OPENING CALLS:
| Class III Milk Futures: | 4 to 8 Lower |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | Mixed |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | Mixed |
| Soybean Futures: | Mixed |
| Soybean Meal Futures: | $1 to $2 Higher |
| Wheat Futures: | 1 to 2 Lower |
MILK:
The pressure on Class III milk futures despite the increase in the barrel cheese price does not bode well for market strength. Traders retain a bearish attitude as cash prices continue to chop around. The supply and demand balance is such that buyers and sellers remain comfortable at the current prices. Lower prices are not likely to increase culling and decrease milk production. The industry is in a different posture than it was a few years ago when culling was a means to supplement income when milk prices were low. That is not the case now, as substantial income comes from beef on dairy calves, reducing the need to cull heavily. Milk prices will need to decrease further to increase the need to cull dairy cattle. USDA will release the July Federal order class prices today. The trade is expecting a Class III price of $17.29 and a Class IV price of $18.91.
CHEESE:
Cheese prices are expected to remain choppy. There is little reason for the market to trend higher as it usually does this time of year. Buyers are comfortable with supplies, leaving much of the buying being done on an as-needed basis. A decline in prices provides the opportunity for buyers to increase ownership for later demand.
BUTTER:
The butter price is expected to increase as the summer progresses, but the upside potential may not be substantial. Even though butter inventory is 6% below a year ago, there remains sufficient supply for demand. Churning has decreased but continues to remain active. Buyers have little concern over supply.
