OPENING CALLS:
| Class III Milk Futures: | Steady to 5 Lower |
| Class IV Milk Futures: | 4 to 8 Higher |
| Butter Futures: | Steady to 1 Higher |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 2 to 4 Lower |
| Soybean Futures: | Mixed |
| Soybean Meal Futures: | Steady to $1 Lower |
| Wheat Futures: | 6 to 9 Lower |
MILK:
Milk futures continued higher Monday, posting substantial gains in some contracts. Futures exceeded the strength of underlying cash the past few days as optimism is growing over stronger cash as the year progresses. Milk production continues to run below a year ago and is expected to remain that way. The bigger question is whether demand will remain strong or if higher food and fuel prices will impact consumer spending in some areas. The impact on the demand for dairy products is uncertain, but historically a recession does impact demand to some extent. If this is the case, lower milk production will not mean continued higher milk prices for the farm. Both domestic and international demand will need to remain strong. The Global Dairy Trade auction Tuesday should provide an idea of world demand.
CHEESE:
Prices really have not moved very much over the past two weeks, but Class III milk futures have increased significantly. It will be interesting to see if cheese prices follow suit or if they remain near the current price level for a period of time. Buyers may not be very aggressive as they remain concerned over ongoing demand strength.
BUTTER:
Price breaking out and moving to the highest level since September 2015 provides support not only for Class IV futures but Class III futures as well. There is some impact of butter in the calculation of the Class III price. It is also likely the strength of butter could provide support to cheese as well. Buyers have been aggressively purchasing for orders later in the year as well as for anticipated demand later in the year. This will not continue indefinitely.
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