Wednesday Morning Dairy Market Update - Limited Cash Weakness is Expected

OPENING CALLS:

Class III Milk Futures:	4 to 8 Lower
Class IV Milk Futures:	Mixed
Butter Futures:	Mixed

OUTSIDE MARKET OPENING CALLS:

Corn Futures:	Steady to 1 Lower
Soybean Futures:	1 to 2 Higher
Soybean Meal Futures:	$2 to $3 Lower
Wheat Futures:	3 to 4 Lower

MILK:

Milk production is holding or increasing seasonally. Winter weather has been mild in many areas, which has kept milk production improving from the lows last year. The seasonal increase has not pushed production above a year ago, but the potential is there due to higher cow numbers. The strong gains in some states have been offset by the weakness in others due to various reasons. Even though milk production is lower than a year ago, there is sufficient supply for demand. Milk prices are expected to hold well throughout the first part of the year as demand remains steady.

CHEESE:

The weakness of cheese is expected to be short-lived as buyers will be willing to buy the weakness. Aging programs need to be restocked after the holidays and buying for immediate needs will be ongoing. Spot milk prices are increasing after the holidays leaving manufacturing plants with sufficient room to handle their milk supplies.

BUTTER:

The butter price will remain choppy and is expected to slowly trend higher similar to last year. Cream supplies are abundant but will slow at some point leaving supply and demand balanced. International demand is expected to improve by increasing the export pace.