November soybeans closed 8.25 cents lower on volume of 194,042 contracts. Open interest declined by 1,514 contracts, which was below average. We have been cautioning speculators to wait for lower prices before entering long soybean positions. As this report is being compiled on September 17, November, January, March soybeans are down the 70 cent limit with the November contract making a low of $16.69. This is the lowest price for November soybeans since August 20 when they made a low of $16.41. As indicated in the Weekend Wrap, we are looking for soybeans to bottom out in the late September, early October period. Stand aside.
October soybean meal declined by $5.90 on volume of 61,700 contracts. Open interest declined by a massive 4,600 contracts, which in relation to volume is approximately 250% above average. Like soybeans, soybean meal has been trading in a lackluster fashion, and the heavy increase of open interest on a relatively modest decline indicates the shorts are in control. As this report is being compiled on September 17, October soybean meal is down $19.20 and the December contract is down the daily $20.00 limit. Our comments about waiting until the end of September or early October time frame applies to soybean meal as well. Stand aside.
December corn closed 8.25 cents higher on volume of 192,202 contracts. Open interest increased by a very modest 1,044 contracts. As this report is being compiled, corn is trading 25.25 cents lower, and has made a new low for the move at $7.47 1/2. Per the September 16 Weekend Wrap, speculators should be on the sidelines while waiting for corn to find a bottom. Harvest pressures will weigh on the price of corn, and the COT report confirms the heavy number of speculative longs, which will beget more selling. Stand aside.
December wheat gained 22.25 cents on relatively heavy volume of 106,858 contracts. Volume was the highest since August 14 when 114,630 contracts were traded and wheat closed at $8.39 3/4. Although volume on the advance was significantly higher than usual, the open interest increase was a huge 12,806 contracts, which in relation to volume is a staggering 410% above average. The increasing volume with the massive increase in open interest is very bullish. As this report is being compiled on September 17, December wheat is trading 33.25 lower. We suspect that the downdraft in wheat is a product of lower grain prices across the board, especially corn. We believe wheat will recover before any of the other grains start moving higher.
October crude oil gained 69.00 cents on huge volume of 828,091 contracts. Volume was the highest since May 4 when crude oil traded 884,050 contracts and closed at $98.49. Possibly accounting for the large spike in volume was that crude made a new high for the move at $100.42, but closed $1.42 off the high at $99.00. Remember, tops, or temporary tops are often made on major spikes in volume and open interest. On September 14, open interest increased by 26,640 contracts, which in relation to volume is slightly above average. From August 15 through September 14, open interest has increased by a total of 171,254 contracts. while crude has advanced by $4.38. As this report is being compiled on September 17, crude oil is trading 30.00 cents lower. Stand aside.
October heating oil gained 2.82 cents on volume of 133,149 contracts. Volume declined by 1,823 contracts. The market is overbought. Stand aside.
October gasoline gained 5.34 on volume of 163,184 contracts. Open increased by a massive 11,298 contracts, which in relation to volume is 225% above average. The market is overbought, and we believe the big move in gasoline is over. Stand aside.
We will apprise readers when we see an interesting opportunity in natural gas. However, we will not be reporting on natural gas on a daily basis. Please see the September 16 Weekend Wrap for more on natural gas.
December copper closed 12.25 cents higher on volume of 61,607 contracts. Considering the magnitude of the advance, volume only increased by approximately 8,000 contracts from September 13, when December copper gained 1.75 cents and open interest declined by 146 contracts. Additionally, volume was lighter than September 12 when 73,897 contracts were traded and copper declined by .0045 on a daily range of approximately 7 cents. On September 14, open interest declined by 703 contracts, which is a small decline, but when combined with the reduced volume on a major advance into new high ground, we conclude that copper may have seen a temporary top. As indicated before, copper is massively overbought and needs to have a shakeout before it is prudent to enter on the long side.
December gold closed 60.00 cents higher on healthy volume of 208,470 contracts. Open interest increased by 6,278 contracts, which in relation to volume is average. Gold made a new high for the move at $1780.20 but closed off its highs at $1772.70. We like gold, but at current levels, it is overbought and needs to correct before it is prudent to enter long positions.
December silver lost 12.2 cents on volume of 56,292 contracts. Open interest increased by 964 contracts, which is below average. Silver is massively overbought and needs to correct before it is prudent to enter new long positions.
The December Euro gained 1.33 cents on heavy volume of 439,133 contracts. Volume declined approximately 92,000 contracts from September 13 when the Euro gained 91 points and open interest increased by 16,091 contracts. On September 14, open interest declined by 8,755 contracts, which in relation to volume is approximately 25% below average. This is the first open interest decline since September 7 when the Euro gained 1.50 and open interest declined by 2,383 contracts. As indicated in the September 16 Weekend Wrap, shorts need to get blown out before this source of of buying strength is alleviated. Stand aside.
S&P 500 E mini:
The December. S&P 500 E mini gained 8.50 points on heavy volume of 3,755,516 contracts. Volume shrank approximately 200,000 contracts from September 13, when the E mini gained 17.75 points and open interest increased by 137,106 contracts. On September 14, open interest increased by 57,831 contracts, which is approximately 60% less than average. We continue to recommend long put protection on the S&P 500 E mini or another index of your choice. Please see the September 16 Weekend Wrap for more on the S&P 500 E mini.