DCA benchmarks: Milk powder market commentary week 36

Powder prices continue to move sharply higher, both for skimmed milk powder and whey powder. Feed-grade products in particular are recording strong gains. The rally is being driven by a combination of factors.In a rapidly rising market, producers tend to offer limited volumes. Buyers, meanwhile, are concerned about missing out. Following the summer holiday period, there is also some deferred demand that still needs to be covered. As a result, the milk powder market is strengthening rapidly, with prices reaching their highest levels in almost four years.In the background, there are concerns about the potential impact of the El Niño weather phenomenon, which could result in either excessive rainfall or extreme drought in several key dairy-producing regions. Neither scenario would be favourable for milk production.In addition, European stocks are tighter than previously thought. This also reflects solid export demand in recent months, which cannot be viewed separately from the broader protein trend. Europe and the US are also moving into the seasonal low in milk collections, meaning that there is not a great deal of additional milk powder in the pipeline.The DCA benchmark for skimmed milk powder (Northwest Europe) rises by EUR €125 this week to EUR €3,230 per tonne. Feed-grade product is rising even more sharply, significantly narrowing the price gap.Whey powder also continues to strengthen, reaching levels not seen before. The DCA benchmark for whey powder rises by EUR €30 to EUR €1,860 per tonne. As with skimmed milk powder, feed-grade product is recording stronger gains, narrowing the price gap.