OPENING CALLS:
| Class III Milk Futures: | 2 to 5 Higher |
| Class IV Milk Futures: | 4 to 8 Higher |
| Butter Futures: | Steady to 1 Higher |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 1 to 2 Lower |
| Soybean Futures: | 10 to 12 Lower |
| Soybean Meal Futures: | $3 to $4 Lower |
| Wheat Futures: | Mixed |
MILK:
Class III milk futures moved to new highs Monday with the December contract closing above $22.00. It is not surprising to see strength during this time of year, but the strength of this magnitude has been unexpected. Lower milk production than a year ago and lower cheese inventory have increased buying interest. Orders need to be filled and buyers need to come to the spot market if they are unable to purchase cheese through regular channels. Milk production should be near its seasonal low, but is expected to remain below year-earlier levels through the rest of the year. The current cow numbers may be maintained but not increased due to the tight heifer replacement supply. The market is being driven somewhat by the perception of a further tightening in supply.
CHEESE:
There is potential for further strength of cheese as buyers step up to purchase rather than holding back to wait for lower prices. The sellers of cheese do not have as much to bring to the spot market as they once had. This limits any weakness causing buyers to remain aggressive.
BUTTER:
The butter price is poised to test the highs and potentially exceed the high today or during this week. Retail demand has been improving which may reduce inventory seasonally, but at a faster rate than usual. The inventory remains above a year ago which may limit the upside price potential.
