OPENING CALLS:
| Class III Milk Futures: | 5 to 15 Lower |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | Steady to 1 Lower |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | Steady to 1 Higher |
| Soybean Futures: | 8 to 11 Higher |
| Soybean Meal Futures: | $3 to $4 Higher |
| Wheat Futures: | Mixed |
MILK:
Strength in Class III milk futures was evident in nearby months Tuesday with traders remaining cautious over price potential in later contracts. Some impact will likely be seen from the severe weather recently experienced but is it not likely to have a large overall impact. Milk production is expected to exceed year-earlier levels for the first quarter and potentially the first half of next year. Many farms have a desire to expand, but that is limited due to high material costs and high cost of production. Milk prices may be lower in 2023 than this year as forecast by USDA on the last World Agricultural Supply and Demand report. Income over feed will have a large impact on milk production and cow numbers. Milk futures might trade lower prior to spot trading as some traders may liquidate positions ahead of spot trading in case cheese buyers might have reached a threshold.
CHEESE:
Cheese has had a nice run up, but buyers may not be interested in chasing the market much higher. There are mixed reports over demand moving into the end of the year. Inventory is expected to increase now that holiday buying is over. More cheese is being manufactured currently as school milk is being absorbed along with very attractive spot milk prices being taken advantage of by manufacturers.
BUTTER:
Price may slip through the end of the year as buyers are purchasing only when needed. World prices have declined which may impact export sales. Inventory may end the year similar to where they were at the end of 2021 which was unexpected earlier in the year. The price spread between butter and block cheese has narrowed substantially.
