DCA benchmarks: Milkfat commentary week 9

Milk fat prices are rising sharply this week, as shown by the higher DCA benchmarks for cream and butter. The fat market is reacting to stronger cheese prices, while Easter demand is also providing support.Cream prices in particular are increasing rapidly, with gains of more than €500 per ton, reaching the highest level since mid-November. This almost completely closes the gap with butter prices, which are rising at a slower pace. Some market insiders describe the speed of the cream price increase as remarkable, especially since the market was very sluggish in the first months of the year.The price rise is driven by a combination of factors. Despite high inventories and strong milk supply numbers across Europe, market sentiment has turned more positive, which often leads to volatile price movements. In addition, Easter demand is supporting the market. At the same time, traders indicate that actual traded volumes at these higher price levels remain limited. Higher cheese prices are also playing a role. Cheese currently offers a better milk valorisation, which could reduce milk availability for butter production in the coming months. However, production capacity is said to be fully utilised at the moment, including butter plants. The coming weeks will show whether the milkfat market can hold these higher price levels.