DCA benchmarks: Milkfat commentary week 16

After two weeks of relatively stable prices, the butter market has come under renewed pressure. Combined with a very high milk supply in Northwestern Europe, this is also pushing cream prices down again, following slight increases in previous weeks. Buyers remain cautious and are delaying butter purchases. Producers, on the other hand, are keen to sell due to large stock levels. Storing product is expensive, especially with additional energy costs for cold and frozen storage. At the same time, there is no expectation of price increases, so sellers prefer to move volumes quickly. This situation is creating strong price pressure across the entire milkfat market. The DCA benchmark for cream in Northwestern Europe falls by €660 to €3,880 per tonne, the lowest level for this time of year since 2020. The seasonal uplift seen around Easter has now completely disappeared. There is some demand for cream from butter producers, but supply clearly exceeds demand. Demand from the fresh segment also remains limited, although it may improve in the coming weeks as temperatures rise. The DCA benchmark for butter declines by €240 to €385 per tonne. This is the lowest level since January and the second lowest since the start of the COVID-19 crisis in 2020. Market insiders expect further price declines, supported by signals such as high stock levels and strong milk supply. Although a large share of milk is being processed into cheese, significant volumes of butter are still coming onto the market, including from Ireland where the milk season is starting.