OPENING CALLS:
| Class III Milk Futures: | Mixed |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | Steady to 1 Lower |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 1 to 4 Lower |
| Soybean Futures: | 6 to 9 Higher |
| Soybean Meal Futures: | $2 to $4 Higher |
| Wheat Futures: | 2 to 4 Lower |
MILK:
Class III milk futures did not respond as much as one would have guessed due to the strength of cheese prices. However, these prices are factored into the market. There are also concerns that underlying cash may be ripe for a price retracement from these levels. Traders anticipated further gains in underlying cash Tuesday, but those gains were less than expected, resulting in futures being unable to hold the gains seen prior to spot trading. The only activity in overnight trading was in March with price remaining unchanged. Bids and offers in both Class III and Class IV futures were placed at wide distances apart with no interest in changing. USDA will release the January Milk Production report Wednesday afternoon. I estimate milk production to be steady with a year ago. I estimate cow numbers to be down 4,000 head from December with production per cow higher than a year ago.
CHEESE:
Block cheese i8s knocking on the door of $2.00 again. There is nothing magical about that level other than the fact it is a psychological level that could either be a level at which buyers may not be willing to pay higher. However, price had reached $2.06 at the beginning of the year from which it fell back substantially as buyers backed away from the market. The January Cold Storage report did not trigger any reaction in overnight trade as it was neutral.
BUTTER:
The weakness of butter was a bit of a surprise Tuesday moving price to the lowest level it has been since Feb. 10. With inventory growing in January, it is possible price could slide to the $2.50 area again. Production is satisfying current demand as well as beginning to build inventory even though buyers are already purchasing for second quarter demand.
