OPENING CALLS:
| Class III Milk Futures: | Steady to 10 Lower |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | 1 to 2 Lower |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 2 to 3 Lower |
| Soybean Futures: | 2 to 4 Lower |
| Soybean Meal Futures: | $1 to $2 Higher |
| Wheat Futures: | 3 to 7 Lower |
MILK:
January and February milk were able to close above $20.00 setting new contract highs again. This certainly improves the milk price outlook. Class IV futures have already been above $20.00 for a period of time but did not close higher Monday in response to the weakness of butter. By looking at the price movements over the past two weeks, one has to believe there could be a price retracement. However, milk futures are driven by underlying cash, and as long as there is strength in underlying prices, milk futures will remain supported. Traders are becoming increasingly nervous over the current price level and time of year. For the most part, holiday orders have been filled with current buying likely for fill-in order and for the first quarter of next year. Some demand is also coming from the desire to rebuild aging programs. Milk supply is tighter in the country than it has been in quite some time. Some milk plants are indicating to their patrons that they can expand if they want to with some plants actively seeking to have farmers switch to them.
CHEESE:
Block cheese finally reached a level it had not been since Jan. 13. At the beginning of the year, block price moved from $1.6175 to $1.9625 over the course of five trading days only to fall back to $1.61 over the next eight trading days. I am not suggesting this pattern will repeat itself as market fundamentals are different. It is just something to take note of that that is what took place right after the holidays. A price retracement is certainly possible in the near-term.
BUTTER:
Butter price will remain supported as the decline yesterday was just the result of normal business taking place. Sellers wanted to sell at the best price possible and buyers were willing to buy at reduced prices. The result was the sellers were more aggressive. Cream supply is beginning to loosen a bit allowing for increased butter production.
