Milk production data halts slide in quota lease values
By Philip Clarke
LATEST milk production figures from the Intervention Board have checked the slide in milk quota lease values seen in recent weeks.
An auction of just under 1m litres by Frank R Marshall in Knutsford, Cheshire this week recorded a lowest value of 6.3p/litre for one lot of 3.6% butterfat quota. And invoices sent to FW by Farmers Quota Bank members show 6.5p/litre paid for 3.7% quota in private treaties.
But average butterfat quota seems to have stabilised at 7p to 7.5p/litre, with up to 8p/litre paid for a 4.29% lot at the Knutsford sale.
October output figures surprised just about everybody in the trade, emphasising the unreliability of weekly production data put out by the IB. Many had been expecting a much bigger undershoot for the month, dragging down the cumulative surplus to about 50m litres. In the event, October was just 27m litres (2.4%) below quota, after an unexpectedly high average butterfat, leaving the UK 98m litres over quota for the milk year to date.
Significantly, production now seems to have turned. This time last year it was 229m litres a week and falling. But latest figures put it at 232m litres a week and rising.
While it is still too early to say if the UK will end the milk year over or under quota, producers can draw comfort from the fact there is more to play with, as this years revised quota profile has an extra 79m litres in the last three months. "But in volume terms, we are still 88m litres ahead of last year and the trend is now upwards as farmers push their cows to counter the lower milk prices," says agent Andrew Ranson of chartered surveyors, Clayson Haselwood. "The effect will not register until after the end of the leasing period."
Despite this, brokers are still realistic about leasing prices. IB figures suggest there is plenty of quota to come, with lease volumes to the end of October amounting to 644m litres , 16% less than last year.
Despite more having been sold, Tony Carver of agents Carver Knowles expects the total volume leased by the end of the season to be similar to last years 1.1bn litres, with a huge amount still to be traded. Combined with next weeks diminished milk cheques, this will keep a lid on prices.
"There is not a lot of upside. We have all had to adjust our businesses in response to the changed milk market," he says.
Quota agent, Charles Holt, adds that if lease values do rise, then lessees will wait until the new year and go for back-to-back transfers. *