Dairy sector continues to run over quota

By FWi staff

DAIRY farmers are continuing to overproduce as the latest figures from the Intervention Board show that production has increased for the second month running.

Provisional figures released for May show production 8.1m litres over quota for the month as output hit 1,329.2m litres. When butterfat adjusted, total deliveries are 1,343.5m litres.

Even when the Intervention Board amended its figures downwards last month production remained 22.8 million litres above profile.

Production this month has not helped the situation with butterfat adjusted deliveries now standing at 30.9m litres over quota.

Although this doesnt quite equate to a whole days production traders say that producers over quota are considering leasing to cover themselves.

Considerable volumes of lease quota for the time of the year have been put on the market over the week, noted Swindon-based quota agents, Lovedays.

As more quota entered the market values eased as demand was limited. Quota of 4% butterfat slipped to 6.6ppl with 3.71% at 6.1ppl.

Many lessors expectations remain high and a large amount of quota continues to be offered above the current market price, said one trader.

But a spokesman from Lovedays said that as the market eases to more profitable levels any potential lessees should consider whether now is the time to lease in.

The volume of clean quota entering the market also increased over the week. But with buyers reluctant to pay the asking prices values dropped.

Butterfat of 4% eased to 33.5ppl with 3.75% at 31.25ppl.

In mind of the production figures and the further uncertainty within Europe regarding the future life expectancy of quota it is hard to envisage any upward movement in the market for some time, said a spokesman from Hamiltons quota agents.

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