OPENING CALLS:
| Class III Milk Futures: | 4 to 6 Higher |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | Mixed |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 2 to 3 Lower |
| Soybean Futures: | 1 to 2 Lower |
| Soybean Meal Futures: | $1 to $2 Lower |
| Wheat Futures: | 3 to 5 Lower |
MILK:
It was welcome to see the strength in Class III futures on Wednesday after a period of continued weakness. Steady cheese prices triggered short covering as traders bought back futures just in case the market had found a bottom. The downside of prices may be limited at current levels due to reduced milk production and the probability of a seasonal increase in demand. However, even if demand improves, the upside potential for prices may be limited. Milk production remains higher than a year ago despite the impact of hot weather. But any improvement in milk prices will certainly be welcomed.
CHEESE:
The general feeling is that cheese prices should be at a bottom with the lower prices being attractive to buyers as they look ahead to demand later in the year. Even though the inventory of cheese has been below the previous year, there remains a sufficient supply to satisfy the current demand. Unless the supply tightens, the upside price potential may be limited.
BUTTER:
The recent weakness in butter has been greater than expected. The price may move into a sideways trading range. One thing for certain is that the current butter price continues to bring international buyers to our shores, as the U.S. price is $1.00 lower than the world price. Churning has slowed due to reduced cream supplies, but it has not caused concern for buyers.
