OPENING CALLS:
| Class III Milk Futures: | 5 to 8 Higher |
| Class IV Milk Futures: | 5 to 10 Higher |
| Butter Futures: | Mixed |
OUTSIDE MARKET OPENING CALLS:
| Corn Futures: | 1 to 2 Higher |
| Soybean Futures: | 4 to 6 Higher |
| Soybean Meal Futures: | $1 to $2 Higher |
| Wheat Futures: | Mixed |
MILK:
Class III milk futures may be supported, but may have limited upside price potential in the near term. The block cheese price is expected to remain rangebound as increasing milk production leaves plentiful milk supplies available for the vat. The dry whey price is historically good, but it is not seeing the same strength as nonfat dry milk. The supply of dry whey is sufficient for demand. Class IV futures showed trading activity overnight, which is unusual. Trading volume was exceptional for Class IV contracts. USDA will release the March Milk Production report Wednesday. I estimate milk output to be up 2.7% from March 2025, with cow numbers up 5,000 head from February.
CHEESE:
The cheese supply is sufficient for demand, with increased output potentially exceeding demand, resulting in inventory close to what it was a year ago. However, high fuel costs will increase prices, potentially impacting demand. The March Cold Storage report will be released on Friday, providing a picture of supply and demand. However, the impact of high fuel prices may not be seen until the April report.
BUTTER:
The butter price will have a difficult time finding much upside price potential in the near term. Even though cream supplies have tightened due to demand for ice cream production and the increase in other Class II product production, churning remains active. Sellers are moving butter to the spot market to reduce inventory build at the plant level.
