OPENING CALLS:
| Class III Milk Futures: | 5 to 15 Lower |
| Class IV Milk Futures: | 5 to 10 Lower |
| Butter Futures: | 1 to 2 Lower |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 6 to 14 Higher |
| Soybean Futures: | 10 to 15 Higher |
| Soybean Meal Futures: | $4 to $8 Higher |
| Wheat Futures: | 8 to 12 Higher |
MILK:
Milk futures have suffered a blow that may be difficult to overcome in the near term. Milk production is running below a year ago which should be supportive to the market. However, even with reduced milk production, cheese and butter inventories increased in May. Demand seems to have slowed below year ago levels requiring less milk to supply demand. Although milk futures show prices historically high, they are not as good considering the high cost of production. Inflation is having a significant impact on the economy with the impact potential to be more than anticipated for dairy. However, this could be temporary with cash prices being overdone to the downside. Buyers of cheese may step up to the plate at these lower levels as they balance supply with demand.
CHEESE:
The recent decline of cheese price has been swift and brutal. Buyers have stepped back as they are concerned over the level of demand going forward. Buyers had been purchasing ahead as prices increased and are now sitting on higher priced product with more on hand than potentially needed for this time of year. This leaves them less aggressive.
BUTTER:
Price weakness may be more delayed than cheese, but fundamentals are different. There is not quite as much butter in storage than cheese. Inventory in May increased from April but is not gaining on a year-over-year basis. There has been strong international demand for butter keeping supply from building. However, there has been some slowing of demand from the food service industry.
