OPENING CALLS:
| Class III Milk Futures: | 4 to 8 Higher |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | 1 to 2 Lower |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | Mixed |
| Soybean Futures: | 3 to 4 Lower |
| Soybean Meal Futures: | $1 to $2 Lower |
| Wheat Futures: | 1 to 2 Higher |
MILK:
Class III futures held well due to support from the increase in the block cheese price. Class IV futures could not find support with the October and November contracts falling below $15.00. The spread between butter and cheese is now only 5 cents, after an extended period during which butter was substantially higher than cheese. Milk checks are going to be smaller through the end of the year if the current fundamentals persist. National Farmers, a farm marketing group, has proposed a $13.00 Dairy Margin Coverage Feed Price Index rather than the current $9.50 floor under the program. The current low feed prices are not providing any payments from the program, even at the low milk prices. It is uncertain how much traction this will gain in the government.
CHEESE:
The increase in the block cheese price may be met with selling as that has been the pattern over the past months. The current fundamentals do not suggest an extended increase in prices. The inventory is higher than a year ago, and cheese production is increasing. Prices have been moving counter-seasonally as the increased buying by packagers and recutters has not had an impact on the market this year.
BUTTER:
The price has fallen to the level it was four years ago and has not found support. The low bid placed a few weeks ago at $1.67 was an indication of where the market could be moving to, and the price is nearly there. The low price has yet to stimulate strong domestic demand. International demand is very strong, with world prices substantially higher.
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