DCA Benchmarks: Milkfat commentary week 18

Pressure on the milk fat market continued in the final week of April. The DCA cream benchmark moved further below butter, while the AMF market showed more stability.That cream is priced below butter has been more the rule than the exception this year. This week, the price gap widened further as cream declined more sharply. The DCA benchmark for cream in Northwest Europe fell by €50 to €3,190 per tonne, the lowest level since the end of February. However, in the second half of the week, market participants reported renewed buying interest and slightly increasing prices, which is not yet reflected in the benchmark.The DCA butter benchmark declined by €30 to €3,810 per tonne. In theory, this creates an incentive to process additional cream into butter, but in practice, processing capacity has been fully utilised for several weeks. As a result, surplus cream is partly sold into Eastern European markets. At the same time, buyers remain cautious due to high production volumes and elevated cold storage stocks, despite historically low price levels.Looking ahead, the market expects cream prices to move back above butter in the coming weeks. Demand for cream is likely to increase seasonally, particularly from the fresh segment. In addition, milk supply is expected to ease somewhat in the second half of May, although volumes are likely to remain relatively high in the short term. The AMF market remained stable, with the DCA benchmark at €4,850 per tonne. Trading activity is limited, indicating a relatively calm market.