Opening Calls:
| Class III Milk Futures: | Mixed |
| Class IV Milk Futures: | Steady to 5 Lower |
| Butter Futures: | 1 to 2 Lower |
Outside Market Opening Calls:
| Corn Futures: | 2 to 4 Higher |
| Soybean Futures: | 15 to 20 Higher |
| Soybean Meal Futures: | $3 to $6 Higher |
| Wheat Futures: | 5 to 8 Lower |
Milk:
Even though block cheese price moved higher Tuesday, the increase of Class III futures was moderate confined to single-digit gains. Overnight trade was confined to the March contract with only one contract traded 12 cents lower. Traders want to see the market move higher but remain cautious due to two major reports being released Tuesday. The January Milk Production report is expected to show strong milk output during the month. I estimate milk production to show an increase of 3.2% similar to what it was in December. This may be a bit conservative due to January having relatively mild weather allowing for good cow comfort and strong milk production. I estimate cow numbers to be up 5,000 head. The January Cold Storage report will have implications on price strength. Inventory is expected to increase from December. Both of these reports together may keep buyers of dairy products less aggressive as there will be sufficient milk and dairy products to satisfy demand.
Cheese:
Block cheese price increased the past two days erasing the losses of late last week. Price continues to remain below the sideways range it had been in during the period from mid-November through the end of December. Current fundamentals may allow price to move to that previous level, but it may need a significant change in supply and demand to push it higher. The Cold Storage report Tuesday is expected to see further growth in American cheese inventory. This would be seasonal, but bearish because it has already increased in November and December.
Butter:
Price declined after gaining the previous six consecutive sessions. This may be the beginning of a price retracement. Butter inventory is expected to show an increase on the Cold Storage report Tuesday. It may not as much as it has been due to some strong export demand, but it will be significantly higher than a year ago. Stocks could be almost 50% higher than January 2020.
