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The time frame for this week’s Commitments Of Traders Report is Wednesday August 27 – Tuesday September 2.

On Thursday, September 11, the USDA will release its World Agriculture Supply Demand report (WASDE).

Soybeans and corn are entering the period when frost scares occur. A major freeze could be a game changer, especially with large numbers of speculative shorts in grain markets. 

The Greenhaven Continuous Commodity Index made its low this week at 25.74, and appears headed to the 2014 low of 25.32 made in early January. The 52-week low of 25.09 was made on November 19, 2013. The Greenhaven index is composed of 17 commodities that are equally weighted and therefore the index reveals the trend of the commodity complex without the bias of indices that give weight to a particular group. Additionally, it is a tradable index and averages turnover of 53,000 shares per day. In short, the index reveals that being on the long side of the commodity complex has been a losing proposition for the past 19 weeks. OIA has recommended a sideline whenever bearish positions could not be initiated at the desired level. However, we think there will be terrific opportunities on the long side for a number of commodities, however it may take a couple of months before they develop.

Soybeans:

For the week, September soybeans lost 4.00 cents, November -2.75, January 2015 -4.25. The COT report revealed that managed money liquidated 646 contracts of their long positions and added 2,883 to their short positions. Commercial interests added 7,253 contracts to their long positions and added 816 to their short positions. As of the latest report, managed money is long soybeans by ratio of 1.24:1, which is down from the previous week of 1.28:1 and the ratio of 2 weeks ago of 1.39:1.

The ratio of 1.24:1 is the lowest of the current bear market.

Soybean meal:

For the week, September soybean meal lost $3.40, October -5.80, December -1.60. The COT report revealed that managed money added 12,532 contracts to their long positions and also added 736 contracts to their short positions. Commercial interests liquidated 513 contracts of their long positions and added 13,855 to their short positions. As of the latest report, managed money is long soybean meal by ratio of 3.19:1, which is up substantially from the previous week of 2.74:1, but down from the ratio of 2 weeks ago of 3.24:1.

Soybean oil:

For the week, September soybean oil advanced 31 points, October +27, December +34. The COT report revealed that managed money added 2,314 contracts to their long positions and also added 4,100 to their short positions. Commercial interests liquidated 12 contracts of their long positions and added 833 to their short positions. As of the latest report, managed money is short soybean oil by ratio of 1.27:1, which is up slightly from the previous week of 1.25:1 and the ratio of 2 weeks ago of 1.22:1.

Corn:

For the week, September corn lost 12.50 cents, December -8.75, March 2015 -9.00. The COT report revealed that managed money added 6,100 contracts to their long positions and liquidated 3,793 contracts of their short positions. Commercial interests liquidated 21,822 of their long positions and also liquidated 14,848 of their short positions. As of the latest report, managed money is long corn by ratio of 1.34:1, which is up slightly from the previous week of 1.30:1 and the ratio of 2 weeks ago of 1.33:1.

Chicago wheat:

For the week, September Chicago wheat lost 18.75 cents, December -28.25, March 2015 – 29.50. The COT report revealed that managed money liquidated 1,685 contracts of their long positions and added 3,663 to their short positions. Commercial interests liquidated 6,349 contracts of their long positions and also liquidated 8,046 of their short positions. As of the latest report, managed money remain short Chicago wheat by ratio of 1.68:1, which is up from the previous week of 1.59:1 and the ratio of 2 weeks ago of 1.65:1.

Kansas City wheat:

For the week, September Kansas City wheat lost 6.50 cents, December -14.25, March 2015 -16.25. The COT report revealed that managed money added 1,060 contracts to their long positions and also added 235 contracts to their short positions. Commercial interests liquidated 1,555 contracts of their long positions and also liquidated 2,350 of their short positions. As of the latest report, managed money remains long Kansas City wheat by a ratio of 1.59:1, which is up slightly from the previous week of 1.56:1, but down from the ratio of 2 weeks ago of 1.72:1.

Thus far in the 3rd quarter, December soybean meal is the out performer with a loss of 4.98%, December Chicago wheat -10.53%, December Kansas City wheat -11.04%, November soybeans -11.73%, December corn -16.28%, December soybean oil -17.04%.

Year to date, December soybean meal is the out performer with a loss of 0.20%, December Kansas City wheat -6.09%, November soybeans -10.0%, December Chicago wheat -16.43%, December soybean oil -18.94%, December corn -20.93%.

Cotton:

For the week, December cotton lost 1.52 cents, March 2015 -2.87, May 2015 -2.86. The COT report revealed that managed money added 1,530 contracts to their long positions and also added 2,109 contracts to their short positions. Commercial interests added 1,127 contracts to their long positions and liquidated 257 of their short positions. As of the latest report, managed money is short by a ratio of 1.00.2:1, which is a complete reversal from the previous week when managed money was long by ratio of 1.01:1.         Two weeks ago, managed money was short by ratio of 1.10:1.

We want to call your attention to the spread action in the December 2014 and March 2015 contracts. This week, the December contract closed at a 17 point premium to March 2015. This is potentially a bullish development. On August 22, December cotton generated a short-term buy signal and remains on this signal, even though it has declined 1.87 cents from the August 22 close. On August 29, we recommended the liquidation of bullish positions. If December cotton is to generate a short-term sell signal, the high of the day must be below OIA’s key pivot point of 64.40. Stand aside.

Sugar #11:

For the week, October sugar lost 49 points, March 2015 -21, May 2015-11. The COT report revealed that managed money added 1,873 contracts to their long positions and also added 361 to their short positions. Commercial interests liquidated 5,073 contracts of their long positions and added 3,387 to their short positions. As of the latest report, managed money is short sugar by ratio of 1.05:1, which is the same as the previous week (1.05:1), but slightly below that of 2 weeks ago 1.08:1.

Coffee:

For the week, December coffee lost 3.15 cents, March 2015 -3.00, May 2015 -2.75. The COT report revealed that managed money added 1,598 contracts to their long positions and liquidated 356 of their short positions. Commercial interests liquidated 700 contracts of their long positions and added 1,564 contracts to their short positions. As of the latest report, managed money is long coffee by ratio of 8.34:1, which is up substantially from the previous week of 7.62:1 and the ratio of 2 weeks ago of 7.42:1.

Cocoa: On September 5, December cocoa generated a short-term sell signal, but remains on an intermediate term buy signal.

For the week, December cocoa lost $127.00, March 2015 -121.00, May 2015-111.00. The COT report revealed that managed money added 2,863 contracts to their long positions and liquidated 81 of their short positions. Commercial interests added 128 contracts to their long positions and also added 1,980 to their short positions. As of the latest report, managed money remains long cocoa by ratio of 3.93:1, which is up somewhat from the previous week of 3.81:1, but down slightly from the ratio of 2 weeks ago of 3.97:1.

The deflationary cycle gripping almost all commodities has now cast its spell on cocoa. December cocoa topped on August 27 at 3,300 per ton and since then has fallen to a low of 3,094 on September 5. December cocoa made its high close of 3,260 on August 18 and closed at 3,211 on August 27 when December cocoa made its contract high at 3,300. From August 27 through September 4, which is the most recent day for final open interest stats, total open interest increased by 1,699 contracts. This is bearish open interest action relative to the price decline, and confirms that speculators are not liquidating as prices move to their lowest level since July 23 (3,095). From September 2 through September 5, December cocoa has declined each day.The large net long position of managed money will fuel the continued downside move. Wait for a 1-3 day counter trend rally to establish bearish positions.

Thus far in the 3rd quarter, December coffee is the out performer with a gain of 10.83%, December cocoa -0.74%, December cotton -12.52%, October sugar -16.71%.

Year to date, December coffee is the out performer with a gain of 64.90%, December cocoa +14.38%, October sugar -12.02%, December cotton – 18.0%.

Live cattle: On September 2, December cattle generated a short and intermediate term buy signal.

For the week, October live cattle advanced 8.33 cents, December +6.97, February 2015 +4.60. The COT report revealed that managed money added 1,578 contracts to their long positions and also added 870 to their short positions. Commercial interests liquidated 233 contracts of their long positions and also liquidated 3,283 of their short positions. As of the latest report, managed money is long live cattle by ratio of 7.88:1, which is down from the previous week of 8.29:1 and down dramatically from the ratio of 2 weeks ago of 10.67:1.

The current ratio of 7.88:1 is the lowest since the July 29 report when managed money was long live cattle by ratio of 6.92:1. This past week, December cattle closed at a premium of 1.72  cents over February 2015 cattle and previously had been selling at a discount. Additionally, the February 2015-April 2015 spread increased by 1.42 cents. This spread was selling at a slight premium in the week prior. The spread action in the aforementioned pairs is bullish. However, October cattle remains at a discount to December, which provides an opportunity to initiate bull spreads with much lower risk than being long in a single contract month. The October contract should gain relative to forward months if cattle continues to move higher.

Lean hogs: On September 2, December hogs generated a short-term buy signal, but remains on an intermediate term sell signal.

For the week, October lean hogs advanced 7.50 cents, December +3.45, February +60 points. The COT report revealed that managed money liquidated 279 contracts of their long positions and also liquidated 4,201 of their short positions. Commercial interests added 1,978 contracts to their long positions and also added 5,331 to their short positions. As of the latest report, managed money is long lean hogs by ratio 4.25:1, which is up substantially from the previous week of 3.27:1, but about the same as the ratio 2 weeks ago of 4.16:1.

Note that the increase in this week’s ratio was due primarily to the liquidation of short positions. Like cattle, the safest way to trade hogs is through bull spreads (long October-short December or February).

Thus far in the 3rd quarter, December live cattle is the out performer with a gain of 4.46%, October live cattle + 4.09%, December lean hogs -3.19%, October lean hogs -7.27%.

Year to date, October lean hogs is the out performer with a gain of 26.12%, December live cattle +22.07%, October live cattle +21.85%, December lean hogs +20.06%.

WTI crude oil: 

For the week, October WTI crude oil lost $2.67, November – 2.31, December -1.97. The COT report revealed that managed money liquidated 2,447 contracts of their long positions and added 11,089 contracts to their short positions. Commercial interests liquidated 8,233 contracts of their long positions and also liquidated 9,401 of their short positions. As of the latest report, managed money is long WTI crude oil by ratio of 3.39:1, which is down substantially from the previous week of 4.01:1 and the ratio of 2 weeks ago of 4.07:1.

We reviewed our records going back to September 3, 2013 and could not find a ratio lower than 4.21:1 made on January 21, 2014. In short, managed money is as bearish today as they have been during the past year.

Heating oil:

For the week, October heating oil lost 4.09 cents, November -4.09, December -4.09. The COT report revealed that managed money liquidated 2,133 contracts of their long positions and added 2,561 contracts to their short positions. Commercial interests liquidated 934 contracts of their long positions and added 1,955 to their short positions. As of the latest report, managed money is short heating oil by ratio of 1.50:1, which is up from the previous week of 1.33:1 and the ratio of 2 weeks ago of 1.16:1.

Gasoline:

For the week, October gasoline lost 3.95 cents, November -4.79, December -5.53. The COT report revealed that managed money added 3 contracts to their long positions and also added 1,541 to their short positions. Commercial interests liquidated 6,381 contracts of their long positions and also liquidated 7,253 of their short positions. As of the latest report, managed money is long gasoline by ratio of 1.53:1, which is down from the previous week of 1.60:1 and down substantially from the ratio of 2 weeks ago of 2.04:1.

Similar to WTI crude oil, we reviewed our records going back to September 3, 2013 and the lowest ratio we could find occurred on November 5, 2013 when managed money was long gasoline by ratio of 2.88:1. In short, managed money is extremely bearish on gasoline and much more bearish than crude oil. However, gasoline has outperformed WTI in the 3rd quarter (-8.81% versus WTI -10.02%). Year to date, WTI is outperforming gasoline

Natural gas: On September 3, October natural gas generated a short-term sell signal, which reversed the short-term buy signal of August 28. October natural gas remains on an intermediate term sell signal.

We are reprinting reports on natural gas from August 28 through September 3, which chronicles our analysis of natural gas in this time frame. This is a separate report and will be available later today.

For the week, October natural gas lost 27.2 cents, November -26.9, December -25.7. The COT report revealed that managed money added 6,292 contracts to their long positions and also added 12,261 to their short positions. Commercial interests added 7,199 contracts to their long positions and also added 4,908 to their short positions. As of the latest report, managed money is long natural gas by ratio of 1.07:1, which is down from the previous week of 1.10:1 and the same as the ratio of 2 weeks ago of 1.07:1.

Although natural gas generated a short-term sell signal on September 3, we are seeing signs backwardation is occurring in the forward months and the prime example of it took place this past week as prices declined. For example, from September 2 through September 5, October natural gas lost 4.06% and November – 4.53%. However the January 2015 contract lost 5.82% and March 2015 -5.85% even though the January and March contracts sell at a premium to October and November. This tells us as fall and winter approaches, natural gas will likely trade at much higher prices.

Thus far in the 3rd quarter, October ethanol is the out performer with a gain of 4.74%, October heating oil -5.84%, November Brent crude oil -8.81%, October gasoline -8.91%, October WTI crude oil -10.02%, October natural gas -14.35%.

Year to date, October ethanol is the out performer with a gain of 18.71%, October WTI crude oil -0.51%, October gasoline -2.69%, October Brent crude oil -4.99%, October heating oil -5.96%, October natural gas -8.63%.

Copper:

For the week, December copper advanced 90 points. The COT report revealed that managed money liquidated 6,049 contracts of their long positions and added 4,708 to their short positions. Commercial interests added 97 contracts to their long positions and liquidated 7,601 of their short positions. As of the latest report, managed money remains long copper by ratio of 1.27:1, which is down substantially from the previous week of 1.90:1 and down only slightly from the ratio of 2 weeks ago of 1.35:1.

Palladium:

For the week, December palladium lost $18.10. The COT report revealed that managed money added 866 contracts to their long positions and liquidated 97 of their short positions. Commercial interests liquidated 125 contracts of their long positions and also liquidated 302 of their short positions. As of the latest report, managed money is long palladium by ratio of 11.94:1, which is up from the previous week of 11.11:1 and the ratio of 2 weeks ago of 10.30:1.

Platinum:

For the week, October platinum lost $13.70. The COT report revealed that managed money added 2,724 contracts to their long positions and also added 1,751 to their short positions. Commercial interests liquidated 206 contracts of their long positions and added 87 to their short positions. As of the latest report, managed money is long platinum by ratio of 5.15:1, which is down from the previous week of 6.31:1 and down dramatically from the ratio of 2 weeks ago of 17.17:1.

Gold:

For the week, December gold lost $20.10. The COT report revealed that managed money liquidated 1,892 contracts of their long positions and added 16,372 to their short positions. Commercial interests added 1,314 contracts to their long positions and liquidated 2,434 of their short positions. As of the latest report, managed money is long gold by ratio of 2.18:1, which is down dramatically from the previous week of 3.20:1 and the ratio of 2 weeks ago of 5.10:1.

The current ratio of 2.18:1 is the lowest since the COT report of June 17 when managed money was long gold by ratio of 1.89:1. Note that the gold ratio of 2.18:1 is considerably lower than platinum (5.15:1) even though platinum has been underperforming gold during the 3rd quarter and year to date

Silver:

For the week, December silver lost 33.6 cents. The COT report revealed that managed money added 854 contracts to their long positions and also added 7,396 to their short positions. Commercial interests liquidated 1,978 contracts of their long positions and also liquidated 3,555 of their short positions. As of the latest report, managed money is long silver by ratio of 1.21:1, which is down from 1.50:1 the previous week and 1.65:1, the ratio of 2 weeks ago.

The current ratio of 1.21:1 is the lowest since June 17 when managed money was long silver by ratio of 1.20:1.

Thus far in the 3rd quarter, December palladium is the out performer with a gain of 5.60%, December copper -0.95%, December gold -4.51%, October platinum -5.29%, December silver -9.05%.

Year to date, December palladium is the out performer with a gain of 23.31%, December gold +5.26%, October platinum +2.31%, December silver – 1.58%, December copper -5.57%.

Canadian dollar:

For the week, the September Canadian dollar lost 9 pips. The COT report revealed that leveraged funds liquidated 1,560 contracts of their long positions and also liquidated 5,484 of their short positions. As of the latest report, leveraged funds are short the Canadian dollar by ratio of 1.19:1, which is down from the previous week of 1.37:1 and the ratio of 2 weeks ago of 1.27:1.

Australian dollar: If the September Australian dollar can make a daily low above OIA’s key pivot point of 93.32, a short and intermediate term buy signal will be generated.

For the week, the September Australian dollar advanced 46 pips. The COT report revealed that leveraged funds added 5,054 contracts to their long positions and liquidated 1,379 of their short positions. As of the latest report, leveraged funds are long the Australian dollar by ratio of 3.54:1, which is up from the previous week of 3.12:1 and the ratio of 2 weeks ago of 2.78:1.

Swiss franc:

For the week, the September Swiss franc lost 1.46 cents. The COT report revealed that leveraged funds added 1,674 contracts to their long positions and also added 1,709 to their short positions. As of the latest report, leveraged funds are short the Swiss franc by ratio of 2.02:1, which is down from the previous week of 2.19:1 and the ratio of 2 weeks ago of 2.59:1.

British pound:

For the week, the September British pound lost 2.32 cents. The COT report revealed that leveraged funds liquidated 1,390 contracts of their long positions and added 1,836 to their short positions. As of the latest report, leveraged funds are long the British pound by a ratio of 1.86:1, which is down from the previous week of 1.95:1 and the ratio of 2 weeks ago of 2.06:1.

Euro:

For the week, the September euro lost 1.76 cents. The COT report revealed that leveraged funds added 9,227 contracts to their long positions and also added 10,268 to their short positions. As of the latest report, leveraged funds are short the euro by ratio of 3.07:1, which is down from the previous week of 3.42:1, but up from the ratio of 2 weeks ago of 2.97:1.

Yen:

For the week, the September yen lost 88 pips. The COT report revealed that leveraged funds liquidated 5,340 contracts of their long positions and added 7,928 to their short positions. As of the latest report, leveraged funds are short the yen by ratio of 4.92:1, which is up substantially from the previous week of 3.85:1 and the ratio of 2 weeks ago of 3.32:1.

Dollar index:

For the week, the September dollar index advanced 97 points. The COT report revealed that leveraged funds liquidated 2,395 contracts of their long positions and also liquidated 3,119 of their short positions. As of the latest report, leveraged funds remain short the dollar index by ratio of 1.32:1, which is the same as the previous week (1.32:1) and the ratio of 2 weeks ago of 1.30:1.

On July 16, the September dollar index generated a short and intermediate term buy signal. From July 16 through September 5, the September dollar index has rallied 3.18 points, + 3.94%. Remarkably, during this period manage money has remained net short and the ratio has changed, but not by much.

For example, on July 15, the Commitments of Traders report revealed that leveraged funds were short the dollar index by a ratio of 1.45:1, or a net short position of 5,767 contracts. However, “Nonreportable” traders were long by a ratio of 4.01:1 in the July 15 report, or a net long position of 6,348 contracts. By September 2, leveraged funds remained short by ratio of 1.32:1, or a net short position of 11,402 contracts.”Nonreportable” traders were long by ratio of 5.58:1, or a net long position of 8,041 contracts.

We took a look at the weekly continuation chart for the dollar index, and the next major area of resistance is 84.965, which was the high the week of July 8, 2013. The previous week, the dollar index reached 84.930. The high for the dollar index going back 5 years occurred during the week of June 7, 2010 when it printed 88.80. There is little resistance from the current price to the July 8, 2013 high. However, the first indication the dollar index may have reached a top, or temporary top will likely occur when leveraged funds assume a net long position.

From the July 20 Weekend Wrap:

“The 50 day moving average of the cash dollar index has crossed above the 200 day average and this is likely to occur in the September contract during the next couple of weeks. Dollar strength is negative for commodities in general and precious metals in particular.”

Thus far in the 3rd quarter, the September dollar index is the out performer with a gain of 4.99%, September Australian dollar -0.53%, September Canadian dollar -1.85%, September yen -3.62%, September British pound -4.48%, September Swiss franc -4.82%, September euro -5.40%.

Year to date, the September Australian dollar is the out performer with a gain of 6.77%, September dollar index +4.07%, September yen +0.04%, September British pound -1.22%, September Canadian dollar -1.77%, September Swiss franc -4.74%, September euro -6.04%.

S&P 500 (250 x):

For the week, the September S&P 500 futures contract advanced 4.60 points. The COT report revealed that leveraged funds added 963 contracts to their long positions and also added 2,948 to their short positions. As of the latest report, leveraged funds remain short the S&P 500 futures contract by ratio of 1.95:1, which is up from the previous week of 1.84:1 and the ratio of 2 weeks ago of 1.60: 1.

Thus far in the 3rd quarter, the NASDAQ 100 cash index is the out performer with a gain of 6.25%, S&P 500 cash index +2.42%, Dow Jones Industrial Average cash index +1.85%, New York Composite cash index +0.86%, S&P 400 cash index +0.49%, Russell 2000 cash index -1.91%.

Year to date, the NASDAQ 100 cash index is the out performer with a gain of 13.86%, S&P 500 cash index +8.62%, S&P 400 cash index +7.26%, New York Composite cash index +6.47%, Dow Jones Industrial Average +3.38%, Russell 2000 cash index +0.56%.