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The time frame for this week’s Commitments of Traders report is from Wednesday, October 15 through Tuesday, October 21.

Soybeans: On October 24, January soybeans generated a short-term buy signal, but remains on an intermediate term sell signal.

For the week, November soybeans advanced 25.75 cents, January 2015 +23.50, March 2015 +22.00. The COT report revealed that managed money liquidated 1,719 contracts of their long positions and also liquidated 3,923 contracts of their short positions. Commercial interests liquidated 11,919 contracts of their long positions and added 1,726 to their short positions. As of the latest report, managed money is long soybeans by ratio of 1.37:1, which is an increase from the previous week of 1.33:1 and the ratio of 2 weeks ago of 1.24:1.Commercial interests are long soybeans by ratio of 1.11:1, which is down from the previous week of 1.17:1 and the ratio of 2 weeks ago of 1.22:1.

Soybean meal:

For the week, December soybean meal advanced $19.70, January 2015 +13.70, March 2015 +8.50. The COT report revealed that managed money added 1,534 contracts to their long positions and liquidated 7,985 of their short positions. Commercial interests liquidated 4,316 contracts of their long positions and also liquidated 1,834 of their short positions. As of the latest report, managed money is long soybean meal by ratio of 2.88:1, which is up substantially from the previous week of 2.10:1 and the ratio of 2 weeks ago of 1.78:1.

Soybean oil:

For the week, December soybean oil advanced 37 points, January 2015 +35, March 2015 +37. The COT report revealed that managed money added 2,386 contracts to their long positions and also added 3,372 to their short positions. Commercial interests liquidated 541 contracts of their long positions and also liquidated 7,197 of their short positions. As of the latest report, managed money remains long soybean oil by ratio of 1.03:1, which is about the same as the previous week of 1.04:1 and the ratio of 2 weeks ago of 1.04:1.

Corn:

For the week, December corn advanced 5.00 cents, March 2015 +5.50, May 2015+5.25. The COT report revealed that managed money liquidated 2,882 contracts of their long positions and also liquidated 38,292 contracts of their short positions. Commercial interests added 8,598 contracts to their long positions and also added 16,429 to their short positions. As of the latest report, managed money remains long corn by ratio of 1.61:1, which is up from the previous week of 1.36:1 and the ratio of 2 weeks ago of 1.22:1.

Chicago wheat:

For the week, December Chicago wheat advanced 1.75 cents, March 2015 + 3.00, May 2015+4.25. The COT report revealed that managed money liquidated 1,547 contracts of their long positions and also liquidated 9,808 of their short positions. Commercial interests added 2,890 contracts to their long positions and also added 11,860 to their short positions. As of the latest report, managed money remains short Chicago wheat by ratio 1.62:1, which is down from the previous week of 1.71:1 and the ratio of 2 weeks ago of 1.80:1.

Kansas City wheat:

For the week, December Kansas City wheat lost 8.00 cents, March 2015 -5.50, May 2015-2.25. The COT report revealed that managed money added 1,105 contracts to their long positions and liquidated 4,666 of their short positions. Commercial interests liquidated 3,121 contracts of their long positions and added 2,825 to their short positions. As of the latest report, managed money remains long Kansas City wheat by ratio of 1.57:1, which is up from the previous week of 1.30:1 and the ratio of 2 weeks ago of 1.22:1.

Thus far in the 4th quarter, December soybean meal is the out performer with a gain of 17.16%, December corn                + 10.05%, December Chicago wheat +8.37%, January soybeans +6.73%, December Kansas City wheat +6.41%, December soybean oil +0.06%.

Year to date, December soybean meal is the out performer with a gain of 0.11%, December Kansas City wheat -11.28%, January soybeans -13.79%, December Chicago wheat -19.16%, December soybean oil -19.17%, December corn -21.60%.

Cotton:

For the week, December cotton advanced 81 points, March 2015 +44, May 2015+ 39. The COT report revealed that managed money liquidated 561 contracts of their long positions and added 797 to their short positions. Commercial interests liquidated 507 contracts of their long positions and also liquidated 593 of their short positions. As of the latest report, managed money remains long cotton by ratio of 1.23:1, which is down from the previous week of 1.28:1, but up from the ratio of 2 weeks ago of 1.08:1.

Sugar #11:

For the week, March 2015 sugar lost 24 points, May 2015-23, July 2015 -24. The COT report revealed that managed money liquidated 650 contracts of their long positions and added 717 to their short positions. Commercial interests liquidated 2,633 of their long positions and added 1,342 to their short positions. As of the latest report, managed money is short sugar by ratio 1.28:1, which is about the same as the previous week of 1.27:1 and the ratio of 2 weeks ago of 1.27:1.

Coffee: On October 23, December coffee generated a short-term sell signal, but remains on an intermediate term buy signal.

For the week, December coffee lost 25.60 cents, March 2015 -25.30, May 2015-24.95. The COT report revealed that managed money liquidated 1,892 contracts of their long positions and added 696 to their short positions. Commercial interests added 2,517 contracts to their long positions and also added 2,423 to their short positions. As of the latest report, managed money is long coffee by ratio 9.53:1, which is down from the previous week of 11.39:1 and the ratio of 2 weeks ago of 8.18:1.

On October 24, the July 2015-March 2016 spread closed at a 1.65 cent premium to March 2016. This is the lowest close since September 25 when the March 2016 contracts sold at a 1.50 cent premium to July 2015 and the July 2015 contract closed at 1.9050. On Friday, the spread fell sharply by 1.05 cents on the eve of the Brazilian presidential election, which should be decided on October 26. The presidential election has enormous implications for the Brazilian economy, and the Brazilian Bovespa index has been trading in a highly volatile manner: plus or minus 2-3% daily.The election will have a major impact on Brazil’s currency (real), and this will significantly affect prices for wide array of commodities.

Although, we continue to think that coffee prices are headed significantly higher longer-term, money management is of paramount importance, and this should govern whether you stay in the coffee bull spread. On a major rally, the spread could turn around in a day or two, but on the other hand, if coffee prices continue to drift lower, the March 2016 contract will likely gain on July 2015. Going back 150 trading days, (March 24) the July 2015-March 2016 spread made its low of 3.10 cents premium to March 2016 on July 22 and made a secondary low at 3.05 on August 4. We recommend using the lows to exit if the spread if it closes below them. 

Cocoa:

For the week, December cocoa lost $36.00, March 2015 -30.00, May 2015-26.00. The COT report revealed that managed money liquidated 3,743 contracts of their long positions and added 35 to their short positions. Commercial interests added 554 contracts to their long positions and liquidated 3,369 of their short positions. As of the latest report, managed money is long cocoa by ratio of 3.56:1, which is down from the previous week of 3.74:1 and the ratio of 2 weeks ago of 4.01:1.

Last week, we recommended liquidating the long call position in March cocoa, but staying with the long March 2015-short December 2015 bull spread in the event the market turns around sharply. However, the position should be exited upon penetration of the October 7 low of $46.00 premium to March 2015. The action on October 23 told us that substantial trade selling was in evidence on heavy volume and the action on October 24 confirmed this. During the past week, the March 2015- December 2015 lost $3.00.

Thus far in the 4th quarter, December cotton is the out performer with a gain of 3.98%, March 2015 sugar -0.43%, December coffee -0.96%, December cocoa -7.58%.

Year to date, December coffee is the out performer with a gain of 59.45%, December cocoa +12.46%, March 2015 sugar -7.72%, December cotton -18.64%.

Live cattle:

For the week, December live cattle advanced 1.85 cents, February 2015 +2.53, April 2015 +2.72. The COT report revealed that managed money liquidated 665 contracts of their long positions and added 169 to their short positions. Commercial interests liquidated 399 contracts of their long positions and also liquidated 4,095 of their short positions. As of the latest report, managed money is long live cattle by a ratio of 11.23:1, which is down slightly from the previous week of 11.51:1 and the ratio of 2 weeks ago of 12.17:1.

Lean hogs:

For the week, December lean hogs lost 32 points, February 2015 +1.32 cents, April 2015 +1.70. The COT report revealed that managed money liquidated 3,397 contracts of their long positions and added 2,478 to their short positions. Commercial interests liquidated 1,072 contracts of their long positions and also liquidated 10,293 of their short positions. As of the latest report, managed money remains long lean hogs by ratio of 5.28:1, which is down from the previous week of 6.89:1 and the ratio of 2 weeks ago of 6.04:1.

Thus far in the 4th quarter, December live cattle is the out performer with a gain of 2.20%, February 2015 live cattle +1.83%, February 2015 lean hogs -1.96%, December lean hogs -4.70%.

Year to date, December live cattle is the out performer with a gain of 26.61%, February live cattle +26.08%, December lean hogs +13.52%, February 2015 lean hogs +10.34%.

WTI crude oil:

For the week, December WTI crude oil lost $1.05, January 2015 -82 cents, February 2015 -57. The COT report revealed that managed money liquidated 5,981 contracts of their long positions and also liquidated 15,150 to their short positions. Commercial interests liquidated 14,064 contracts of their long positions and also liquidated 7,816 of their short positions. As of the latest report, managed money remains long WTI crude oil by ratio of 4.20:1, which is up from the previous week of 3.49:1 and the ratio of 2 weeks ago of 3.73:1.

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 lost 2.23 cents, January 2015 -1.93, February 2015 -1.69. The COT report revealed that managed money added 1,353 contracts to their long positions and liquidated 1,434 of their short positions. Commercial interests added 8,857 contracts to their long positions and also added 4,864 to their short positions. As of the latest report, managed money remains short heating oil by ratio of 1.80:1, which is down from the previous week of 1.92:1 and the ratio of 2 weeks ago of 1.97:1.

Gasoline:

For the week, December gasoline lost 2.22 cents, January 2015 -1.35, February 2015 -88 points. The COT report revealed that managed money added 5,265 contracts to their long positions and liquidated 1,695 their short positions. Commercial interests added 1,714 contracts to their long positions and also added 6,424 to their short positions. As of the latest report, managed money is long gasoline by ratio of 1.86:1, which is up from the previous week of 1.64:1 and the ratio of 2 weeks ago of 1.56:1.

Remarkably, managed money has increased their net long position over the past several weeks even though gasoline prices have fallen sharply.The current ratio of 1.86:1 is the highest since the August 19 COT tabulation date when managed money was long gasoline by ratio of 2.04:1. 

The trading range encompassed by the August 19 report was $2.6374-2.7584 and managed money was net long 28,821 contracts.The trading range encompassed by the current October 21 report was 2.1349-2, 2548, or approximately 50 cents below the trading range of the August 19 report. Interestingly, the net long position of manage money according to the latest report stands at 31,153 contracts, higher than on August 19.

It is apparent that managed money is attempting to pick a bottom in gasoline, and in our view this spells lower prices in the weeks ahead, especially since consumption of gasoline seasonally declines during late fall through the winter. The only thing worse than trying to pick a market bottom is trying to pick a market top.Additionally, it appears that WTI crude oil prices are headed lower, and this will exert pressure on gasoline prices, which are at their lowest level since November 2010 (2.0595).Looking at the monthly continuation chart there is strong support for gasoline at the 1.84 level. This area provided support between November 2009 and September 2010.

Natural gas:

For the week, December natural gas lost 16.5 cents, January 2015 -16.4, February 2015 -16.4. The COT report revealed that managed money liquidated 12,632 contracts of their long positions and added 4,084 to their short positions. Commercial interests added 2,788 contracts to their long positions and also added 219 to their short positions. As of the latest report, managed money is short natural gas for the 1st time in many months by a ratio of 1.06:1, which is a complete reversal from the previous week when they were long by a ratio of 1.02:1 and the ratio of 2 weeks ago of 1.04:1.

The only contract low for this week occurred in November natural gas at $3.558. The December contract did not make a contract low.

Thus far in the 4th quarter December ethanol is the out performer with a gain of 3.78%, December heating oil -7.26%, December Brent crude oil -9.73%, December WTI crude oil -10.26%, December gasoline -10.40%, December natural gas -11.60%.

Year to date, December ethanol is the out performer with a gain of 0.12%, December WTI crude oil -12.28%, December natural gas -14.10%, December heating oil -17.24%, December gasoline -17.37%, December Brent crude oil -18.91%.

Copper:

For the week, December copper advanced 5.00 cents. The COT report revealed that managed money liquidated 1,679 contracts of their long positions and also liquidated 1,156 of their short positions. Commercial interests added 5,511 contracts to their long positions and also added 2,546 to their short positions. As of the latest report, managed money is short copper by ratio 1.34:1, which is up slightly from the previous week of 1.31:1 but down from the ratio of 2 weeks ago of 1.64:1.

Palladium:

For the week, December palladium advanced $24.20. The COT report revealed that managed money liquidated 649 contracts of their long positions and added 213 to their short positions. Commercial interests added 13 contracts to their long positions and liquidated 403 of their short positions. As of the latest report, managed money remains long palladium by ratio of 6.63:1, which is down from the previous week of 7.40:1 and the ratio of 2 weeks ago of 7.17:1.

Platinum:

For the week, January 2015 platinum lost $10.60. The COT report revealed that managed money liquidated 163 contracts of their long positions and added 2,109 to their short positions. Commercial interests liquidated 231 contracts of their long positions and added 504 to their short positions. As of the latest report, managed money remains long platinum by ratio of 1.98:1, which is down from the previous week of 2.33:1 and the ratio of 2 weeks ago of 2.30:1.

Gold: On October 21, December gold generated a short-term buy signal, but remains on an intermediate term sell signal.

For the week, December gold lost $7.20. The COT report revealed that managed money added 9,253 contracts to their long positions and liquidated 11,039 of their short positions. Commercial interests liquidated 2,526 contracts of their long positions and added 9,930 to their short positions. As of the latest report, managed money remains long gold by ratio of 1.89:1, which is up from the previous week of 1.52:1 and the ratio of 2 weeks ago of 1.37:1.

The current ratio of 1.89:1 is the highest since the COT tabulation date of September 9 when managed money was long gold by ratio of 2.03:1.

Silver:

For the week, December silver lost 14.9 cents. The COT report revealed that managed money added 26 contracts to their long positions and also added 167 to their short positions. Commercial interests added 227 contracts to their long positions and also added 822 to their short positions. As of the latest report, managed money remain short silver by ratio of 1.12:1, which is the same as the previous week of 1.12:1, and up slightly from the ratio of 2 weeks ago of 1.07:1.

Thus far in the 4th quarter, December gold is the out performer with a gain of 1.82%, December silver +1.09%, December palladium +0.87%, December copper +0.86%, January 2015 platinum -3.91%.

Year to date, December palladium is the out performer with a gain of 8.11%, December gold +2.07%, January 2015 platinum -9.32%, December silver -11.93%.

Canadian dollar:

For the week, the December Canadian dollar advanced 34 pips. The COT report revealed that leveraged funds liquidated 6,823 contracts of their long positions and also liquidated 1,629 of their short positions. As of the latest report, leveraged funds are short the Canadian dollar by ratio of 3.26:1, which is up substantially from the previous week of 2.31:1 and almost double the ratio of 2 weeks ago of 1.75:1.

Australian dollar:

For the week, the December Australian dollar advanced 40 pips. The COT report revealed that leveraged funds liquidated 360 contracts of their long positions and added 183 to their short positions. As of the latest report, leveraged funds are short the Australian dollar by ratio of 1.45:1, which is up slightly from the previous week of 1.42:1 but up substantially from the ratio of 2 weeks ago of 1.08:1.

Swiss franc:

For the week, the December Swiss franc lost 77 pips. The COT report revealed that leveraged funds liquidated 3,558 contracts of their long positions and also liquidated 3,194 of their short positions. As of the latest report, leveraged funds are short the Swiss franc by ratio of 3.03:1, which is up from the previous week of 2.40:1 and up dramatically from the ratio of 2 weeks ago of 1.73:1.

British pound:

For the week, the December British pound lost 32 pips. The COT report revealed that leveraged funds liquidated 13 725 contracts of their long positions and also liquidated 2,530 of their short positions. As of the latest report, leveraged funds remain long the British pound by ratio 2.07:1, which is down from the previous week of 2.42:1 and the ratio of 2 weeks ago of 2.52:1.

Euro:

For the week, the December euro lost 1.10 cents. The COT report revealed that leveraged funds added 2,119 contracts to their long positions and also added 5,255 to their short positions. As of the latest report, leveraged funds are short the euro by ratio of 3.12:1, which is down slightly from the previous week of 3.15:1, but above the ratio of 2 weeks ago of 2.76:1.

Yen:

For the week, the December yen lost 122 pips. The COT report revealed that leveraged funds added 5,594 contracts to their long positions and liquidated 24,075 contracts of their short positions. As of the latest report, leveraged funds are short the yen by ratio of  2.87:1, which is down substantially from the previous week of 4.61:1 and the ratio of 2 weeks ago of 4.21:1.

Dollar index:

For the week, the December dollar index advanced 60 points. The COT report revealed that leveraged funds liquidated 6,848 contracts of their long positions and also liquidated 11,486 contracts of their short positions. As of the latest report, leveraged funds are long the dollar index by ratio of 1.38:1, which is up substantially from the previous week of 1.09:1 and the ratio of 2 weeks ago of 1.02:1.

Thus far in the 4th quarter, the December yen is the out performer with a gain of 1.41%, December Australian dollar +0.78%, December euro +0.26%, December Swiss franc +0.24%, December Canadian dollar -0.17%, December dollar index -0.28%, December British pound -0.75%.

Year to date, the December dollar index is the upper former with a gain of 6.35%, December Australian dollar +0.47%, December British pound -2.69%, December yen -2.87%, December Canadian dollar -4.70%, December Swiss franc -6.97%, December euro -8.18%.

S&P 500 (250 x):

For the week, the December S&P 500 futures contract advanced 78.70 points. The COT report revealed that leveraged funds added 3,752 contracts to their long positions and also added 1,877 to their short positions. As of the latest report, managed money is short the S&P 500 futures contract by ratio of 1.27:1, which is down from the previous week of 1.75:1 and down dramatically from the ratio of 2 weeks ago of 3.16:1.

The S&P 500 cash index is at a crucial point. On Friday, it closed at 1964.58, which is a bit more than 2 points away from its 50 day moving average of 1966.94. Additionally, for the S&P 500 to generate a short-term buy signal the low of the day must be above OIA’s key pivot point for October 24 of 1951.40. For an intermediate term buy signal to be generated the low the day must be above OIA’s key pivot point for October 24 of 1944.10. As we have reported previously, the open interest action relative to the price advance, which began on October 16 has been abysmal.

The S&P 500 cash index is 2.71% from its all-time high made on September 19 and the Dow Jones Industrial Average cash index is 3.14% away from its all-time high made on September 19. The NASDAQ 100 cash index is 1.87% from its all-time high made on September 19. The S&P 400 cash index is 5.14% from its all-time high made on July 1, 2014 and the Russell 2000 is 7.81% from its all-time high made on July 1, 2014. The New York Composite cash index is 4.72% from its all-time high made on September 4.

The performance of the major European indices have fared less well than their U.S. counterparts. For example the December Euro Stoxx 50 index is trading down 8.53% from its all-time high made on June 19 while the December German Dax 30 index is trading 10.57% down from its all-time high made on June 20. The only major index in Europe that compares favorably to the performance of the major US indices is the FTSE 100, which is down 7.42% from its all-time high made on September 19.

In order for the S&P 500 cash index to continue its rally, it must make lows above OIA’s key 2 key pivot points, and the 50 day moving average.If it is unable to accomplish this after a number of attempts, the chances are it will rollover and test the October 15 low of 1813.00.

Thus far in the 4th quarter, the Russell 2000 cash index is the out performer with a gain of 1.55%, S&P 400 cash index +0.46%, NASDAQ 100 cash index – 0.18%, S&P 500 cash index -0.39%, New York Composite cash index -1.12%, Dow Jones Industrial Average cash index -1.39%.

Year to date, the NASDAQ 100 cash index is the out performer with a gain of 12.53%, S&P 500 cash index +6.29%, S&P 400 cash index +2.59%, New York Composite cash index +1.75%, Dow Jones Industrial Average cash index +1.38%, Russell 2000 cash index -3.85%.