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The time frame for this week’s Commitments of Traders report is from Wednesday, October 22 through Tuesday, October 28.

Soybeans:

For the week, November soybeans advanced 69.00 cents, January 2015 +66.00, March 2015 +63.25. The COT report revealed that managed money liquidated 20,915 contracts of their long positions and also liquidated 11,368 contracts of their short positions. Commercial interests liquidated 28,933 contracts of their long positions and also liquidated 8,494 contracts of their short positions. As of the latest report, managed money is long soybeans by ratio of 1.31:1, which is down somewhat from the previous week of 1.37:1 and the ratio of 2 weeks ago of 1.33:1. Commercial interests are long soybeans by ratio 1.03:1, which is down from the previous week of 1.11:1 and the ratio of 2 weeks ago of 1.17:1.

This week’s COT report confirmed what we were saying last week: namely that market participants were liquidating as prices advanced. We examined the performance of January soybeans during the COT reporting period of October 22 through October 28 and during this period advanced 43.25 cents or 4.45%. Additionally, commercial interests were liquidating as prices advanced as well.

In short, large numbers of potential market participants are either liquidating or sitting on the sidelines. This is not to say that prices cannot continue to advance, only that the rally is on borrowed time.In order for the January contract to generate an intermediate term buy signal, the low the day must be above OIA’s key pivot point for October 31 of 10.46 1/8. On Friday, January soybeans closed at 10.49 1/4, which is slightly above the August 22 close of 10.48 3/4.The November contract may display unusual strength (or weakness) now that it is in delivery, and this may ratchet January contract prices higher temporarily.We see the next point of resistance is OIA’s pivot point of 10.87 5/8, and if the rally is to continue, January soybeans must make a low above this pivot point.

Another very important factor is farmer selling should increase and will act to cap the rally. Many in the farm community have been sitting on inventories that have just been harvested, and will be looking to sell, especially when prices begin to decline. Preliminary stats from Friday’s trading show that total open interest declined by 2,257 contracts on Friday’s 19.50 cent advance. Although preliminary open interest stats are unreliable, volume stats are accurate. Total volume traded was 296,824 contracts, which is the lowest volume traded since October 20 when soybeans lost 7.50 cents on 229,361 contracts and total open interest declined by 7,720. The fact that volume is shrinking as prices are advancing to new highs and closing at new highs is another major negative.

We will be watching carefully for open interest increases on price advances from this point, because if it occurs, this likely signifies that Johnny-come-lately’s are getting on board as the move approaches its final stages.

From the October 29 report:

“If we take the stats from October 27, 28 and 29, January soybeans have advanced 65.75 cents yet total open interest has declined by 30,836. Despite very favorable price action, market participants are liquidating as prices move higher. This is bearish. The pattern of liquidation on higher prices has been consistent, which in our view confirms the likelihood of soybeans turning down again.”

Soybean meal:

For the week, December soybean meal advanced $38.80, January 2015 +27.90, March 2015 +18.80. The COT report revealed that managed money added 3,604 contracts to their long positions and liquidated 943 of their short positions. Commercial interests liquidated 7,025 of their long positions and added 9,743 to their short positions. As of the latest report, managed money is long soybean meal by ratio of 3.16:1, which is above the previous week’s ratio of 2.88:1 and substantially above the ratio of 2 weeks ago of 2.10:1.

The current ratio of 3.16:1 is the highest since the COT tabulation date of September 2 when managed money was long soybean meal by ratio of 3.19:1.

December soybean meal made a new high for the move at 408.50, which is approximately $3.00 away from its contract high of 411.40.

Soybean oil: On October 30 December soybean oil generated a short-term buy signal, but remains on an intermediate term sell signal.

For the week, December soybean oil advanced 2.41 cents, January 2015 +2.38, March 2015 +2.34. The COT report revealed that managed money added 312 contracts to their long positions and liquidated 9,321 of their short positions. Commercial interests liquidated 1,127 contracts of their long positions and added 16,551 to their short positions. As of the latest report, managed money is long soybean oil by ratio of 1.19:1, which is significantly above the previous week of 1.03:1 and the ratio of 2 weeks ago of 1.04:1.

Note, the ratio increased primarily because of the liquidation of short positions, not the addition of new long positions.

Corn: On October 30, December corn generated an intermediate term buy signal after generating a short-term buy signal on October 9.

For the week, December corn advanced 23.75 cents, March 2015 +22.50, May 2015+22.75. The COT report revealed that managed money liquidated 13,500 contracts of their long positions and also liquidated 32,989 contracts of their short positions. Commercial interests liquidated 5,300 contracts of their long positions and added 21,870 to their short positions. As of the latest report, managed money is long corn by ratio of 1.86:1, which is up from the previous week of 1.61:1 and the ratio of 2 weeks ago of 1.36:1.

Note, the increase in the ratio was due to the liquidation of short positions, not an increase in long positions.

Like soybeans, we looked at the performance of December corn during the compilation of the COT report, and just like soybeans, market participants were liquidating as December corn prices advanced 8.50 cents, or + 2.39% during October 22 through October 28.On October 1, December corn made its contract low at 3.18 1/4 and closed at 3.21 1/4. From October 1 through October 30, December corn advanced 52.75 cents while total open interest in this period declined by 8,858 contracts. This confirms liquidation, and since 1st notice day in the December contract is 30 days away, the decline of total open interest cannot be attributed solely to its impending approach.

As we said in the October 30 report, we think it is possible for corn rally to our pivot point of 3.93 7/8, but like soybeans, farmer selling will begin to kick in and this will cap advances.Like soybeans, we will be watching for increases of open interest on price advances, because this likely signals the Johnny-come-lately’s getting on board at the last stage of the move.

Chicago wheat:

For the week, December Chicago wheat advanced 14.75 cents, March 2015 +14.75, May 2015+14.50. The COT report revealed that managed money added 1,032 contracts to their long positions and liquidated 6,011 of their short positions. Commercial interests added 541 contracts to their long positions and also added 10,676 to their short positions. As of the latest report, managed money is short Chicago wheat by ratio of 1.52:1, which is down slightly from the previous week of 1.62:1 and the ratio of 2 weeks ago of 1.71:1.

Kansas City wheat:

For the week, December Kansas City wheat closed unchanged, March 2015 +2.75, May 2015+5.25. The COT report revealed that managed money liquidated 938 contracts of their long positions and also liquidated 634 of their short positions. Commercial interests added 208 contracts to their long positions and liquidated 128 of their short positions. As of the latest report, managed money remains long Kansas City wheat by ratio of 1.57:1, which is the same as the previous week of 1.57:1, but up from the ratio of 2 weeks ago of 1.30:1.

Thus far in the 4th quarter, December soybean meal is the out performer with a gain of 30.14%, December corn +17.46%, January soybeans +13.89%, December Chicago wheat +11.46%, December soybean oil +7.51%, December Kansas City wheat +6.41%.

Year to date, December soybean meal is the out performer with a gain of 11.21%, January soybeans -8.00%, December Kansas City wheat -11.28%, December soybean oil -13.15%, December corn -16.32%, December Chicago wheat -16.86%.

Cotton: On October 29, December cotton generated a short-term buy signal, but remains on an intermediate term sell signal.

For the week, December cotton advanced 64 points, March 2015 +75, May 2015+78. The COT report revealed that managed money added 3,902 contracts to their long positions and liquidated 1,699 of their short positions. Commercial interests liquidated 2,266 contracts of their long positions and added 4,962 to their short positions. As of the latest report, managed money is long cotton by ratio of 1.41:1, which is up from the previous week of 1.23:1 and the ratio of 2 weeks ago of 1.28:1.

Sugar #11:

For the week, March 2015 sugar lost 34 points, May 2015-31, July 2015 -29. The COT report revealed that managed money liquidated 2,567 contracts of their long positions and added 5,729 to their short positions. Commercial interests added 1,880 contracts to their long positions and also added 6,669 to their short positions. As of the latest report, managed money is short sugar by ratio of 1.33:1, which is up from the previous week of 1.28:1 and the ratio of 2 weeks ago of 1.27:1.

The current ratio of 1.33:1 is the highest short ratio since the beginning of the bear market in early July 2014.

Coffee:

For the week, December coffee lost 3.50 cents, March 2015 -3.45, May 2015-3.30. The COT report revealed that managed money liquidated 4,888 contracts of their long positions and added 376 to their short positions. Commercial interests added 968 contracts to their long positions and liquidated 3,468 of their short positions. As of the latest report, managed money is long coffee by ratio of 8.03:1, which is down significantly from the previous week of 9.53:1 and down dramatically from the ratio of 2 weeks ago of 11.39:1.

The current ratio of 8.03:1 is the lowest since the COT tabulation date of October 7 when managed money was long coffee by ratio of 8.18:1.

This past week, the July 2015-March 2016 spread narrowed by 45 points and closed at 2.10 cents premium to March 2016. Our recommended exit point for the spread is the July 22 low of 3.10 cents premium to March 2016. Looking at the weekly chart, first support comes in at 1.7640, which were the lows during the weeks of September 15 and 22. During the weeks of July 7 and 14 2014, December coffee found support at 1.6330 and 1 6310 respectively.  The 200 week moving average of 1.83 should provide support and after this, the 50 week moving average of 1.69. We will be monitoring coffee for a 50 week moving average cross above the 200 week moving average.

Cocoa:

For the week, December cocoa lost $151.00, March 2015 – 142.00, May 2015-131.00. The COT report revealed that managed money liquidated 8,312 contracts of their long positions and also liquidated 1,269 of their short positions. Commercial interests added 2,956 contracts to their long positions and liquidated 7,434 of their short positions. As of the latest report, managed money remains long cocoa by ratio of 3.37:1, which is down only slightly from the previous week of 3.56:1, but down substantially from the ratio of 2 weeks ago of 3.74:1.

Thus far in the 4th quarter, December cotton is the out performer with a gain of 5.02%, March 2015 sugar -2.49%, December coffee -2.77%, December cocoa -12.15%.

Year to date, December coffee is the out performer with a gain of 56.54%, December cocoa +9.18%, March 2015 sugar -9.63%, December cotton -17.82%.

Live cattle:

For the week, December live cattle lost 85 points, February 2015 -45, April 2015 +83. The COT report revealed that managed money liquidated 861 contracts of their long positions and also liquidated 347 of their short positions. Commercial interests added 2,831 contracts to their long positions and also added 4,657 to their short positions. As of the latest report, managed money remains long live cattle by a ratio of 11.56:1, which is up from the previous week of 11.23:1 and the ratio of 2 weeks ago of 11.51:1.

 Lean hogs: 

For the week, December lean hogs lost 2.23 cents, February 2015 -82 points, April 2015 -5. The COT report revealed that managed money liquidated 2,735 contracts of their long positions and added 1,768 to their short positions. Commercial interests liquidated 1,654 contracts of their long positions and also liquidated 2,529 of their short positions. As of the latest report, managed money remains long lean hogs by ratio of 4.44:1, which is down from the previous week of 5.28:1 and down substantially from the ratio of 2 weeks ago of 6.89:1.

Thus far in the 4th quarter, December live cattle is the out performer with a gain of 1.68%, February 2015 live cattle +1.56%, February lean hogs -2.87%, December lean hogs -7.05%.

Year to date, December cattle is the out performer with a gain of 25.96%, February live cattle +25.74%, December lean hogs +10.72%, February lean hogs +9.31%.

WTI crude oil:

For the week, December WTI crude oil lost 47 cents, January 2015 – 38, February 2015 – 28. The COT report revealed that managed money liquidated 5,770 contracts of their long positions and also liquidated 147 of their short positions. Commercial interests added 13,658 contracts to their long positions and also added 16,224 to their short positions. As of the latest report, managed money is long WTI crude oil by ratio of 4.13:1, which is down from the previous week of 4.20:1, but up substantially from the ratio of 2 weeks ago of 3.49:1.

In last weekend’s report, we warned clients about the breakdown of front months versus back months spreads and that this had negative implications for crude oil prices. This past week, the December 2014-June 2015 spread continued to narrow, and broke below the September 10 low of 43 cents premium to December 2014. It made a new closing low of 32 cents premium to December 2014.This is the lowest close since June 21, 2012 when December 2014 sold at a 6 cent discount to June 2015.

On June 21, 2012 December WTI closed at $82.87. The low for 2012 occurred during the week of June 18, 2012 when the July contract made a low of 77.56, then snapped back to close at 79.76. From there, the December 2014 contract proceeded to rally to a short-term high of 88.91 on July 18, 2012, and then made a secondary high on September 14, 2012 of 93.53.

The December 2014-June 2015 spread widened with the rally to close at $1.34 premium to December 2014 on July 18 and closed at $2.10 premium to December 2014 on September 14.

It appears the tightening of the spreads in 2014 is similar to what occurred in 2012. We do not think that WTI prices are at a bottom, and if the spread narrows further, and moves into contango, the next target for the December 2014 contract would be the 2012 low of 77.56. The market has been trading as if wants to go lower and has been unable to muster much of a rally.We continue to recommend a stand aside posture.

From the October 26 Week and Wrap:

“We want to notify clients the front months relative to distant month spreads are breaking down. For example, on October 24, the December 2014-June 2015 spread closed at 59 cents premium to December, which is the lowest since September 10 when the spread closed at 43 cents premium to December. This is the lowest close for the spread going back 200 trading days (January 10, 2014), and a break below September 10 would imply very negative price action for WTI going forward. If WTI moves into contango, which appears inevitable, selling pressure will likely increase substantially. In short, the market has more downside before it can bottom.”

Heating oil:

For the week, December heating oil advanced 4.33 cents, January 2015 +3.76, February 2015 +3.35. The COT report revealed that managed money liquidated 700 contracts of their long positions and added 2,777 to their short positions.Commercial interests increased their long positions by 3,800 contracts, and added 3,212 to their short positions. As of the latest report, managed money remain short heating oil by ratio of 1.92:1, which is up from the previous week of 1.80:1, and exactly the same as the ratio of 2 weeks ago of 1.92:1.

Gasoline:

For the week, December gasoline advanced 54 points, January 2015 +33, February 2015 +25. The COT report revealed that managed money added 859 contracts to their long positions and also added 837 to their short positions. Commercial interests liquidated 2,675 contracts of their long positions and also liquidated 1,197 of their short positions. As of the latest report, managed money remains long gasoline by ratio of 1.84:1, which is down slightly from the previous week of 1.86:1, but above the ratio of 2 weeks ago of 1.64:1.

Natural gas:

For the week, December natural gas advanced 17.5 cents, January 2015 +17.2, February 2015 +16.8. The COT report revealed that managed money added 1,863 contracts to their long positions and also added 17,414 to their short positions. Commercial interests liquidated 12,683 contracts of their long positions and also liquidated 6,074 their short positions. As of the latest report, managed money is short natural gas by ratio of 1.13:1, which is an increase from the previous week of 1.06:1 and a complete reversal from 2 weeks ago when managed money was long natural gas by ratio of 1.02:1.

The current short ratio 1.13:1 is the highest of the current bear market, which began in mid June 2014.

Thus far in the 4th quarter, December ethanol is the out performer with a gain of 11.47%, December heating oil -5.61%, December natural gas -7.77%, December Brent crude oil -9.99%, December gasoline -10.25%, December WTI crude oil -10.92%.

Year to date, December ethanol is the out performer with a gain of 7.54%, December natural gas -10.30%, December WTI crude oil -12.93%, December heating oil -15.77%, December gasoline -17.24%, December Brent crude oil -19.15%.

Copper: On October 29, December copper generated a short-term buy signal, but remains on an intermediate term sell signal.

For the week, December copper advanced 60 points. The COT report revealed that managed money added 3,013 contracts to their long positions and liquidated 7,658 of their short positions. Commercial interests liquidated 1,452 contracts of their long positions and added 3,670 to their short positions. As of the latest report, managed money remain short copper by ratio of 1.03:1, which is down substantially from the review suites ratio of 1.34:1 and the ratio of 2 weeks ago of 1.31:1.

Palladium:

For the week, December palladium advanced $10.90. The COT report revealed that managed money liquidated 145 contracts of their long positions and also liquidated 111 of their short positions. Commercial interests added 32 contracts to their long positions and also added 372 to their short positions. As of the latest report, managed money remains long palladium by ratio of 6.84:1, which is up somewhat from the previous week of 6.63:1 but down from the ratio of 2 weeks ago of 7.40:1.

Platinum:

For the week, January platinum lost $15.70. The COT report revealed that managed money liquidated 1,196 contracts of their long positions and added 530 to their short positions. Commercial interests added 42 contracts to their long positions and liquidated 68 of their short positions. As of the latest report, managed money remains long platinum by ratio of 1.83:1, which is down from the previous week of 1.98:1 and the ratio of 2 weeks ago of 2.33:1.

Gold: On October 30, December gold generated a short-term sell signal and remains on an intermediate term sell signal.

For the week, December gold lost $60.20. The COT report revealed that managed money liquidated 4,415 contracts of their long positions and also liquidated 1,994 their short positions. Commercial interests liquidated 1,312 contracts of their long positions and added 3,588 to their short positions. As of the latest report, managed money remains long gold by ratio of 1.88:1, which is about the same as the previous week of 1.89:1, but up from the ratio of 2 weeks ago of 1.52:1.

December gold made a new contract low of $1161.40 last week, which is the lowest print since July 2010 (1155.60).

Silver:

For the week, December silver lost $1.076. The COT report revealed that managed money added 344 contracts to their long positions and also added 1,161 to their short positions.Commercial interests liquidated 110 contracts of their long positions and also liquidated 241 of their short positions. As of the latest report, managed money remains short silver by ratio of 1.14:1, which is up slightly from the previous week of 1.12:1 and the ratio of 2 weeks ago of 1.12:1.

December silver made a new contract low of $15.635, which is the lowest print since February 2010 ($14.650).

Thus far in the 4th quarter, December palladium is the out performer with a gain of 2.42%, December copper +1.28%, December gold -3.12%, January platinum -5.06%, December silver -5.29%.

Year to date, December palladium is the out performer with a gain of 9.77%, December gold -2.88%, December copper -9.17%, January platinum -10.41%, December silver -17.49%.

Canadian dollar:

For the week, the December Canadian dollar lost 33 pips. The COT report revealed that leveraged funds liquidated 3,414 contracts of their long positions and also liquidated 2,818 of their short positions. As of the latest report, leveraged funds are short the Canadian dollar by ratio of 3.99:1, which is up from the previous week of 3.26:1 and up substantially from the ratio of 2 weeks ago of 2.31:1.

Australian dollar:

For the week, the December Australian dollar advanced 4 pips. The COT report revealed that leveraged funds added 4,358 contracts to their long positions and also added 2,688 to their short positions. As of the latest report, leveraged funds remain short the Australian dollar by ratio of 1.32:1, which is down from the previous week of 1.45:1 and the ratio of 2 weeks ago of 1.42:1.

Swiss franc:

For the week, the December Swiss franc lost 1.12 cents. The COT report revealed that leveraged funds liquidated 823 contracts of their long positions and added 1,630 to their short positions. As of the latest report, leveraged funds are short the Swiss franc by ratio of 3.57:1, which is up substantially from the previous week of 3.03:1 and the ratio of 2 weeks ago of 2.40:1.

British pound:

For the week, the December British pound lost 85 pips. The COT report revealed that leveraged funds added 4,356 contracts to their long positions and also added 5,927 to their short positions. As of the latest report, leveraged funds are long the British pound by ratio of 1.78:1, which is down from the previous week of 2.07:1 and down substantially from the ratio of 2 weeks ago of 2.42:1.

Euro:

For the week, the December euro lost 1.38 cents. The COT report revealed that leveraged funds liquidated 3,431 contracts of their long positions and added 4,050 to their short positions. As of the latest report, leveraged funds are short the euro by a ratio of 3.39:1, which is up from the previous week of 3.12:1 and the ratio of 2 weeks ago of 3.15:1.

The December euro made a new contract low of 1.2486 this past week, which is the lowest print since the week of August 27, 2012.

Yen: On October 30, the December yen generated a short-term sell signal and remains on an intermediate term buy signal.

For the week, the December yen lost 348 pips. The COT report revealed that leveraged funds liquidated 304 contracts of their long positions and also liquidated 7,505 of their short positions. As of the latest report, leveraged funds are short the yen by a ratio of 2.64:1, which is down from the previous week of 2.87:1 and the ratio of 2 weeks ago of 4.61:1.

The December yen made a new contract low of .8893 this past week, which is the lowest print since December 2007 (.8792).

Dollar index:

For the week, the December dollar index advanced 1.20 points. The COT report revealed that leveraged funds liquidated 618 contracts of their long positions and also liquidated 941 of their short positions. As of the latest report, leveraged funds remain long the dollar index by ratio of 1.42:1, which is up from the previous week of 1.38:1 and up substantially from the ratio of 2 weeks ago of 1.09:1.

Thus far in the 4th quarter, the December dollar index is the out performer with a gain of 1.12%, December Australian dollar +0.83%, December Canadian dollar -0.54%, December Swiss franc -0.83%, December euro -0.83%, December British pound -1.27%, December yen -2.41%.

Year to date, the December dollar index is the out performer with a gain of 7.85%, December Australian dollar +0.52%, December British pound -3.20%, December Canadian dollar -5.06%, December yen -6.53%, December Swiss franc -7.96%, December euro -9.18%.

S&P 500 E mini: On October 27 the December S&P 500 E mini generated an intermediate term buy signal and generated a short-term buy signal on October 28.

S&P 500 (250 x):

The December S&P 500 futures contract advanced 51.70 points. The COT report revealed that leveraged funds added 549 contracts to their long positions and also added 1,148 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 up from the previous week of 1.27:1, but down from the ratio of 2 weeks ago of 1.75:1.

Thus far in the 4th quarter, the Russell 2000 cash index is the out performer with a gain of 6.52%, S&P 400 cash index +3.48%, NASDAQ 100 cash index + 2.69, S&P 500 cash index +2.32%, Dow Jones Industrial Average cash index +2.04%, New York Composite cash index +1.33%.

Year to date, the NASDAQ 100 cash index is the out performer with a gain of 15.76%, S&P 500 cash index +9.18%, S&P 400 cash index +5.67%, Dow Jones Industrial Average cash index + 4.91%, New York Composite cash index +4.28%, Russell 2000 cash index +0.85%.