OPENING CALLS:
| Class III Milk Futures: | 5 to 10 Higher |
| Class IV Milk Futures: | 5 to 10 Higher |
| Butter Futures: | 1 to 2 Higher |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 3 to 5 Higher |
| Soybean Futures: | 10 to 15 Higher |
| Soybean Meal Futures: | Mixed |
| Wheat Futures: | 35 to 45 Higher |
MILK:
June Class III futures stopped just shy of $25.00 on the rally Monday. There was some follow-though strength overnight, but it was limited as the strength on Monday kept up with underlying cash. Class III and Class IV futures are moving closer together after a period when Class IV was quite a bit higher than Class III. The milk production report Monday for the month of February was neutral. Milk production was 1% below a year ago which is friendly to the market. However, cow numbers increased 3,000 head from January and production per cow was one pound higher than a year ago. This may indicate a turning of trend but is not expected to change quickly. A labor dispute has shut down operations at Canadian Pacific Railway that provides significant service into and throughout the United States. The railroad hauls a lot of grain and potash, which may impact feed and fertilizer cost significantly at a time when prices are already very high.
CHEESE:
Cheese prices could reach some resistance soon if the market reacts similarly to the last time price moved higher. Buyers will watch the reaction of demand at increased prices to see whether there will be consumer price resistance at some level. Buyers are looking ahead to demand further out but may not become much more aggressive for in the near term.
BUTTER:
Buyers seem to have turned more aggressive as more demand for cream is surfacing from ice cream manufacturers. Supply is not tight at the present time, but buyers are increasing ownership of supply for later in the year in anticipation of tighter supply and higher price. It is interesting that butter futures carry a discount to current cash.
