DCA Benchmarks: Liquids commentary week 25

The liquid dairy market showed mixed developments this week. Prices for skimmed milk concentrate and whey concentrate moved higher, while the German raw milk market experienced significant declines.The skimmed milk concentrate market is recovering from recent lows despite weaker skimmed milk powder prices. The DCA benchmark increased by €120 to €1,945 per tonne, reaching its highest level since last autumn. Market participants describe availability as tight, despite strong milk production levels.This is being supported by solid demand from the fresh dairy segment. At the same time, processing concentrate into skimmed milk powder has become less attractive for powder manufacturers as the price spread between concentrate and powder continues to narrow.The DCA whey concentrate benchmark also increased, rising by €20 to €1,035 per tonne. The price increase is somewhat surprising given reports of relatively large volumes being offered in the Dutch market this week due to factory strikes. So far, however, these additional volumes have not created significant downward pressure. With further industrial action announced, the market could still be affected in the coming weeks.Raw milk The raw milk spot market presented two distinct trends. In the Netherlands, conditions remained relatively stable, with the DCA benchmark rising by €0.50 to €20 per 100 kilograms. In Germany, however, prices moved sharply lower. The DCA benchmark for Northern German raw milk fell by €4 to €20 per 100 kilograms, while the Southern German benchmark dropped by €6 to €21.50 per 100 kilograms.There is no single explanation for the weakness in the German market. What is clear is that spot milk continues to trade at exceptionally low levels relative to the farmgate milk prices paid to farmers. Processors are trying to limit spot market sales as much as possible, resulting in low trading volumes and a thinly traded market.