OPENING CALLS:
| Class III Milk Futures: | Mixed |
| Class IV Milk Futures: | 4 to 8 Higher |
| Butter Futures: | Steady to 1 Higher |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 2 to 3 Lower |
| Soybean Futures: | 5 to 8 Lower |
| Soybean Meal Futures: | $1 to $2 Lower |
| Wheat Futures: | 2 to 4 Lower |
MILK:
Class III milk futures have taken a beating the past few days. Initial pressure stemmed from the bearish implications of the Cold Storage report. This was followed by weakness of cheese and dry whey spot prices Tuesday. Traders are grappling with milk price potential through the end of the year based on a bullish Milk Production report and bearish Cold Storage report last week. So far, bearishness has had the upper hand with November Class III futures posting the lowest close since Oct. 7 with December closing at the lowest price since Oct. 13. Overnight trade would suggest a little bounce is in order, but that may be limited due to the close of spot cheese trade, indicating the potential for further loss. Milk production is declining, but there is sufficient supply to meet both bottling and manufacturing needs.
CHEESE:
The decline of cheese prices Tuesday was a little surprising but certainly not unusual. The recent pattern has been that block cheese reaches price resistance at the top of the trading range as buyers see no need to bid higher due to plentiful supplies. By the same token, the upper level of the price range is attractive for sellers to offer more product to the market. That is what took place Tuesday. However, sellers were unable to move much product even at lower offers.
BUTTER:
Price has broken out and this may bring more buyers off the sidelines and into the market. Those that have been purchasing on an as-needed basis may now step up to gain further ownership of supply to avoid paying higher prices over the next month. Retail demand has been strong and increasing while food service demand has been steady. Further strength is expected in spot trading Wednesday.
