OPENING CALLS:
| Class III Milk Futures: | Mixed |
| Class IV Milk Futures: | Steady to 5 Higher |
| Butter Futures: | Mixed |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 5 to 8 Lower |
| Soybean Futures: | 8 to 14 Lower |
| Soybean Meal Futures: | $2 to $3 Lower |
| Wheat Futures: | 4 to 6 Lower |
MILK:
There is pressure on many of the outside markets Monday pushing weakness across many commodities. The concern is over the potential fail of property developer China Evergrande Group. This company has the largest debt burden of any publicly traded real estate management or development company in the world. It is believed that Beijing will let the company fail due to its unprecedented difficulties. The outcome is uncertain. However, this is not likely to have any spillover effect on dairy like it has on other markets. It would take something more widespread than that to impact dairy prices. The light trade overnight was due to the uncertainty of spot prices Monday. Traders will also look ahead to the August Milk Production report to be released Monday afternoon. I estimate milk production to be up 1.6% from a year ago with cow numbers down 2,000 head from July.
CHEESE:
The divergence of cheese prices last week will keep traders guessing this week. Although cheese prices were higher for the week, much of the trading last week showed weakness of blocks and strength of barrels. However, the moves were not very pronounced and still hold within a range.
BUTTER:
The daily price chart for spot butter could indicate that the uptrend may be over for the time being. Price will need to find buying support soon or risk negating the uptrend. Increasing retail demand and lower butter output should provide continued support for the time being.
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