Hectic quota trading leads to firmer prices

By FWi Staff

THE release of the August UK production figures and news of Milk Marques successful selling round caused a significant increase in demand last week. Hectic trading at the beginning of the week saw prices firm quickly.

Leasing costs for 4% butterfat are 7.8ppl, with 3.76% moving at 7.3ppl.

“Last week was as busy as any other week so far this year,” said Roger Lightfoot of Hobbs and Parker. With milk production figures at 1.4% over quota for August and 60-70% of milk quota still to be leased, the extra demand was anticipated.

Mr Lightfoot said that producers need to judge when the market will be at its lowest, and expects prices to fall between now and November. “But dont risk everything by waiting for the prices to fall,” he said. “Farmers should buy small amounts as they go along so that they wont get hit if the prices dont fall.”

Milk quota sales prices have again remained virtually static this week, despite a rise in the leasing price. More quota continues to come on to the market and Mark Dyson of Townsend Quota Plan described a situation where the sales price was falling and the leasing price was rising.

“These unusual market conditions cannot last for long and either the sales price will rise or the leasing price will fall to come back in line,” said Mr Dyson.

The purchase price of 4% butterfat quota is 35ppl and 3.77% is trading at 32.5ppl.

Jenny Clements of Alder King put the slight price increase down to the short supply in milk quota: “Some accountants will be recommending producers leaving the industry to lease quota rather than sell in order to gain the 2ppl tax relief.”

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