OPENING CALLS:
| Class III Milk Futures: | 2 to 10 Higher |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | Steady to 1 Higher |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | Mixed |
| Soybean Futures: | 1 to 3 Higher |
| Soybean Meal Futures: | Mixed |
| Wheat Futures: | 1 to 3 Higher |
MILK:
The action in Class III futures defied logic yesterday but higher futures do improve the outlook for milk prices. It is interesting to see higher bids than the closing prices Wednesday for contracts through July. The significant decline in spot cheese prices yesterday would normally have put substantial pressure on milk futures. However, the market did the opposite. One explanation could be that large traders knew selling would increase with the weakness. They purchased sufficient contracts to move the market higher in order to have sellers react by buying back out of their positions. This would move the market higher, allowing the larger spec traders to make a profit. This is just a theory as I have seen it happen before. All eyes will be on the spot market Thursday to see if buyers of cheese will step back into the market.
CHEESE:
Block cheese price fell 16.50 cents over the past two days, moving price back to the lowest level it had been since March 14. It is uncertain whether the price is low enough to bring buyers back into the market again. Business continues to be done out in the country. Buyers and sellers come to the spot market when they need to accomplish business outside of their usual channels.
BUTTER:
The strength of price over the past two days might be near the end again as buyers do not need to be aggressive as supply is sufficient for demand. Cream supply has tightened but not enough to impact churning activity with plants continuing to run on full schedules. Price is expected to remain rangebound.
