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July soybeans closed 6 cents higher on extremely light volume of 119,016 contracts. Total open interest increased by a mere 63 contracts. Open interest in the July contract declined by 3,379 contracts on volume of 65,113 contracts. The decline in total open interest since May 1 when the market topped out, has been rather meager. However, the open interest decline in the July contract has been substantial. Since topping out on May 1, July soybeans of lost $1.21 1/2 and open interest in the July contract has declined by 68,298 contracts. The open interest decline in the July contract is a healthy sign indicating that both longs and shorts were liquidating as the market was going down. Another positive was the action in the July-November soybean spread, which closed at $1.11 premium to July on May 1. On May 25, the spread had narrowed to 92 3/4 cents premium to July, which would be expected on a decline of $1.20. Despite the decline, the July contract is selling at a significant premium to new crop soybeans, which is positive.
July soybean meal lost $1.50 on very light volume of 36,447 contracts. Open interest increased by 1,002 contracts. Like soybeans, soybean meal is on an intermediate term buy signal and a short-term sell signal. Until the short term sell signal turns into a buy signal, speculators should stand aside.
July corn closed unchanged on volume of 261,545 contracts. Open interest declined by 16,080 contracts. Open interest in the July contract declined by a massive 14,410 contracts on volume of 147,037 contracts. According to the latest Commitment of Traders Report, managed money speculators are still net long corn, which means more longs need to liquidate. The market fell precipitously during the week, and as I write this on May 29, July corn is trading 18 3/4 cents lower. Although I think we are getting into the value area for the July contract, the strength of the dollar is negatively impacting commodities. It appears that the washout in corn will continue until the last long liquidates. Stand aside.
July wheat closed 17 cents higher on volume of 128,372 contracts. Open interest increased by 1,508 contracts. This is the first time since May 10 that wheat increased in price and open interest went up as well. The Commitment of Traders Report showed that managed money speculators are net long for the first time in over a year. This may be a sign that wheat has topped out, if only temporarily. Stand aside.
July crude oil gained 20 cents on extremely light volume of 273,089 contracts. Open interest declined by 1,009 contracts. Stand aside.
July gasoline closed 1.24 cents higher on volume of 158,549 contracts. Open interest declined by 5,856 contracts. The liquidation in gasoline has been nothing short of spectacular. Open interest has declined for seven days in a row and the total decline of open interest has been 23,384 contracts. On May 17, July gasoline closed at $2.8174 and on May 25 the contract closed at $2.8317. In other words, there has been heavy liquidation, yet closing prices are flat over a period of seven sessions. This is constructive price and open interest action. Despite the decline in gasoline prices which reached their peak on April 3, open interest has rarely increased on price declines, which is positive. There is support at the $2.80 level going back to early January. Gasoline generated a short term sell signal on April 17 and generated in intermediate term sell signal on May 15. Stand aside.
July copper closed 1.95 cents higher on volume of 54,133 contracts. Open interest increased by a meager 131 contracts. The market needs a significant rally before bearish positions can be implemented. Stand aside.
June gold closed $11.40 higher on heavy volume of 233,178 contracts. Open interest declined by 2,800 contracts. Open interest action relative to price continues to be negative. Consult with your investment advisor or broker before embarking upon a plan to accumulate gold for the long term at lower prices. As mentioned in the May 28 Weekend Wrap, investors and speculators alike should take a look at the ETF GDXJ which yields over 5% and is comprised of 82 small mining companies (both gold and silver). Please review the Weekend Wrap for a further analysis of the ETF.
July silver closed 22.9 cents higher on very low volume of 34,501 contracts. Open interest increased by 1,301 contracts. Stand aside.
The June Euro lost eight points on relatively heavy volume of 279,368 contracts. Open interest declined by 3,609 contracts. The market is loaded with speculative shorts, and there is a substantial risk of a short-term but extremely sharp rally. Stand aside.
S&P 500 E mini:
The June S&P 500 E mini lost 7.50 points on relatively light volume of 1,525,949 contracts. Open interest declined by 11,195 contracts. Maintain long put protection.