OPENING CALLS:
| Class III Milk Futures: | 15 to 20 Higher |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | Mixed |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 1 to 2 Higher |
| Soybean Futures: | 4 to 5 Higher |
| Soybean Meal Futures: | $2 to $3 Lower |
| Wheat Futures: | 7 to 9 Higher |
MILK:
It was surprising to see the strength overnight in the December, January and February Class III futures contracts. Trading activity was large for an overnight market. The cold storage report should not have triggered buying interest as inventory followed the seasonal decline with cheese stocks lower than last year, and butter stocks higher like the September report. Cheese buyers are not likely to react to the cold storage report. Sufficient milk is available and will remain that way as milk output improves seasonally. However, the strength of blocks on Monday with sellers holding back may indicate the same may take place Tuesday. Some support could stem from the discovery of the New World screwworm in Mexico that will restrict cattle imports. This is a concern for the entirety of the livestock industry.
CHEESE:
The increase in the block cheese price on Monday may indicate sellers may hold back in anticipation as buyers could turn more aggressive as holiday demand improves and orders need to be filled. It may not be a turn in trend, but could provide support keeping the market from further weakness.
BUTTER:
It is uncertain how low the butter price will move. Further weakness is expected in light of October inventory, remaining 11% above a year ago. Buyers see no need to be aggressive and continue to wait for lower prices to increase ownership. Much of the need for butter for the holidays has been shipped. The strong churning schedules leave manufacturers wanting to move supply rather than build inventory further.
