By Farmers Weekly staff

MILK output dropped sharply in June, according to the latest Intervention Board figures which show butterfat adjusted deliveries at 1.34 billion litres or 1.26% under quota.

That is a decrease of almost 28.5m litres over the last month, some of which is attributed to the reduction in average butterfat from 3.95% to 3.91% for June supplies.

However, the cumulative figures for the first three months of this milk year show the UK remains 19.6m litres over quota.

This time last year output was 16.1m litres below profile. Nevertheless, quota prices remain under pressure.

  June deliveries against quota
Dairy cash-flows remain tight, says consultant Charles Holt.

The cash-flow difficulties are exacerbated by the withdrawal of several secondary finance providers from the agricultural market, he points out.

“It could lead to a cash-flow crisis because many producers will be forced to rely on overdrafts to fund quota and other farm requisites.”

The floor of 6ppl for 4% leased supplies looks set to be broken and the occasional exceptional deal has already been sealed.

“We have seen a 3.99% quota trade in the mid-fives,” says Mr Holt.

With little to cheer dairy producers in the Monopoly and Mergers Commissions report on the sale of raw milk, dealers predict that more quota will become available, which could add further pressure to prices.

Andrew Ranson of Clayson & Haselwood warn that an increase in availability could see the current trade slip back in the longer-term from 6ppl to 5.5p/litre. Others put it at 4ppl.