OPENING CALLS:
| Class III Milk Futures: | 5 to 15 Lower |
| Class IV Milk Futures: | 10 to 20 Lower |
| Butter Futures: | 2 to 3 Lower |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 3 to 5 Lower |
| Soybean Futures: | 5 to 8 Lower |
| Soybean Meal Futures: | $1 to $2 Lower |
| Wheat Futures: | 12 to 14 Lower |
MILK:
The market may have run out of steam with underlying cash reflecting a slowing of demand due to much of the holiday aggressive purchasing having now been finished. Demand will be ongoing, but the retail and food service industry may already have much of their needs on hand or already contracted. This would allow buyers to be less aggressive on the spot market. USDA will release the October Milk production report Monday afternoon. I estimate milk production to be up 1.4% from a year ago with cow numbers up 2,000 head compared to September. Milk production per cow is expected to be strong.
CHEESE:
Block cheese price has been holding well despite the weakness of barrels. It is uncertain whether blocks would bring barrels back up again or if the weakness of barrels will pull blocks lower. There seems to be sufficient fresh cheese available to the market, which may limit further upside potential at this time of year. There will be ongoing demand but increasing cheese production may be sufficient to meet demand as well as build inventory.
BUTTER:
The large decline of price Friday is likely not the end of the weakness. Buyers will hold back, waiting to see if price will follow a repeat of the previous sharp decline. Buyers will be willing to purchase but at lower prices. The question is whether the previous sharp demand was an aberration or if the recent sharp rally was an aberration. The Cold Storage report Tuesday may provide a clearer picture.
