OPENING CALLS:
| Class III Milk Futures: | 5 to 10 Lower |
| Class IV Milk Futures: | Mixed |
| Butter Futures: | Mixed |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | Steady to 1 Higher |
| Soybean Futures: | 2 to 4 Higher |
| Soybean Meal Futures: | Mixed |
| Wheat Futures: | 7 to 9 Higher |
MILK:
Traders were very aggressive on Wednesday in milk futures. Higher cheese prices propelled Class III futures limit up for a while during the day as traders were caught short and needed to buy out of their positions. This may have pushed milk futures higher than they should have been relative to the underlying cash. This may result in lower futures as the market moves back in line as it corrects to move in line with the spot prices. The gains on Wednesday certainly improved the outlook for milk prices, but it is difficult to determine whether that will continue. Class III milk futures were higher two weeks ago and then crashed as spot cheese prices declined. The same could take place again.
CHEESE:
Cheese buyers have been aggressive, willing to bid up to purchase supplies at low prices and increase their ownership. It is not a matter that cheese stocks are tight or that the milk supply is tight. It is a matter of purchasing at historically low prices as a hedge in case the market changes and supply tightens.
BUTTER:
Buyers and sellers have been at a standoff in the spot market. Buyers do not need to be aggressive, and sellers do not need to move supply aggressively. The Global Dairy Trade action price is about $1.10 above the U.S. price, which will keep export demand strong.
