DCA benchmarks: Liquid market commentary week 34

The liquid dairy market is receiving support from two directions, resulting in higher prices across almost the entire dairy complex. On the supply side, seasonal milk production in Northwest Europe continues to decline, with the impact of last week's heatwave still being felt. This has accelerated the seasonal downturn in milk availability, although production may recover somewhat in the coming weeks as temperatures across the region have moderated. At the same time, stronger dairy commodity prices are providing additional support. Cheese prices continue to improve, while milk powders have posted particularly strong gains this week. Butter prices are also moving higher, albeit at a more measured pace. The tighter milk supply has prompted some processors to enter the spot market as buyers, concerned about securing sufficient volumes for the autumn period. In southern Germany, sentiment has been further influenced by the spread of the Orthobunyavirus, which could accelerate the decline in milk production in affected areas. Against this backdrop, the DCA Raw Milk benchmark increased by EUR 3 to EUR 45.00 per 100 kilograms, remaining well above the milk prices currently paid to dairy farmers. This marks the highest level since last autumn. Price increases in the Netherlands and northern Germany were somewhat more moderate. Skimmed milk concentrate also continued its upward trend, with the DCA benchmark approaching EUR 3,000 per tonne. The rapid rise in skimmed milk powder prices is underpinning the concentrate market, although concentrate remains relatively expensive compared with powder. Firm demand from the fresh dairy segment is providing additional support.