January soybeans gained 11.25 cents on very light volume of 134,911 contracts. Total open interest increased by 1,002 contracts, which in relation to volume is approximately 60% below average. The November contract lost 4,471 contracts of open interest and there remains 14,086 contracts outstanding. January beans hit the highest price since October 25 when they reached $15.76. January soybeans closed at 15.60, which was 11 1/2 cents below the high.
The inability of soybeans to close near the highs was disappointing. During the past 3 days, soybeans have advanced 30 cents and the average volume per day has been 168,030 contracts. This compares to an average daily volume year to date of 212,890 contracts, and October average daily volume of 229,220 contracts. Additionally, during the past 3 days volume decreased on each day as soybeans moved higher. Low volume during an advancing market is neutral at best and slightly bearish in the short term. The export sales report was excellent and for the 2012-2013 season sales for the latest reporting week were 741,100 tons and sales for the 2013-2014 season was 19,400 and tons. One of the factors that may be holding soybeans back is that deliveries against the November contract have been heavier than expected at over 600 contracts. As this report is being written on November 2, January beans are trading 24.50 lower at 15.33 1/2, which is the lowest price since October 30 when January beans reached 15.28 1/4. While we think that soybeans are definitely moving higher, in the short term it appears the market is not ready. It looks like soybeans will need a major catalyst before they can move above their recent trading range. On November 9, the USDA will release its supply and demand report, and this will be last until January. Clients should have sell stops in accordance with their risk tolerance.
December soybean meal gained $2.10 on volume of 48,486 contracts. Total open interest increased by 62 contracts, and the December contract lost 2,211, which in relation to volume is 80% above average. Although there were increases of open interest in the back months the decline in the December contract was disappointing. December soybean meal made a new high at 490.00 but was unable to hold onto its gains and closed at $484.30. The export sales report was released the morning of November 2 and sales for the 2012- 2013 season were disappointing at 73,200 tons. Like soybeans, it is apparent the market is not ready to move significantly higher yet, and clients should have their sell stops in place.
December corn closed 4.75 cents lower on relatively heavy volume of 295,282 contracts. Total open interest increased by 7,367 contracts, which in relation to volume is average. The December contract shed 5,468 contracts of open interest, and there was a sufficient amount of new positions taken in the forward months to offset this decline. Interestingly on October 31, corn advanced 14 cents and open interest increased by 7,622, which is only a 255 contract increase above November 1 when corn declined. With the exception of October 31, corn has been acting in a bearish fashion since October 22. As this report is being written on November 2, corn is trading 10.25 cents lower. The export sales report released on November 2 showed that corn had another dismal week of sales at 167,900 tons for the 2012-2013 season. Stand aside.
December wheat closed 4 cents higher on heavy volume of 104,345 contracts. Total open interest increased by 172 contracts, but open interest in the December contract declined by 6,087 contracts, which in relation to volume is approximately 120% above average, which means that liquidation was heavier than normal. Export sales for wheat were disappointing at 362,900 tons for the 2012-2013 season which is significantly below the 525,000 tons per week necessary to meet USDA projections. Stand aside.
December crude oil gained 85 cents on volume of 421,661 contracts. Open interest declined by 7,874 contracts, which in relation to volume is approximately 15% below average. As this report is being written, December crude is trading $1.66 lower. The dollar index is sharply higher as a result of a 91 point decline in the euro. This is negatively affecting commodity markets on November 2. Stand aside.
December heating oil lost 2.91 cents on heavy volume of 229,041 contracts. Volume was higher than October 22 when 220,144 contracts were traded and December heating oil declined by 5.08 cents while open interest declined by 5,833 contracts. Volume was more than 50% above the average daily volume of 144,970 on a year to date basis. The big surprise on November 1 was that open interest increased by a massive 10,950 contracts, which in relation to volume is 90% above average, meaning that new shorts and longs were entering the market in heavy numbers, but the shorts were in control. This continues to be the case on November 2, as heating oil has broken below the major support of its 200 day moving average. Additionally, heating oil has made a new low for the move at 2.9584, which is the lowest price for it since August 7 when the low reached 2.93 on the continuation chart. This is a major violation of support. Stand aside.
December gasoline closed .0033 higher on volume of 156,934 contracts. Open interest increased by 1,472 contracts, which in relation to volume is approximately 50% less than average. As this report is being compiled on November 2, December gasoline is trading 5.01 lower. Stand aside.
December copper gained 3.45 cents on volume of 55,952 contracts. Open interest declined by 2,831 contracts, which in relation to volume is approximately 100% above average, meaning that liquidation was heavy as copper prices advanced. We have not liked the action of copper for quite some time, and continue to recommend a stand aside position.
December gold lost 3.60 on light volume of 134,855 contracts. Open interest declined by 5,920 contracts, which in relation to volume is 75% above average meaning that liquidation was heavy. We had recommended writing out of the money puts in the December contract as a way of participating in a market that was moving sideways to lower/higher. As this report is being written on November 2, gold has taken a surprising turn and is trading $40.40 lower having made a new low for the move $1674.80. This takes out previous low of 1698.70 made on October 24. We recommend that short puts be liquidated and that clients move to the sidelines.
December silver lost 6.8 cents on light volume of 33,107 contracts. Open interest increased by 86 contracts. As this report is being compiled on November 2, silver is trading $1.373 lower and has taken out the low made on October 24 of $31.535. We have previously recommended writing out of the money puts in the December contract. Clients should liquidate these positions.
The December euro lost 25 points on volume of 189,357 contracts. Open interest declined by 2,092 contracts, which in relation to volume is approximately 45% less than average. As this report is being written on November 2, the December euro is trading 93 points lower on what appears to be fairly heavy volume. The move in the euro on November 2 appears to be exerting a negative force on the entire commodity complex. Stand aside.
S&P 500 E mini:
The September S&P 500 E mini gained 16.50 points on volume of 1,706,959 contracts. Open interest declined by a massive 30,653 contracts, which in relation to volume is approximately 15% below average, but the large number long nonetheless. The decline of open interest on the move higher is extremely negative, and added to this was the terrible performance of Apple Computer on November 1. Apple barely rallied with the broad market and closed only fractionally higher. This is very bearish. Continue to maintain long puts.