Leased quota still trading – for next to nothing

By FWi staff

LEASED quota for the 2000/2001 milk year continues to trade at near-zero values, reports ADAS Quota Direct.

“The market is still quite busy with some producers taking up to 500,000 litres at a time,” says ADAS David Pettitt.

“It is effectively free and taken mainly as a guarantee to make sure they will receive milk cheques.

“Many processors have agreed to pay up to about 20% above the threshold, but any more and cover is needed.”

After a fairly positive start, forward leasing is starting to drop off, with producers wary of next years production potential.

“Production figures havent picked up as they should have over the last few weeks.

“If the new milk year starts under profile in April, the market will be very sluggish,” says Mr Pettitt.

The price could then ease by about 0.5ppl, which would trigger more interest, he believes. “Producers are more inclined to wait and see.”

Purchase quota deals have picked up over the last few days as the 01 March deadline approaches.

“The price has dropped slightly as more quota has come on to the market,” says Mr Pettitt.

“Prices for forward purchases are likely to stabilise with producers still unsure about the prospects for next year.”

Leased 4.27% butterfat quota is trading at 0.1ppl. Forward leasing, 3.99% butterfat quota is trading at 3ppl and 4.08% butterfat at 3.2ppl.

Clean quota sales are trading at 18.0ppl for 4.08% butterfat, and 3.78% supplies at 16.5ppl.