OPENING CALLS:
Class III Milk Futures: Mixed
Class IV Milk Futures: Steady to 5 Lower
Butter Futures: Steady to 1 Lower
OUTSIDE MARKET OPENING CALLS:
Corn Futures: 1 to 3 Lower
Soybean Futures: 3 to 5 Lower
Soybean Meal Futures: $1 to $2 Lower
Wheat Futures: 10 to 14 Higher
MILK:
The continued growth of cow numbers will insure sufficient milk supplies for demand. The recent Milk Production report for June showed cow numbers down slightly from May, but that is not yet a trend. We may see more of this if drought conditions persist, and feed becomes very short in supply in some areas. Grain futures have not been in a runaway market, but price will remain higher for the upcoming year. The larger concern for some farmers will be the availability of forage for the year as hay prices in drought areas are already escalating. Overnight trading activity was a bit higher than usual, but it did not move the market much with July, August and September Class III contracts one cent lower with nothing done in Class IV futures.
CHEESE:
Blocks increased Tuesday and barrels bounced back from the lows, but that did not change the attitude of traders. The weakness of barrels solidified the idea that there may be limited upside potential for price. However, the bounce back from the lows generally would have supported futures, but such was not the case.
BUTTER:
Butter futures continue to erode the premiums they contained as traders become a bit more disillusioned with price potential through the rest of the year. Inventory should have begun to decline this month, but it will remain substantially higher than last year. The price spread between butter and cheese is now at only $0.50 with butter at risk of falling below blocks again.
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