DCA benchmarks: Milkfat commentary week 11

The milkfat market continued its upward trend this week. Cream prices maintained the strong momentum seen last week, although the market remained highly volatile.The DCA cream benchmark increased to €5,310 per ton. After rising by 20.8% in week 10, prices gained another 6.2% this week, with some price inputs as high as €5,700. Yet market conditions remained volatile, with prices fluctuating daily.Butter also moved slightly higher, albeit at a slower pace. The DCA butter benchmark increased by 1% to €4,725 per ton, while anhydrous milk fat (AMF) followed the broader upward trend, rising 2.3% to €5,550 per ton. As cream prices have increased faster than butter in recent weeks, the price gap between the two benchmarks has narrowed, although it remains positive.Fundamentals have not shifted significantly. January milk production increased year-on-year (YoY) across key European producers, although growth moderated slightly compared to the strong gains observed in December. France recorded growth of 6.5% YoY, Germany 7%, and Poland 3.4%, while the UK and Ireland reported increases of 4.1% and 4.2%, respectively. In Ireland, milk fat content also rose to 4.63%, contributing to a 6.7% YoY increase in milk solids, which reached 14,440 tons in January. At the same time, geopolitical developments continue to influence market sentiment and contribute to uncertainty. Some participants also attribute the recent price increases to additional seasonal demand ahead of Easter and the ice-cream season. Nevertheless, milkfat sentiment weakened towards the end of the week, raising questions about whether current price levels can be sustained in the coming weeks.