OPENING CALLS:
| Class III Milk Futures: | Mixed |
| Class IV Milk Futures: | 6 to 12 Higher |
| Butter Futures: | 1 to 2 Higher |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 1 to 3 Lower |
| Soybean Futures: | 5 to 8 Higher |
| Soybean Meal Futures: | $1 to $2 Lower |
| Wheat Futures: | Mixed |
MILK:
USDA was friendly to milk and product prices next year as the anticipation is for lower milk production than earlier estimated. The trend points in that direction due to higher culling that has resulted from lower milk prices and higher feed prices. However, the World agricultural Supply and Demand report was bearish for corn and soybeans Tuesday, which should lower the cost of feed to some extent. The problem is that lower grain prices may be offset by higher trucking and processing costs. This would continue to impact income over feed, leaving an increase of milk prices having limited impact on profitability. One large co-op is implementing a quota on milk production, which may be detrimental for farms that have recently expanded. Traders have been more optimistic over milk prices, but that optimism will need to be supported by better cash. It is somewhat unusual to see overnight trading activity in Class IV futures, but double-digit gains took place in December and January contracts.
CHEESE:
Spot trading action Tuesday indicates the potential for further declines Wednesday. No buyers showed up with price declining on offers. However, demand is improving causing buyers could step up to take advantage of the lower prices to fill orders and increase ownership of supply. Cheese prices just cannot break out of the sideways trading range.
BUTTER:
The gain of butter price Tuesday was nice to see, but certainly does not indicate a change in trend. Supply and demand are balanced, leaving market participants confident with production and supply, leaving them doing business on an as-needed basis.
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