OPENING CALLS:
| Class III Milk Futures: | Steady to 5 Higher |
| Class IV Milk Futures: | 4 to 8 Higher |
| Butter Futures: | Mixed |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 1 to 2 Higher |
| Soybean Futures: | 4 to 7 Higher |
| Soybean Meal Futures: | $2 to $3 Higher |
| Wheat Futures: | 6 to 8 Higher |
MILK:
Traders were hoping stronger underlying cheese prices would develop Monday, but those hopes diminished during spot trading. However, the fact that block cheese prices did not decline, provided some hope that it may have found support. The fact that milk production is contracting due to heavier culling provides the idea that milk supply will be further reduced as time moves forward. High feed prices are squeezing profitability, forcing some farms out of business. So far, many of those cows have not been absorbed by other farms, resulting in the contraction of the national dairy herd. Cow numbers continue to remain above year earlier levels, but production per cow is declining, pulling it below a year ago. This provides some support to the market in general.
CHEESE:
Cheese prices are struggling but only until prices move to a level at which buyers will step back in to purchase supply to fill orders. There is no concern over a tight market right now. Cheese production has been strong supplying demand as well a building inventory. That is the nemesis of the market right now and is keeping price in a sideways range. Spot trading activity Monday would point to further weakness Tuesday.
BUTTER:
Butter continues to creep higher toward $2.00. Decreasing output and declining inventory is reducing supply. There is no fear of a tight supply as there remains sufficient inventory to fill demand. However, the fact that supply is below year earlier levels provides support to the market. Price will not run away to the upside, but higher price should continue to unfold.
