9.88%.

Year to date, June ethanol is the out performer with a gain of 25.28%, June natural gas +9.81%, June WTI crude oil +2.88%, June gasoline -1.01%, June Brent crude oil -1.40%, June heating oil -3.80%.

Copper:

For the week, July copper advanced 1.30 cents. The COT report revealed that managed money liquidated 1,542 contracts of their long positions and added 2,828 contracts to their short positions. Commercial interests added 2,247 contracts to their long positions and also added 1,227 contracts to their short positions. As of the latest report, managed money is long copper by ratio of 1.02:1, which is down from the previous week of 1.17:1, but up substantially from the ratio of 2 weeks ago when managed money was short by ratio of 1.11:1.

Palladium:

For the week, June palladium lost $12.65. The COT report revealed that managed money liquidated 280 contracts of their long positions and added 503 contracts to their short positions. Commercial interests added 218 contracts to their long positions and liquidated 648 contracts of their short positions. As of the latest report, managed money is long palladium by ratio of 5.77:1, which is down substantially from the previous week of 6.68:1 and the ratio of 2 weeks ago of 6.27:1.

Platinum: On May 5, July Platinum generated a short and intermediate term buy signal. 

For the week, July platinum lost $10.80. The COT report revealed that managed money added 2,029 contracts to their long positions and liquidated 1,418 contracts of their short positions. Commercial interests liquidated 691 contracts of their long positions and added 1,088 contracts to their short positions. As of the latest report, managed money is long platinum by a stratospheric 10.34:1, which is up dramatically from the previous week of 6.76:1 and the ratio of 2 weeks ago of 8.04:1.

Gold:

For the week, June gold lost $15.30. The COT report revealed that managed money added 12,466 contracts to their long positions and liquidated 766 contracts of their short positions. Commercial interests added 3,189 contracts to their long positions and also added 5,240 contracts to their short positions. As of the latest report, managed money is long gold by ratio of 4.15:1, which is up substantially from the previous week of 3.62:1 and the ratio of 2 weeks ago of 3.71:1.

Silver:

For the week, July silver lost 42.5 cents. The COT report revealed that managed money added 510 contracts to their long positions and also added 1,329 contracts to their short positions. Commercial interests liquidated 292 contracts of their long positions and also liquidated 2,508 contracts of their short positions. As of the latest report, managed money is long silver by ratio of 1.12:1, which is down from the previous week of 1.15:1 and the ratio of 2 weeks ago of 1.22:1.

For the 2nd quarter, June palladium is the out performer with a gain of 3.62%, July copper +1.98%, July platinum +0.88%, June gold +0.30%, July silver -3.63%.

Year to date, June palladium is the out performer with a gain of 11.79%, June gold +7.07%, July platinum +4.11%, July silver -1.53%, July copper -8.58%.

Canadian dollar:

For the week, the June Canadian dollar advanced 64 pips. The COT report revealed that leveraged funds liquidated 3,667 contracts of their long positions and also liquidated 236 contracts of their short positions. As of the latest report, leveraged funds are short the Canadian dollar by ratio of 2.03:1, which is up from the previous week of 1.87:1 and the same as 2 weeks ago (2.03:1).

Australian dollar:

For the week, the June Australian dollar advanced 92 pips. The COT report revealed that leveraged funds liquidated 6,185 contracts of their long positions and also liquidated 1,808 contracts of their short positions. As of the latest report, leveraged funds are long the Australian dollar by ratio of 1.69:1, which is down from the previous week of 1.80:1 and the ratio of 2 weeks ago of 2.17:1.

Our comments on the Australian dollar in last weekend’s report proved to be prescient when we stated that the low made on May 2  likely could be an interim low or major low, from which the Australian dollar could resume its uptrend. On May 7, the June Australian dollar made a daily low above OIA’s pivot point, and its performance since then has been outstanding compared to other major currencies. We expect the rally to continue and would look to buy setbacks. For futures traders, we recommend using the May 7 low of 92.94 as an exit point for futures positions. As of Friday’s close, the June Australian dollar is 4.69% away from the 52-week high on the continuation chart of 97.91, which was made on May 10, 2013. We think there is a good chance the Aussie could test this high, and have little doubt that it will test the April 10 high of 94.19. Another positive factor is that leveraged funds are net long by the lowest amount since the April 15 COT report (1.78:1) and the April 8 report of 1.51:1.

From the May 4 Weekend Wrap:

“As we stated in the April 27 Weekend Wrap, if the rally in the Australian dollar was to resume, the June contract had to make a daily low above 92.63 (this was last week’s pivot point). This did not occur and the market closed essentially unchanged for the week. On Friday May 2, the June Australian dollar made a new low for the move at 91.75, which is the lowest print since 91.60 made on April 3. However, the June contract snapped back from the low to close only 4 pips lower on the day. Conceivably, the low made on Friday may be an interim low, or a major low from which the Australian dollar recovers and eventually resume its uptrend. Also, preliminary stats show a decline of open interest of 2,714 contracts, which would make it the 3rd day in a row that open interest has declined. This may be the kind of wash out required to put the Australian dollar on a more healthy footing.”

Swiss franc:

For the week, the June Swiss franc lost 1.19 cents. The COT report revealed that leveraged funds added 3,130 contracts to their long positions and also added 4,107 contracts to their short positions. As of the latest report, leveraged funds are long the Swiss franc by ratio of 1.26:1, which is down from the previous week of 1.39:1 and the ratio of 2 weeks ago of 1.41:1.

The June Swiss franc will generate a short-term sell signal if the high of the day is below OIA’s key pivot point of 1.1319.On Friday, the June Swiss franc closed at 1.1274.

British pound:

For the week, the June British pound lost 26 pips. The COT report revealed that leveraged funds liquidated 783 contracts of their long positions and also liquidated 1,439 contracts of their short positions. As of the latest report, average funds are long the British pound by ratio of 4.85:1, which is slightly above the previous week of 4.66:1 and the ratio of 2 weeks ago of 4.68:1.

Euro:

For the week, the June euro lost 1.25 cents. The COT report revealed that leveraged funds added 6,821 contracts to their long positions and also added 1,574 contracts to their short positions. As of the latest report, leveraged funds are long the euro by ratio of 1.90:1, which is up slightly from the previous week of 1.82:1 but down to a ratio of 2 weeks ago of 1.98:1.

The June euro will generate a short-term sell signal if the high of the day is below OIA’s key pivot point of 1.3797. On Friday, the June euro closed at 1.3745.

Yen: On May 6, the June yen generated a short and intermediate term buy signal.

For the week, the June yen advanced 42 pips. The COT report revealed that leveraged funds added 4,907 contracts to their long positions and liquidated 1,838 contracts of their short positions. As of the latest report, leveraged funds are short the yen by ratio of 2.89:1, which is down substantially from the previous week of 3.65:1 and down slightly from the ratio of 2 weeks ago of 2.97:1.

We continue to be amazed by the fact that leveraged funds are massively short the yen despite its very impressive performance thus far in the 2nd quarter and year to date. Additionally, the moving averages are in a bullish set up: 5 day MA .9830, 20 day MA .9796 50 day MA .9777, 100 day MA .9735. The 200 day moving average stands at .9928 and the year to date moving average is .9751. The June yen closed at .9826 on May 9.

Though the market has been in an uptrend, open interest action of late leaves much to be desired area. For example, from April 30 through May 8, the June yen advanced 104 pips, however total open interest declined by 5329 contracts.The June contract is within 30 days of expiration, and open interest will be declining in this contract, which will impact overall open interest. For the yen to continue its advance, it must overcome resistance at the of April 11 high of .9873, March 3 .9889,  and the February 3 high of .9930, which is at the 200 day moving average.

Dollar index:

For the week, the June dollar index gained 40 points. The COT report revealed that leveraged funds added 3,914 contracts to their long positions and also added 4,600 contracts to their short positions. As of the latest report, leveraged funds are short the dollar index by ratio of 2.93:1, which is down significantly from the previous week of 3.66:1 and the ratio of 2 weeks ago of 3.35:1.

For the June dollar index to generate a short-term buy signal, the low for the day must be above 79.95. On Friday the June dollar index closed at 79.69

For the 2nd quarter, the June Canadian dollar is the out performer with a gain of 1.42%, June yen +1.37%, June Australian dollar +1.16%, June British pound +1.06%, June euro -0.21%, June Swiss franc -0.39%, June dollar index -0.42%.

Year to date, the June Australian dollar is the out performer with a gain of 5.70%, June yen +3.33%, June British pound +1.77%, June Swiss franc +0.62%, June euro -0.32%, June dollar index -0.55%, June Canadian dollar -2.20%.

S&P 500 futures (250 x):

For the week, the June S&P futures contract lost 1.00 point. The COT report revealed that leveraged funds liquidated 6,232 contracts of their long positions and added 5,415 contracts to their short positions. As of the latest report, leveraged funds are short the S&P 500 by ratio of 2.15:1, which is a complete reversal from the previous week when they were long by ratio of 1.36:1. Two weeks ago, leveraged funds were short by ratio of 1.28:1.

For the 2nd quarter, the Dow Jones Industrial Average is the out performer with a gain of 0.76% New York Composite Index + 0.75%, S&P 500 cash index +0.33%, NASDAQ 100 cash index -1.11%, S&P 400 cash index -1.79%, Russell 2000 cash index-5.61%.

Year to date, the New York Composite Index is the out performer with a gain of 1.98%, S&P 500 cash index +1.63%, S&P 400 cash index +0.84%, Dow Jones Industrial Average cash index +0.04%, NASDAQ 100 cash index -1.01%, Russell 2000 cash index -4.85%.