OPENING CALLS:
| Class III Milk Futures: | 5 to 10 Higher |
| Class IV Milk Futures: | 5 to 10 Higher |
| Butter Futures: | Steady to 1 Higher |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 2 to 3 Higher |
| Soybean Futures: | 3 to 6 Higher |
| Soybean Meal Futures: | Steady to $1 Higher |
| Wheat Futures: | 5 to 7 Higher |
MILK:
The strength of Class III milk futures is based on the perception that milk supply will tighten as cow numbers and milk per cow decline. A continued trend as such will eventually tighten the milk supply and result in lower production of dairy products. Traders pushed Class III futures significantly higher Thursday in anticipation of this as the year progresses. The underlying cash did not support the strong gains in futures Thursday. Class IV futures increased due to the strength of butter and nonfat dry milk. USDA will release the January Cold Storage report Friday afternoon, but it will have little impact on the market next week as inventory will not increase over time if milk production declines.
CHEESE:
Buyers of cheese did not react to the milk production report as some had anticipated. Buyers and sellers will take care of business as they need to. A tighter supply may have a larger impact in time, depending on demand, but buyers and sellers of the physical commodity are not speculators. It may take a little time for a higher trend to develop.
BUTTER:
Butter price seems to be finding further strength and may continue to trend higher. The cold storage report may not see much increase in inventory in January due to continued steady demand. However, the plentiful cream supply and strong butter output may add to inventory over the next few months.
