July soybeans lost 4.50 cents on very light volume of 129,206 contracts. Volume was the smallest since March 28 when 125,720 contracts were traded and July soybeans closed at $14.07. On April 30, total open interest declined by 5,219 contracts, which relative to volume is approximately 55% above average, meaning that there was a significant amount of liquidation on the minor decline. The May contract lost 4,470 of open interest, and July lost 3,585. As this report is being compiled on May 1, July soybeans are trading 43.25 cents lower and have made a new low for the move at 14.60.We have been cautioning clients about the long side of the bean complex, and that a correction is not only overdue, but highly desirable. As we have said in previous reports, we think there will be a terrific opportunity on the long side after soybeans have washed out speculative longs. July soybeans remain on a short and intermediate term buy signal. Stand aside.
In yesterday's report (see below), we pointed out some of our concerns regarding open interest and the disappointing volume on the price advance.
From the April 29 report:
"July soybeans made a new contract high at $15.20 1/2, but the fact remains that low volume and a decline in total open interest indicate there was light participation and not much conviction on the part of new longs.In the previous paragraph we listed days in which soybeans advanced along with their corresponding volumes for comparison purposes. Certainly on a day when soybeans made a new contract high on the strong percentage advance, volume should have picked up and total open interest should have increased."
"We think soybeans remain vulnerable to the downside and the unimpressive stats in yesterday's trading confirm our cautious approach. July soybeans remain on a short and intermediate term buy signal."