16 May 1997

Early turnout helps firm quota prices

MILK quota prices have firmed in recent weeks in response to the early turnout and spring flush in production.

Leasing auctions this week saw quota consistently over 10p/litre as producers sought to take some early cover.

At Frank R Marshalls sale at Chelford on Monday (May 12), 1.3m litres out of a total entry of 1.6m litres cleared for an average 10.4p/litre for 3.86% butterfat. A top price of 11.6p/litre was paid for a 4.29% butterfat lot.

"The market is surprisingly buoyant, due to the early turnout and flush of milk off spring grass," says agent James Holroyd. "Initially trade was slow due to drought fears and lack of grass. But the recent belt of rain has eased these concerns and demand is now stronger."

Another auction by Alder King at Avon Livestock Centre on Tuesday (May 13) saw most of the 440,000 litres on offer clear for an average 10.21p/litre.

"This included quite a lot of low butterfat quota, which would have failed to find any buyers at our last leasing auction at Chippenham," says the companys Suzie Luxton. "Prices were almost 1p a litre better for equivalent butterfats."

Whether these values will be sustained is questionable. "Prices in the short term will probably steady when this months milk cheques (for April deliveries) are released," says Mark Dyson of Exeter-based Townsend chartered surveyors. "These will show a marked reduction in the milk price which will probably have a knock-on effect on the leasing price."

Most brokers also report an improvement in the sales value of quota, with 4% butterfat unused now worth about 45p/litre. But trade is still described as "sluggish".

"High April production, limited quota supply, slow cohort movement and the weather have all made vendors more bullish," says Bruton Knowles National Quota Exchange.

But generally there is a stand-off in the sales market, says brokers with purchasers waiting for increased supplies of quota as more producers retire and cash in their assets.n