Ag markets ended Monday mostly higher

Grain traders were probably squaring positions Monday. The corn market has recently suffered badly from prospects for a huge U.S. harvest and from U.S. dollar strength. Today’s Export Inspections result also looked rather bearish. Nevertheless, futures rose modestly today, which probably reflected widespread short-covering ahead of tomorrow’s quarterly Grain Stocks report. December corn futures gained 2.75 cents to $3.2575/bushel in late Monday action, while May bounced 2.75 to $3.47.

The Export Inspections report seemingly encouraged soy complex bulls. Soybean and meal futures declined Sunday night, but rebounded from early lows this morning. The reason for the early bounce isn’t clear, but bullish traders were probably encouraged by strong results on the USDA Export Inspections report. Widespread position squaring prior to Tuesday’s stocks report likely played a bullish role as well. November soybean futures surged 13.25 cents to $9.235/bushel at their Monday settlement, while October soyoil jumped 0.87 cents to 32.79 cents/pound, and October soymeal edged up $0.9 to $308.1/ton.

Wheat futures turned upward as well. Grain industry participants were almost surely squaring positions in the wheat markets today, since Tuesday’s Small Grains Summary and Grain Stocks reports could have major implications for the outlook. News of a sizeable Taiwanese tender for U.S. wheat probably encouraged buying. December CBOT wheat closed up 7.0 cents to $4.8125/bushel Monday afternoon, while December KC wheat rose 2.75 cents to $5.665/bushel, and December MWE wheat added 6.0 to $5.3925.

Cash strength likely boosted cattle futures. As we suspected, beef packers raised their country bids last Friday and paid $1 more (to $158/cwt) for a few Nebraska cattle late that day. That news almost surely powered the gains seen at the CME Monday. However, the lack of Southern Plains activity may bode ill for the intermediate-term outlook. October live cattle futures leapt 2.50 cents to 160.95 cents/pound as the CME pit session ended Monday, while December futures soared 2.37 to 164.47. Meanwhile, October feeder futures jumped 1.55 cents to 234.65 cents/pound and January spiked 2.45 to 228.62.

Hog futures rebounded from report-driven lows. Last Friday’s quarterly USDA Hogs & Pigs report held generally bearish implications beyond the short run, thereby sparking big losses on today’s opening. However, today’s wholesale firmness seemed to persuade traders that the outlook is better than suggested by the supply data. October hogs bounced 0.80 cents to 107.32 cents/pound in late Monday trading, while December gained 0.37 to 94.85.