For Bloomberg access:{OIAR<GO>}

Corn:

December corn advanced 2.00 cents on heavier the normal volume of 404,545 contracts. Volume was the strongest since November 12 when the December contract lost 0.25 cents on volume of 549,368 contracts and total open interest increased by 6,950. On November 17, total open interest declined by 15,312 contracts, which relative to volume is approximately 25% above average meaning liquidation was heavy on the modest advance. Accounting for this was a 30,174 contract loss in the December contract. As this report is being compiled on November 18, the December contract is trading 2.00 cents lower and has not taken out yesterday’s low of 3.58 1/4. December corn remains on short and intermediate term sell signals. We have no recommendation.

Soybeans:

January soybeans advanced 4.50 cents on light volume of 122,272 contracts. Volume declined from November 16 when the January contract gained 4.25 cents on volume of 124,867 contracts and total open interest increased by 3,019. On November 17, total open interest increased again, this time by 2,188 contracts, which relative to volume is approximately 25% below average. The January contract accounted for loss of 392 of open interest. As this report is being compiled on November 18, the January contract is trading 9.75 cents lower and has made a daily low of 8.53, which is above the contract low of 8.50 made on November 10. Soybeans, soybean meal and soybean oil remain on short and intermediate term sell signals. We have no recommendation.

Sugar:

March sugar lost 40 points on volume of 101,038 contracts. Total open interest declined by a massive 7,497 contracts, which relative to volume is approximately 180% above average meaning liquidation was extremely heavy on yesterday’s substantial decline. The December contract accounted for loss of 7,687 of open interest. As this report is being compiled on November 18, the March contract is trading sharply lower again, this time by 44 points or -2.98%. Yesterday, the March contract made a high of 15.18, which was slightly below the November 16 print of 15.22. However both of these are below the high print of 15.53 made on November 3. March sugar remains on short and intermediate term buy signals. We have no recommendation.

Cocoa:

March cocoa lost $6.00 on light volume of 20,275 contracts. However, total open interest exploded higher, this time by 3,196 contracts, which relative to volume is approximately 475% above average meaning huge numbers of buyers and sellers were making commitments and sellers were able to edge the market lower.

This is the second day in a row in which open interest has increased by a substantial amount relative to volume and that prices moved by a minor amount. On November 16, the March contract gained 14.00 on volume of 23,356 contracts and total open interest increased by 2,197.

In summary, during the past two days, total open interest has increased by 5,393 contracts and prices have advanced only $8.00. This concerns us, especially since March cocoa is trading near contract highs. In our view, commercials are on the sell side and speculators on the buy. Although, we think there will be an opportunity in the long side, it is premature at the moment.

WTI crude oil:

December WTI crude oil lost $1.07 on volume of 850,629 contracts. Total open interest declined by a massive 53,954 contracts, which relative to volume is approximately 140% above average meaning liquidation was extremely heavy on the substantial decline. The December contract accounted for loss of 76,608 of open interest.

As this report is being compiled on November 18 after the release of the EIA report, the December contract is trading 45 cents lower and has made a new low for the move of 39.91, which is above the contract low of 39.22 made on August 24. At this juncture, we see nothing to impede the downward spiral, and as we have pointed out in previous reports, it is only a matter of time before a new contract low is made in WTI. The December and January contracts remain on short and intermediate term sell signals. We have no recommendation. Contract

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 0.3 million barrels from the previous week. At 487.3 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 1.0 million barrels last week, and are well above the upper limit of the average range. Finished gasoline inventories increased while blending components inventories remained unchanged last week. Distillate fuel inventories decreased by 0.8 million barrels last week but are in the middle of the average range for this time of year. Propane/propylene inventories rose 0.5 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 0.2 million barrels last week.

Dollar index:

The December dollar index advanced 16.2 points on volume of 29,991 contracts. Total open interest increased by a substantial 1,477 contracts, which relative to volume is approximately 100% above average meaning that large numbers of buyers and sellers were entering the market and buyers were able to edge the market higher.

As this report is being compiled on November 18, the December contract is trading almost unchanged on the day after making a new high for the move of 99.920, which takes out yesterday’s print of 99.835. We expect the dollar index to continue to advance until the employment report on December 4. If the employment number is strong, the dollar index should continue to gain. On the other hand, if there is a surprisingly weak number, a sharp pullback would likely occur. Of course all this is coming to a head in mid December when the Federal Reserve will decide whether or not to raise interest rates. The dollar index remains on short and intermediate term buy signals. We have no recommendation.

S&P 500 E-mini:

The S&P 500 E-mini gained 1.00 point on volume of 1,623,589 contracts. Volume was the weakest since November 11 when the December contract lost 9.00 points on volume of 1,173,196 contracts and total open interest declined by 16,713. On November 17, total open interest declined by a substantial 32,124 contracts, which relative to volume is approximately 20% below average. The market rallied to a high of 2063. 50 and then sold off into the close.

As this report is being compiled on November 18, the December contract is trading 13.50 points ¬†higher and has made a daily high of 2065.25, which is below OIA’s key pivot point for November 18 of 2067.60. For the December contract to reverse the short-term sell signal of November 13 and generate a short-term buy signal, the low of the day must be above the pivot point.

Today, is the third day of the counter trend rally, the December contract has not been able to touch the pivot point, let alone make a low above it. Yesterday, we recommended the initiation of out of the money short calls in the December S&P 500 E-mini contract and continue to think the position makes sense. We would abandon it if the December contract generates a short-term buy signal.