OPENING CALLS:
| Class III Milk Futures: | 5 to 10 Lower |
| Class IV Milk Futures: | 20 to 30 Lower |
| Butter Futures: | Mixed |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 12 to 16 Lower |
| Soybean Futures: | 10 to 14 Lower |
| Soybean Meal Futures: | $4 to $4 Lower |
| Wheat Futures: | 45 to 55 Lower |
MILK:
Milk futures may not see much upside potential unless there is a definite turn in the underlying cash market. That does not seem likely at the present time. The increase of barrel cheese has had limited influence. The weakness of butter has put substantial pressure on Class IV milk. It is very unusual to see trading activity in Class IV futures overnight, but there were five contracts traded in December with price down 33 cents. The current weakness shows slowing interest due to buyers already having prepared for the holidays by purchasing ahead. This leaves limited interest at the present time. With milk production increasing seasonally, more milk is available for bottling and manufacturing. Ongoing demand is a concern during and after the holidays. The Fed is expected to raise interest rates 0.75 percentage points Wednesday, which will continue to impact consumer buying power.
CHEESE:
Cheese prices have limited upside potential and may see lower levels. Cheese inventory is large and is expected to end the year at a higher level than last year. Cheese production is increasing as more milk becomes available, keeping sufficient supply available in the country. Components are higher than a year ago, improving cheese yield.
BUTTER:
No buyers showing up in the spot market Tuesday with 11 offers remaining at the close. This does not bode well for price Wednesday as further weakness might be seen. The decline over the past two days has been a sight to behold, but there may be more to come. High price has accomplished the task of slowing demand. The fear of a shortage triggered increased purchasing as buyers and consumers stocked up. That frenzy has passed.
