DCA benchmarks: Liquid market commentary week 30

In recent weeks, the dairy market has been supported by strong sentiment, resulting in rapidly rising spot prices. Now that milk supplies have recovered following lower temperatures, the liquid dairy market has taken a step back.The liquid dairy market is broadly balanced this week. Trading activity remains limited. Processors have few surplus volumes available, while at the same time there is little appetite to purchase additional volumes on the spot market. This is largely due to reduced staffing levels during the holiday period.Lower spotmilk pricesAs a result, the DCA benchmark for raw milk has fallen by €4.50 to €35.50 per 100kg. This can be viewed as a correction following the exceptionally rapid price increase seen a few weeks ago. Spot milk prices in Germany have also eased.The same applies to semi-finished dairy products such as skimmed milk concentrate and cream. Skimmed milk concentrate continues to trade at a premium relative to skimmed milk powder, while cream remains persistently undervalued compared with butter. Weather marketOverall, sentiment across the liquid dairy market has cooled as temperatures have fallen. However, August is expected to bring another spell of hot weather to north-west Europe. Combined with the ongoing dry conditions, this could accelerate the seasonal decline in milk production.