OPENING CALLS:
| Class III Milk Futures: | Mixed |
| Class IV Milk Futures: | 4 to 10 Lower |
| Butter Futures: | 2 to 4 Lower |
| Corn Futures: | Mixed |
| Soybean Futures: | 3 to 5 Higher |
| Soybean Meal Futures: | Steady to $1 Higher |
| Wheat Futures: | 2 to 4 Lower |
Class III milk futures have taken a beating over the past two weeks. There has been no support from underlying spot cheese as buyers have moved to the sidelines. Class IV futures have fared better but may come under more pressure now that butter price has fallen. Just like it was not likely futures would rise forever, it is not likely they will fall forever. The market is trying to find a balance between supply and demand and price. Overall milk production is holding well with milk per cow above a year ago.
A team called the Dairy Exports Working Group (DEWG) stated that they were going to begin addressing the supply chain disruptions that are affecting dairy exports. This group is made of some members of the Port of Los Angeles, the International Dairy foods Association and the container shipping company CMA CGM. The DEWG plans on finding out how to collect and streamline dairy exports, increase rail availability, and implement a "fast lane concept" for vessels that have full or empty cargo containers. This is may not only be a help to the dairy industry but all who import and export products. This will not be an immediate solution but will take time to sort out and implement.
CHEESE:Cheese is being produced and product is available. Buyers have sufficient on hand for the time being leaving purchases on an as-needed basis. There are also some orders that have been placed and are slowly being filled for the second quarter already. This may reduce the aggressive purchasing over a short period of time as we had seen during December and the first half of January. Buyers are looking ahead to compensate for production and shipping delays.
BUTTER:The rug was pulled out from under the market Wednesday. There is no way of telling whether the decline was overdone or if it was the beginning of yet further weakness. Buyers may hold back in anticipation of lower price before stepping back into the market again. It will be interesting to see whether nonfat dry milk price will follow a similar pattern. Overnight butter futures suggest further losses Thursday.
