OPENING CALLS:
| Class III Milk Futures: | 4 to 6 Lower |
| Class IV Milk Futures: | 2 to 4 Lower |
| Butter Futures: | Mixed |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | Mixed |
| Soybean Futures: | 4 to 6 Higher |
| Soybean Meal Futures: | Steady to $1 Higher |
| Wheat Futures: | Steady to 1 Lower |
MILK:
Class III milk futures took a hit on Monday while Class IV futures moved higher. It made sense that Class III futures would be lower due to the weakness of cheese. The gains in Class IV futures were a bit of a surprise as butter declined. Traders seemed to be focused on the increase in nonfat dry milk. Likely, milk futures will be choppy in the near term unless demand improves, prompting buyers to become more aggressive. Milk production is increasing, with more milk available to the market. The supply and demand balance will be the driver of the market. USDA will release the March Milk Production report this afternoon. I estimate milk production to be 0.5% above a year ago. I am not sure whether cow numbers have increased or decreased since February. With the high replacement prices, I am leaning towards an increase in cow numbers.
CHEESE:
The decline of cheese prices was not unexpected as the recent increase was more than anticipated. Buyers reached a threshold for the time being with their needs met for now. Lower prices could renew buying interest as buyers look ahead to the potential for increased demand later this year.
BUTTER:
The butter price is expected to remain sideways for the near term. There is little fundamental reason for prices to trend higher. Manufacturing plants continue to run on full schedules, utilizing the available cream. Inventory continues to increase. The March Cold Storage report will be released on Thursday, April 24.
