DCA Benchmarks: Milkfat commentary week 24

Milk fat prices declined again this week. As cream prices fell considerably faster than butter prices, the price gap between the two products has now almost completely disappeared.The DCA benchmark for butter in Northwest Europe decreased by €85 to €3,730 per tonne. The DCA benchmark for cream fell by €220 to €3,740 per tonne. Market participants had expected cream prices to move further away from butter price levels, as is historically common at this time of year.So far, this has not materialised. Cream availability remains ample across Northwest Europe, as seasonal declines in milk production are occurring only gradually. Favourable production conditions, supported by the mild and wet weather seen in recent weeks, are contributing to the abundant supply. At the same time, these weather conditions are limiting demand from the fresh dairy segment.Pressure on the butter market also persists due to substantial inventories. Demand remains particularly weak in comparison. Buyers continue to adopt a wait-and-see approach, expecting little scope for price increases and, in some cases, anticipating further downward price corrections. The price of AMF, which is closely linked to both butter and cream markets, is also under pressure. The DCA benchmark declined by €340 this week to €4,585 per tonne, the lowest level since the beginning of the year.