OPENING CALLS:
| Class III Milk Futures: | 15 to 30 Lower |
| Class IV Milk Futures: | 5 to 10 Lower |
| Butter Futures: | Steady to 1 Lower |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 4 to 5 Lower |
| Soybean Futures: | 7 to 9 Lower |
| Soybean Meal Futures: | $2 to $3 Lower |
| Wheat Futures: | 4 to 5 Lower |
MILK:
Further liquidation gripped milk futures overnight with Class III contracts trading 17 to 44 cents lower. It is unlikely this pressure will be maintained until spot trading takes place. Much of the weakness is long liquidation as the inability of cheese prices to move higher yesterday brings back memories of steady prices -- meaning price resistance rather than support. Some traders were not willing to wait until further direction was set by underlying cash but felt the need to get out while they may still have some profit. Fundamentals of the market have not suddenly changed. Milk production remains at seasonally low levels with demand for cheese showing increases in certain varieties. Bottled milk demand has been holding steady.
CHEESE:
The increase of cheese prices over the past two weeks has held, giving the impression the market did not run up only on emotion. Buyers and sellers are waiting to see who will blink first. Manufacturers may not be willing to sell aggressively to move product as their supply is tightening. This may keep prices supported but upside potential limited.
BUTTER:
The recent weakness has not been totally surprising as demand may be impacted by record prices. However, price is not expected to decline very much as inventory remains lower than a year ago and could potentially tighten further by the end of the year. Price is trying to find a level at which demand may slow and record prices may be accomplishing that task.
