OPENING CALLS:
| Class III Milk Futures: | Mixed |
| Class IV Milk Futures: | 4 to 8 Lower |
| Butter Futures: | Steady to 1 Lower |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 2 to 7 Lower |
| Soybean Futures: | Mixed |
| Soybean Meal Futures: | $1 to $2 Higher |
| Wheat Futures: | 7 to 10 Lower |
MILK:
The movement of milk futures Tuesday seems similar to what took place the last time Class III prices were above $25.00 for a period of time. Prices fell back as cheese prices declined. The difference is that block cheese price last time was $2.24 while barrels were at $2.21. Current block price is $2.36 with barrels at $2.3950. Prices are more in line with underlying cash now, while previously futures contained a strong premium to cash. Milk production continues to improve as spring flush is underway. Although production is lower than a year ago, there is sufficient supply for demand from both bottlers and manufacturers. USDA will release the March Milk Production report Wednesday afternoon. I estimate milk production to be down 0.6% from a year ago with increased production per cow. I estimate cow numbers to show an increase of 2,000 head from February.
CHEESE:
There was some cheese purchased on the weakness Tuesday, but buyers held back, seeing the strong interest from sellers to move product. The same might be true again Wednesday. Buyers will purchase at lower prices, requiring sellers to reduce offers to accomplish business.
BUTTER:
Buyers and sellers continue to accomplish business within a price range. The market is balanced with sufficient supply for demand as well as building inventory. Just how much inventory has grown will be seen on Friday when the March Cold Storage report is released. For now, the trend continues sideways.
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