Monday Morning Dairy Market Update - Cold Storage Report Spurs Positive Trade

OPENING CALLS:

Class III Milk Futures:	5 to 10 Higher
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Mixed
Soybean Futures:	Mixed
Soybean Meal Futures:	Steady to $1 Lower
Wheat Futures:	3 to 5 Lower

MILK:

The Cold Storage report was considered bullish to Class III prices. This was reflected in overnight trade. This does not mean that a bottom is in and milk prices will move higher, but it does indicate demand has held well and if milk supply shows signs of tightening, prices may increase. The Milk Production report showing increased milk production and higher cow numbers offset the decrease of lower cheese inventory. Butter was not quite so fortunate as inventory grew substantially in January. Producers are doing a very good job with getting increased milk production out of their cows, which is making up for some of the lower milk prices. The outlook for more corn acres and increased ending stocks by the USDA on their meeting last week may keep milk production strong. There is a correlation between corn prices and milk prices in the overall picture. USDA will release the January Agricultural Prices report Tuesday.

CHEESE:

Cheese inventory was bullish from the standpoint that stocks did not increase from the previous month in the American, Swiss and Total cheese categories. However, that may not bring buyers into the spot market aggressively due to that already being factored into the market as the report was for January and we are already a month out. Cheese prices still declined in February despite reduced supply in January. Inventory continues to remain high historically.

BUTTER:

Butter inventory in January was somewhat bearish with supply 20% above January 2022 and a gain of 21% from December. That may not push prices lower, but it may limit upside potential. Manufacturers wanted to improve inventory and with heavy cream supplies, they have been able to do just that. Business may continue to be done without much fanfare in the near term.