DCA benchmarks: Liquid commentary week 17

The combination of high milk supply during the seasonal peak and fewer processing days due to holidays (King’s Day in the Netherlands and Labour Day across Europe) is putting further pressure on liquid dairy prices. Semi-finished products are declining the most.The DCA benchmark for Skimmed Milk Concentrate drops by €240 to €620 per tonne. Although the product currently offers strong returns when processed into skimmed milk powder, where prices are increasing, supply is clearly exceeding demand. This is partly linked to the closure of several milk powder towers in Northwest Europe over the past year.At the same time, a significant share of processing capacity is being used for whey powder production, which also shows favourable margins. The DCA benchmark for whey concentrate declines by a similar amount, down €230 to €635 per tonne. It is unusual for skimmed milk concentrate to be priced below whey concentrate, but this is currently the case. Despite solid demand for whey concentrate, supply is still higher than demand. Raw milkThe spot market for raw milk is also under pressure. Supply is high, while demand remains weak, even at very low price levels. Processors are mainly focused on handling their own milk intake. The DCA benchmark for raw milk in the Netherlands decreases by €1 to €10 per 100 kg, the lowest level since the start of the year, when the market was already at historically low levels. From a historical perspective, raw milk prices will move up again in the coming weeks.