DCA benchmarks: Liquids commentary week 10

While dairy commodities such as butter, cheese and milk powder are rising sharply this week, the liquid dairy market remains under strong price pressure, according to the DCA benchmarks. The liquid market is less influenced by the improved sentiment caused by the conflict with Iran and much more affected by the milk surplus in Northwest Europe.The oversupply outweighs the higher prices of end products. This is clearly visible in the DCA benchmark for skimmed milk concentrate, which dropped by €230 to €475 per tonne. Skimmed milk concentrate is now significantly cheaper than whey concentrate, which declined by only €15 to €810 per tonne. Historically, it is quite remarkable for whey concentrate to be more expensive, especially by such a large margin.Despite the rising prices for skimmed milk powder, there is hardly any demand for concentrate, even at these attractive price levels. Drying capacity is already running at full utilisation, leaving no room to process additional volumes, even if the economics look favourable. At the same time, demand from the fresh dairy segment is weak for this time of the year and therefore provides little support to the market.Spotmilk moving flat, cream more expensive Raw milk benchmarks from DCA remain broadly stable in a small range between €13 (The Netherland and Northern Germany) and €14.50 (Southern Germany) per 100 kilo. Here as well, supply is high while demand remains limited. With seasonal milk production continuing to increase, this imbalance is expected to persist in the coming weeks. Among liquid dairy products, only cream is moving higher at the start of March. Higher cream and AMF prices are providing support, partly driven by Easter demand. The price increase should also be seen as a correction after the relatively low cream prices earlier this year.