January soybeans gained 12.25 cents on volume of 167,402 contracts. Open interest declined by 6,143 contracts, which in relation to volume is approximately 50% above average, meaning that liquidation was heavier than usual. The November contract accounted for a loss of 10,122 contracts, and there are 18,557 contracts outstanding in the November contract as of the final October 31 report.
The crop progress report, which was released yesterday afternoon showed that 87% of the crop has been harvested, which is up from 80% the previous week. Last year this time 85% had been harvested and the five-year average for this time of year is 78%. Surprisingly, the harvest progress is about the same as last year, despite the fact that harvesting started much earlier this year. Soybeans are definitely on the upswing, but low volume shows there continues to be a lack of participation. Volume will pick up when managed money sees that the bull market is very much intact, and that soybeans are headed significantly higher. Today, we want to see soybeans close near their highs. Tomorrow, the USDA will release its export sales figures and we will provide the numbers in tomorrow’s report. Usually, these reports are issued on Thursday, but due to the the storm on the east coast, the numbers have been delayed. A move to $15.80 would constitute a breakout on the continuation chart, and would be the highest price for soybeans since early October. As this report is being compiled on November 1, January soybeans are trading 15.50 cents higher. Hold long positions with appropriate stop loss protection.
December soybean meal closed $6.20 higher on volume of 52,435 contracts. Open interest increased by 2,320 contracts, which in relation to volume is 75% above average, meaning that new commitments were heavy and longs were in control. Since October 23, price and open interest action has been acting in a bullish congruent fashion. As this report is being compiled on November 1 December soybean meal is trading $5.20 higher and has made a new high for the move at 490.00. This is the highest price since September 28. Continued to hold long positions with appropriate stop loss protection.
December corn gained 14 cents on huge volume of 317,518 contracts. Volume was the highest since October 11 when corn traded 398,255 contracts and open interest increased by 49,911 contracts while December corn advanced 36.25 cents. On October 31, open interest increased by 7,622 contracts, which in relation to volume is average. Open interest in the December contract which holds approximately 38% of total open interest declined by 6,287 contracts while the March contract gained 11,065 contracts. This reveals possible switching out of December into March as well as liquidation by longs and shorts in the December contract. The crop progress report released yesterday by the USDA showed that 91% of the crop has been harvested, versus 74% at this time last year, a five-year average of 60%. Stand aside.
December wheat gained 7.75 cents on very heavy volume of 121,398 contracts. Volume was the highest since September 28 when 164,789 contracts were traded and open interest increased by 4,294 contracts while December wheat gained 47 cents. On October 31, open interest increased by 281 contracts, which is neglible. The December contract lost 6,541 contracts of open interest, and this contract accounts for approximately 45% of total open interest. Therefore, the dominant action was liquidation as prices moved higher. Like corn, we think wheat will trade higher down the road, but this is not the time to be long.
December crude oil gained 56 cents on volume of 426,060 contracts. Open interest increased by 8,815 contracts, which in relation to volume is approximately 10% less than average. Last week, we advised clients to take profits on their long put positions. At this juncture, we see no reason to be involved in crude.
December heating oil lost .0074 cents on heavy volume of 207,389 contracts. Open interest increased by only 6 contracts. Stand aside.
December gasoline ain’t 1.48 cents on heavy volume of 212,025 contracts. This is the highest volume since September 26 when 236,370 contracts were traded and open interest declined by 5,204 contracts while gasoline advanced 5.14 cents. On October 31, open interest declined by 3,898 contracts, which in relation to volume is approximately 15% less than average. Gasoline continues to act poorly. Stand aside.
December copper gained 1.15 cents on heavier than normal volume of 64,350 contracts. Volume increased by approximately 26,000 contracts from October 30, when copper advanced 1.15 and open interest increased by 4,298 contracts. On October 31 open interest increased by only 229 contracts, which in relation to volume is approximately 75% less than average. Stand aside.
December gold gained $7.00 on volume of 130,609 contracts. Open interest increased by 3,069 contracts, which in relation to volume is average. For gold to move significantly higher, it must close above its 50 day moving average of $1735. Until that occurs, gold will trade in a sideways to lower/higher pattern. Last week, we suggested that clients write puts in out of the money December options to take advantage of this kind of market action.
December silver gained 50 cents on light volume of 32,729 contracts. Despite the low volume, buyers were aggressive and open interest increased by 1,658 contracts, which in relation to volume is slightly over 100% above average. Buyers were aggressive and in control. Like gold, we have suggested that clients write out of the money puts for December options.
The December euro lost 20 points on volume of 213,293 contracts. Open interest declined by 314 contracts. Stand aside.
S&P 500 E mini:
The S&P 500 E mini lost 0.75 on volume of 1,780,014 contracts. Open interest declined by 2,159 contracts. As this report is being compiled on November 1, the E mini is trading 14.50 higher. Maintain long puts.