Now that the Commitment of Traders report is back up to speed and current for the first time in 2 months, I decided to dig into the fund long numbers for soybeans going back 6 weeks and compare them to the bean chart - where was price relative to the fund position.
The fund position has been net long for months and months, maybe 2 years. The COT publishes several variations of the trader categories, but I use the futures only/short format (no options) report, also called the legacy report. It is aggregated (as opposed to the disaggregated form). It has funds, managed money and all large speculators in one category, and merchants/producers in the other category. You can see it here: https://www.cftc.gov/dea/futures/deacbtsf.htm
For me, this is the most straight forward and simple report to analyze. The analysis is comparing fund net long and fund shorts with where price was on the bean chart at a particular time. Overall, the numbers confirm that while this was a very deep bean correction, a correction in an uptrend it is - not a larger downtrend.
The short fund position actually decreased from February 7th to March 21st. However, the total fund net long numbers decreased a bit also, meaning that open interest decreased from 717,684 on February 7th to 696,280 on March 21st. OI decreasing when a market is declining is indicative of a corrective wave (weakness), not an impulse or a strong downtrend.
The numbers do not include Wednesday and Thursday of last week, because the report is released Friday for a report ending on Tuesday. I am confidant new shorts and longs did pile on Wednesday & Thursday, because open interest increased on these days. These numbers are published next Friday.
This May soybean correction was a correction against the entire rally from last July to February. Again, the short sellers decreased their short position during this time interval. Therefore, beans should be starting another big impulse up now or very soon.
The primary reason the numbers were interesting was because the shorts did not increase during these 6 weeks and the fund net long actually increased and the gross longs added 3948 between March 14th & 21st, right before the bean price plummeted another 60+ cents.
The May bean chart has these 6 weeks in question and corresponding numbers marked and labeled on the chart so you can take your time comparing the chart to the numbers. The main point of this exercise is comparing the relative numbers across these six weeks to bean chart price, not the absolute fund positions.
Because The gap was filled in November Soybeans and Friday closed 1 tick above the top of the gap, the probability is greater for higher prices, near-term.
May Corn broke out to the upside from the inverted head & shoulders pattern on Friday, closing about 8 cents above the neckline. Corn also closed above the left neckline swing high at 644.5 and is on the way to the initial target of 670. Support is 635.
The current 3/21 COT legacy report shows the corn fund position as +59,476 net long and the longs increased +10,937 during the last week .Take a look at Friday's 2 hour updated May Corn.
May Wheat closed 28 cents higher on Friday at 690, after testing the blue trendline up above. Also, wheat closed about a dime below the last swing high. Confidence is now higher that wheat will try to trade above the blue line. Check out Friday's 8 hour wheat chart.
May Crude Oil sold off to the lower blue line at 67 (near 62%) and then rallied 2 bucks into the close to 69.20 on Friday. This small correction should be complete now, making way for a test of the channel line near the 72.30 level up above. Take a look at Friday's May Crude chart.
The May Soybean Meal (continuation) rebounded near trendline support on Friday. Here's the updated chart.
The front month and therefore the first six months of natural gas have not been able to sustain a rally thus far. The initial breakaway gap up was filled and price keeps leaking lower. Therefore, a lower low is possible. Check out the 4 hour Nat Gas chart.
