30 June 2000

Top milkers still finding wary buyers

By Simon Wragg

SUMMER milk bonuses are helping to fund investment in dairy stock to boost output, but buyers are being choosy.

So, although overall averages have fallen over the past year producers are paying more for the best entries.

June dairy sales through marts monitored by MAFF suggest that prices are rising. Auctioneers agree, adding that the cream of commercial milkers being offered are now attracting a £30-40 premium over levels achieved this time last year.

farmers weeklys own figures suggests the gap is slightly wider. Buyers, well aware of the shortfall in milk production, are investing in proven cows that will milk well.

"There is certainly a keen interest in anything that has a proven lactation behind it," says Glos-based Gwilym Richards. Attendance at Ross-on-Wye markets dairy ring and on-farm dispersals remains strong as increasing milk output during summer remains a priority for many, he says.

Seasonality bonuses are being chased and provide a significant improvement on many base supply prices. "It still remains a grassy time, which is helping," he adds.

In the Lancashire milk field auctioneer John Hughes is equally enthused: "We have seen dealers back at the ringside, which indicates some areas are getting short of stock. Cows remain a buoyant trade averaging £576 a head and heifers £513. There is literally nothing in the dairy ring going under £450."

Earmarking cash to buy cows has been made a little easier thanks to a steadier trade in milk quota this year. Values remain down with leasing for 4% supplies under 3.8p/litre and purchase costs at 17p/litre, say brokers.

"Things are working in producers favour. The extension of leasing to the end of the quota year has given producers more room. Why should they spend? Some will wait until summer milk and corn cheques come in before looking at the UK milk situation and deciding whether to get more quota," says George Paton of Paton Webb.

Intervention Board figures suggest producers are not tying up capital in quota as early as they were. The number of transfers for the year to date stood at 3500, a fall of 27%. The total volume sold and leased to the end of June has fallen to 211m litres from 328m litres a year ago.

Entries for the over 30-month scheme have also taken a seasonal fall, as expected. Producers are maintaining numbers, and output, as long as possible with few expecting the UK to reach quota this year, say auctioneers.