The Weekend Wrap will be released on January 1, which will give us time to compile market stats through December 31.
March soybeans lost 4.50 cents on volume of 125,998 contracts. Open interest declined by 7,952 contracts, which in relation to volume is approximately 150% above average, meaning that liquidation was extremely heavy. The export sales report released on Friday, showed that a total of 87,000 tons were sold for the 2012-2013 season, but there was a cancellation of 383,300 tons. The week’s sales were the lowest since the beginning of the season, and even if the cancellation had not occurred, sales would have been one of the lowest in several weeks. For now, it appears that soybean sales may be taking a breather, and this may portend dismal sales for the next month. China canceled approximately 270,000 tons this week, which comes on top of the 420,000 ton cancellation the previous week. Stand aside.
March soybean meal lost $1.80 on volume of 56,156 contracts. Total open interest increased by 77 contracts, however the January contract lost 4528 contracts of open interest. Export sales totaled 124,700 tons, which was the lowest in several weeks, but more than twice above the average weekly sales needed to meet the USDA export projections. As of the latest report, meal exports are the highest going back to the 2008-2009 season. Stand aside.
March corn lost 1.75 cents on volume of 97,548 contracts. Open interest declined by 4,471 contracts, which in relation to volume is approximately 100% above average, meaning that liquidation was heavy. Export sales registered another dismal number at 104,300 tons, and 22,500 tons of previous sales were canceled. It appears that export sales to date are the lowest in nearly 40 years. Stand aside.
March wheat lost 2.25 cents on volume of 57,888 contracts. Open interest increased by 1,095 contracts, which in relation to volume is approximately 5% below average. Export sales for the week totaled 1,009,000, which is the highest of the season, and 50% higher than the previous week. For the past 6 weeks, export sales have exceeded the USDA projection in 4 of those weeks. In previous reports, we wrote that wheat was becoming more competitive on the world market. This is occurring just as speculative shorts are entering the market en masse at the low end of the trading range. On December 27, March wheat made a new low for the move at $7.64 1/2, which is the lowest price since June 26 when wheat made a low of $7.59 3/4. Stand aside.
February crude oil lost 11 cents on volume of 307,434 contracts. Open interest declined by 6,913 contracts, which in relation to volume is average. Crude made a new high by 14 cents over the December 26 high, and yet open interest declined, which offset the increase of 6,502 on December 26. From December 11, when February crude oil made its low of $85.76 through December 27 when it made its high of $91.44, open interest has declined by 67,213 contracts. This is bearish open interest action relative to price. However, as we’ve said before crude oil has a tendency to rise into early January. The market’s performance on December 27 was quite impressive considering that the equity indices were sharply lower for good portion of the day. Additionally, if crude oil’s price continues to trade as it has been, it may generate a short-term buy signal next week. Stand aside.
February natural gas lost 1.3 cents on volume of 179,601 contracts. Open interest declined by 953 contracts, which was significantly below average. Stand aside.
March copper advanced .0035 cents on volume of 30,764 contracts. Open interest declined by 1,197, which in relation to volume is approximately 50% above average, meaning that liquidation was fairly heavy. Stand aside.
February gold gained $3.00 on volume of 111,752 contracts. Open interest declined by 568 contracts, which is minuscule and significantly below average. Gold continues to trade in a negative fashion, and there is no reason to be involved at this juncture.
March silver gained 20.5 cents on volume of 38,729 contracts. Open interest increased by 2,134 contracts, which in relation to volume is approximately 120% above average, meaning that buyers were aggressive and moving prices higher. Like gold, silver is trading negatively, and there is no reason to be involved at this juncture.
The March British pound lost 20 points on volume of 78,685 contracts. Volume was the highest since December 21, when the pound fell 1.22 cents on volume of 91,495 contracts and open interest declined by 8,160. On December 27, open interest declined by 3,079 contracts, which in relation to volume is approximately 50% above average, meaning that liquidation was heavy. During the past 4 days, three of these have had unusually heavy liquidation relative to volume.
During the past 4 trading sessions open interest has declined by 14,901 contracts while the pound has declined by 1.73 cents. This is positive price and open interest action, and the pound remains on a short and intermediate term buy signal. The low on December 27 of 1.6065, matches the low of December 11. We suspect much of the liquidation is due to managed money piling in at the top of the market, who are now liquidating. The low thus far on December 28 is 1.6075, and the pound should find support at this level. Another supportive factor is the 50 day moving average of 1.6053. Our preferred trade is to be long the euro, rather than long the British pound.
The March euro gained 17 points on volume of 154,000 contracts. Open interest increased by 260 contracts, which is minuscule and significantly below average. We are waiting for a pullback to the 1.3100-1.3150 area. The euro’s 50 day moving average is 1.2979. The market is acting very strong, but we suspect it will pullback when the equities market falls apart.
S&P 500 E mini:
The S&P 500 E mini lost 2.75 points on volume of 1,471,072 contracts. Open interest increased by 16,007 contracts, which in relation to volume is approximately 50% less than average. For the past several days, the market has been acting terribly, and a pattern of lower highs has been in the making. For example, the following are the highs of the day beginning on December 19: 1446.00, 1441.25, 1441.25 1424.50, 1425.50, 1418.50. The high on December 28 of 1416.75 completes the pattern for 7 trading days of lower highs. This is decidedly bearish. Another bearish factor is the continued dismal performance of Apple Computer, which is the stock that is undermining investor confidence. We are recommending a stand aside position because one never knows what can happen over the weekend.