DCA benchmarks: Liquid market commentary week 40

Movements in the liquid dairy market remain relatively subdued. The price of skimmed milk concentrate has made a notable move higher, although this can be seen as a correction following last week’s decline.Prices came under pressure last week following an incident at a German processor, which resulted in additional volumes entering the market. This week, prices have recovered. The DCA benchmark increases by EUR €185 to EUR €3,085 per tonne.For skimmed milk powder producers, this level is too high for profitable drying. The same applies to liquid whey concentrate prices, although the DCA benchmark for this product decreases by EUR €75 to EUR €1,350 per tonne.Demand for SMC is mainly coming from the fresh segment, but the increase in prices is primarily the result of limited supply, which is typical for this time of year.Raw milkRaw milk prices on the spot market are broadly stable and are in line with the milk prices paid to dairy farmers. Processors are unwilling to sell volumes at lower prices. With milk collections moving towards their seasonal low, there is little reason for them to do so.At the same time, market participants indicate that milk supply is not particularly low either. As milk prices strengthen, dairy farmers also have a greater incentive to increase production. Milk collections in Northwest Europe are expected to start increasing again within the next few weeks.