Price, volume and open interest for May 23, 2014

Soybeans:

July soybeans lost 3.25 cents on light pre-holiday volume of 115,339 contracts. Total open interest increased by 5,367 contracts, which relative to volume is approximately 75% above average meaning that a battle occurred between longs and shorts and shorts were able to drive prices lower. The July contract accounted for loss of 1,991 of open interest, which makes the total open interest increase more impressive (potentially bearish). On May 22, July soybeans generated a short-term buy signal, and as is usually the case, the market has a tendency to correct from 1-3 days.

As this report is being compiled on May 27, July soybeans are trading 27.50 cents lower and is making new lows as this report is being compiled. Soybeans closed at $15.15 1/2 on Friday and the high for soybeans on May 27 is 15.15 1/4. In short, the market began declining when it reopened for the evening session at 7:00 p.m. CST on May 26 and was unable to rally above Friday's close. May 27 is the 2nd day of the correction, and we recommend waiting for a 3rd day before contemplating the initiation of bullish positions. July soybeans topped out at 15.36 3/4 (contract high) on May 22, and as of this writing, is trading approximately 48 cents from the high. Speculators have seen profits erode on the pullback from the high and undoubtedly a fair number of speculators are showing losses on positions. We will take another look at soybeans tomorrow and evaluate today's volume and open interest stats along with price action on Wednesday.

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