End-season quota doubts keep trading quiet

By FWi staff

TRADING in lease quota for this milk year has almost come to an end, as doubts over meeting quota by the end of the season continue to grow.

“There was a flurry earlier in the week, with producers seeing it as a cheap investment and others under pressure from buyers to get cover – otherwise they wont release milk cheques,” says David Pettitt of ADAS Quota Direct.

A 4% butterfat is worth about 0.1ppl.

Demand for forward leasing is also weak. “This is surprising as, at 3ppl, it is good value, especially if there is another milk price rise before April.

“But many producers are concerned that they wont reach quota again next year, and others are waiting to see if prices drop further.”

But Mr Pettitt reckons that there is unlikely to be a fall at the moment. “Lessors are under no pressure to accept offers, so they are wise to hold on to it.”

Purchase quota sales are also limited.

“There is much available, but many producers think it is still too expensive. And they are under no pressure to buy it as there is no indication that prices will rise,” says Mr Pettitt.

“Most are happy to wait and see, but it is still good value at 18ppl for a 4% butterfat – there is certainly an advantage to buying now.”