OPENING CALLS:
| Class III Milk Futures: | Mixed |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | Mixed |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 2 to 3 Lower |
| Soybean Futures: | 4 to 7 Lower |
| Soybean Meal Futures: | Steady to $1 Lower |
| Wheat Futures: | 6 to 8 Lower |
MILK:
It was a strong day Tuesday for Class III futures following strong buyer interest in spot cheese trading. Traders are cautious over the jump of cheese prices as the increase may spark increased selling interest as cheese plants want to limit their growth of inventory. Milk production has been steady to slightly higher. This may be impacted to some extent this week as a strong winter storm is moving through large areas of the country. There will be power outages with most of the impact stemming from that and transportation issues. The storm will be of short duration and fairly mild winter weather is forecast for most areas after that is through. USDA will release the January Milk Production report Wednesday. I estimate milk production to be 0.5% above a year ago with cow numbers down 3,000 head from December. The cow numbers will be watched closely to see if an increased culling trend is developing.
CHEESE:
The strength of cheese was somewhat surprising as there is sufficient supply for demand. However, buyers wanted to gain ownership and were willing to bid up to get it. It makes sense for buyers to pick up supply on price dips as they slowly rebuild aging programs and purchase ahead for upcoming demand. Prices will not remain at these levels indefinitely.
BUTTER:
Butter may not be quite as volatile as cheese as buyers and sellers seem comfortable at the current level. Churning is active, allowing for sufficient supply for demand as well as building inventory. USDA will release the January Cold Storage report on Friday which is expected to show a significant increase of butter supplies.
