OPENING CALLS:
| Class III Milk Futures: | Mixed |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | Steady to 1 Higher |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 1 to 2 Lower |
| Soybean Futures: | 6 to 8 Lower |
| Soybean Meal Futures: | $3 to $4 Lower |
| Wheat Futures: | 4 to 6 Lower |
MILK:
Milk futures seemed to be in a holding pattern with limited impact seen from stronger underlying cash Tuesday. Traders remain somewhat bearish on the Class III market, leaving price increases difficult to unfold much less a higher trend to develop. Demand for cheese is good but has slowed since a few weeks ago. Class IV futures are in a better position with stronger support seen in the butter market. The weather continues to remain good for cow comfort, which keeps feed intake strong. Milk components are reported to be higher than usual for this time of year. Higher components improve cheese yield. USDA will release the January Milk Production report Wednesday afternoon. I estimate milk production to be 0.4% below a year ago with cow numbers down 2,000 head from December.
CHEESE:
Block and barrel prices narrowed the gap Tuesday and may reduce the price spread further Wednesday. However, cheese prices are not expected to move very much in the near term. Slower demand and sufficient supply will keep manufacturers moving cheese to the market to limit the increase in inventory.
BUTTER:
The butter price has been heading back up to the recent high at the end of January. The market is supported and may continue to slowly trend higher. Sellers have not been quite as adamant about moving supply and seem to be interested in building some inventory as a hedge against potentially higher prices as the year progresses.
