MM sells out to first-round bids
By Shelley Wright
MILK Marque has successfully sold all the milk it had available from Apr 1 in just one round of dairy company bidding.
The selling process closed last week, and the milk was sold despite the dairy trades fury over the 3% increase in prices (Business, Jan 19).
MM chief executive Andrew Dare said: "When we started the latest selling process earlier this month we were offering between 3.3 and 4.1 million litres a day for sale. I am pleased to announce that customers put in offers totalling 3.5m litres a day and so a market balance has been achieved based on our initial prices."
He added that six, 12 and 18-month contracts had been available for the first time and the level of demand had been encouraging. It showed that customers appreciated being able to adjust their buying patterns throughout the year.
But the price increases will not have much impact on producer returns. A MM official said that 3.5m litres a day was about 17.5% of the daily volume sold, so the price rises would have only a marginal effect on returns. "But it does demonstrate that there is still confidence in the market," he added.
The demand leaves 1.1m litres a day available on the short-term market. Currently this offers milk on a daily and monthly basis. Prices are established through sealed tenders, with milk sold to the highest bidders.
Mr Dare said MM had discussed ways to make the short-term markets even more flexible. "As a result we are planning to introduce a bi-monthly short-term market. This means that customers can put in bids at the beginning of one month for milk to be delivered two months later," he said.
Customers will also shortly be offered milk on forward contracts for the six months from Oct 1. *