OPENING CALLS:
| Class III Milk Futures: | Mixed |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | 1 to 3 Higher |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 1 to 2 Higher |
| Soybean Futures: | 2 to 3 Lower |
| Soybean Meal Futures: | $1 to $2 Higher |
| Wheat Futures: | 3 to 5 Higher |
MILK:
The strength in milk futures on Thursday improved the outlook for milk prices immensely, but prices remain low historically. The strength has been attributed to the announcement USDA plans to purchase $148 milion worth of dairy products for food banks. It is difficult to say spot butter and block cheese prices were higher because of it, or if the higher prices were from continued buying interest because of low prices. Of the $148 million, $75 million is butter, $32.5 million is cheddar cheese, $10 milion is Swiss cheese, $20.5 million is fluid milk, and $10 million is for ultra-high temperature milk. To put it in perspective, if butter is purchased at $2.00 per pound, it would be 37.5 million pounds. Cheddar cheese at $2.00 per pound would be 16.3 million pounds. Fluid milk at $3.00 per gallon would be 6.8 million gallons. The prices at which these will be purchased are not known at this point, so amounts may be different. The January Milk Production report will be released Friday afternoon. I estimate milk production at 4.2% above a year ago. I estimate cow numbers to be 4,000 head above December.
CHEESE:
It is difficult to anticipate the movement of cheese prices, as the pattern would suggest the price could retrace. The block cheese price has increased for three consecutive days and may be ready for a correction, with sellers becoming aggressive.
BUTTER:
The spot price has been trending higher since mid-January as buyers have been purchasing to increase ownership. There is no concern over supply tightness, but buyers wanted to build inventory as a hedge against the potential for higher prices as the year progresses.
