DCA Benchmarks: Milkfat market commentary week 35

Cream prices continue to rise this week, although the pace of the increase is slower than in previous weeks. Butter prices remain broadly stable, despite some improvement in demand.The DCA benchmark for cream in Northwest Europe rises by EUR €95 this week to EUR €5,290 per tonne, the highest level since week 11. The increase is driven by tightening supply combined with strong seasonal demand from the fresh segment. An increase in cream prices at this time of year is historically not unusual, although the pace has been stronger than market participants had anticipated.Stable butter marketThe DCA benchmark for butter in Northwest Europe remains unchanged this week at EUR €4,070 per tonne. Although demand is increasing seasonally, ample stocks continue to keep prices stable. The price difference between fresh and frozen butter is around EUR €2,500 to EUR €3,000 per tonne.With butter prices unchanged, cream is theoretically valued above its butter equivalent. Market participants expect cream prices to adjust in the coming weeks and move more closely in line with the butter equivalent. Calm AMF marketTrading activity in AMF is subdued, with limited volumes changing hands. The DCA benchmark rises by EUR €85 this week to EUR €4,950 per tonne, partly reflecting the firmer cream market. Buyers are required to pay a modest premium for delivery in the fourth quarter.