By FWi Staff
LEASED quota prices rose sharply last week in response to an increase in demand.
However, a high proportion of this quota has been priced above the current market, as lessors hold on for further price increases, said a spokesman for ADAS Quota Direct.
There is no justification to make the price go up 2p in three weeks, said Roger Lightfoot of Hobbs Parker. “However, the recent delivery of milk cheques has helped, and this becomes a regular pattern and the year progresses.
“The market has become very busy this week, and a large number of farmers have leased out quota – more so than last week, although there is not much available.”
Mark Dyson of Townsend Quota Plan echoed this, saying that the main reason for the sudden price increase was a lack of supply: “Most producers leasing production are keen to sell rather than lease out their quota, while many producers needing quota do not want to invest in buying quota at this time.
“As a result the quota price is 1ppl higher than at this time last year, despite a 4ppl lower milk price and 1 million litres less milk production.”
Leased quota prices have climbed to 9.2ppl for 4% butterfat, while 3.84% rose to 8.6ppl.
Milk quota sales have remained relatively stable, with adequate supplies and a moderate supply, noted Mr Dyson. However, as the leasing price hardens, he predicts, with more lessees switching to purchasing sale, prices might rise slightly: “However, the overall trend this year is for producers who require quota to lease rather than buy, despite the fact that buying looks better value.”
Sale prices inched up slightly this week with 4% quota at 37ppl and 3.78% at 35ppl.
The used quota market is now picking up, noted Mr Lightfoot. “Farmers would rather buy than pay a high leasing price in future years.”
This increased demand has led to a firming in price for the used market, with 4% butterfat at 29ppl.