OPENING CALLS:
| Class III Milk Futures: | 3 to 6 Lower |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | Mixed |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 1 to 2 Higher |
| Soybean Futures: | Mixed |
| Soybean Meal Futures: | $3 to $4 Higher |
| Wheat Futures: | 5 to 7 Higher |
MILK:
The weakness of Class III futures was a concern on Tuesday as underlying cash did not suggest there should be any price movement. Traders turned negative in expectation of limited upside potential. Supply remains sufficient for demand, leaving buyers complacent at present. Milder weather will improve milk production moving it back to where it had been before the adverse weather. USDA will release the December milk production report today. I estimate milk production to be down 0.4% from December 2022. I estimate cow numbers to be down 3,000 head from November. The trade will watch cow numbers closely to see whether culling is increasing.
CHEESE:
Cheese buyers remain complacent and are purchasing as needed for demand and to replenish their aging program. However, they are not interested in building inventory and paying for storage when it is not necessary. Sellers are not holding back, and buyers are not aggressive as they feel there is limited upside price potential for now.
BUTTER:
USDA will release the December Cold Storage report today. It is expected to show butter inventory closing the year higher than the previous year. Domestic demand has been good, but production has been strong due to the plentiful cream supply. Export demand has been substantially lower than a year ago. Price is expected to remain range-bound.
