OPENING CALLS:
| Class III Milk Futures: | 5 to 8 Higher |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | Mixed |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 14 to 18 Higher |
| Soybean Futures: | 15 to 20 Higher |
| Soybean Meal Futures: | $10 to $13 Higher |
| Wheat Futures: | 12 to 15 Higher |
MILK:
The strength of Class III milk futures may carry over Wednesday if those who wanted to buy cheese Tuesday show up more aggressively today. Buyers may not be purchasing cheese because supply is tightening, but rather due to low prices. Now if the milk production report Wednesday and the livestock slaughter report Thursday indicate culling is increasing, cheese buyers might become a bit more aggressive. However, it may be a bit early for culling to increase significantly as the full impact of lower milk prices are yet to be felt. USDA will release the May Milk Production report Wednesday. I estimate milk production to be 0.2% above a year ago with cow numbers down 4,000 head from April. Dairy Farmers of America (DFA), the largest dairy cooperative, withdrew its membership in the International Dairy Foods Association (IDFA) due to the association moving forward with its petition to modify the federal milk marketing order system. DFA feels it is a divisive petition and could not support IDFA at this time.
CHEESE:
The continued inversion of the block/barrels spread indicates an abundance of block cheese remains in the market. Current fundamentals suggest this inversion might remain for a time as cheese production is strong due to the abundance of milk. Blocks might see further buyer interests Wednesday, but it may be short-lived.
BUTTER:
Price is near the bottom end of the trading range where buyers might become more aggressive again. There is little to get excited about in the daily spot market. Butter futures have been eroding as premium is being taken out of the market.
