DCA Benchmarks: Milkfat market commentary week 37

The steady recovery in butter prices comes to an end this week, although the market does not necessarily feel weaker. Cream prices, however, show a sharp downward correction.The DCA benchmark for butter (Northwest Europe) decreases by EUR €25 this week to EUR €4,115 per tonne, interrupting the recent upward trend. Persistently high stocks of frozen butter continue to weigh on the market. At the same time, concerns about dry weather have eased following substantial rainfall across Northwest Europe, supporting renewed grass growth.This is tempering demand for butter, although seasonal demand is expected to increase. Buyers are already paying a premium of around EUR €300 per tonne for January deliveries, according to market sources.Declining cream pricesThe changeable autumn weather is also affecting the cream market. Demand from the fresh segment is weakening, bringing the price recovery seen in August to an end. Lower cream prices make cream more attractive to butter producers, which could generate additional demand. Availability is not particularly ample, however, as seasonal milk supply is moving towards its low point.The DCA benchmark for cream (Northwest Europe) decreases by EUR €315 this week to EUR €4,790 per tonne.The AMF market is also affected by the decline in cream prices. The DCA benchmark for AMF decreases by EUR €140 to EUR €4,825 per tonne.