OPENING CALLS:
| Class III Milk Futures: | Mixed |
| Class IV Milk Futures: | Steady to 5 Higher |
| Butter Futures: | Steady to I Higher |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 3 to 5 Higher |
| Soybean Futures: | 2 to 4 Higher |
| Soybean Meal Futures: | Mixed |
| Wheat Futures: | 15 to 19 Higher |
MILK:
The meteoric rise of Class III futures was fueled by increasing cheese prices, which were triggered in part by the bullish Milk Production report. Some traders were caught short in the market and needed to buy out of their positions no matter what. This propelled the market substantially higher as many orders became market orders adding to the volatility. The contraction of the nation's dairy herd and the decline of milk production per cow may indicate a tighter milk market in the future. If this takes place, it will be interesting to see how milk plants that currently have or those planning to initiate milk production limits, will react. Higher prices and tighter milk supply will likely result in the lifting of those limits. However, with high feed prices and the soaring costs of goods and service, it may not make much difference because farmers may not push to increase cow numbers or milk production. Cow and heifer prices are fairly strong as there remains good demand. There seems to be a tighter heifer market surfacing.
CHEESE:
Cheese prices may take a breather Monday after the sharp rise in prices the last half of last week. One wonders if the increase of cheese prices later in the week was the result of the market being overdone to the downside and a price correction needed to be made or if buyers became concerned over slowing milk production and reacted by buying cheese. The October Cold Storage report will be released Monday. It is anticipated inventory will decline from September but may remain higher than a year ago.
BUTTER:
Lower butter output and strong holiday demand provided the combination needed to cause buyers to aggressively look to purchase supplies. The need to make sure they have sufficient on hand for demand as well as to increase their own inventory. The Cold Storage report Monday should show a significant decrease of inventory compared to September and a year ago.
