OPENING CALLS:
| Class III Milk Futures: | Mixed |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | Mixed |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 2 to 4 Lower |
| Soybean Futures: | 6 to 8 Higher |
| Soybean Meal Futures: | $3 to $4 Higher |
| Wheat Futures: | 3 to 5 Higher |
MILK:
Class III milk futures settled back a bit Tuesday as they had moved too high on Monday relative to underlying cash. The weakness Tuesday moved futures closer in line with underlying cash prices. Further increases of cheese or dry whey should generate further buying interest from traders. The trend has turned up for the time being, supporting higher prices. There is some concern over the rate of inflation with the August Consumer Price Index on Tuesday at 8.3% and higher than expected. The food component of the CPI increased 11.4% and the fastest rate since April 1979. This may have an impact on overall dairy demand as consumers are struggling with higher food prices. Milk production remains at seasonally low levels. Milk availably is sufficient for current demand.
CHEESE:
Cheese prices have been in an uptrend as buyers turned more aggressive. Some of the buying is related to orders that needed to be filled, while some buying is due to the steady increase of prices bringing more buyers into the market as they see prices increase. Those who had been complacent buying as needed have been caught off guard and now have joined other buyers in trying to purchase supply before prices increase further. The market feeds on itself as a panic surfaces. Hopefully, the increase of cheese is due to increased demand, otherwise there could be a void developing under the market and once current buying is satisfied, prices could fall back.
BUTTER:
Price is poised to move higher as buyers are not shy about purchasing product at current prices. High prices cure high prices and butter is trying to find a level at which demand will slow and supply begin to increase. Higher food prices all around may begin to accomplish that purpose.
