Milk production drop cuts leased quota price
By FWi staff
LOWER-than-expected production figures have been blamed for the sharp drop in leased quota prices at the start of last week.
“The bottom fell out the market,” said Nick Butler of Strutt and Parker, Chester. He blamed lower production figures and the fact that potential lessors are being cagey as to whether they will hold on to their quota or lease.
“The price might creep up, but it doesnt look as if its going to. It depends how much is held back until mid December,” said Mr Butler.
A spokesman from Lovedays Agricultural Auctioneers and Valuers said that, overall, leasing appeared to be 0.5ppl cheaper than a week ago.
However, as the weekly production figures increased slightly, prices firmed a little and quota of 4% butterfat inched up to 8.4ppl while 3.8% is a 7.8ppl.
The key to leasing quota of the next couple of weeks will be the production figures, said Jim Leamon of Hamiltons National Milk Quota Agents. “We could see a stand-off as the price of quota drops.”
There was little change in the clean sales market, despite an increase in supply. ADAS noted that, with low demand, prices have eased again, with 4% butterfat at 37ppl. “Vendors continue to hold out for higher prices,” said one quota agent.
Strong demand is building for used quota, noted Lovedays. The company believes that buying quota is better than continuous leasing for those that can afford to do so. This is on the basis that as milk prices recover due to weakening exchange rates, falling interest rates, lifting of the export ban and improving confidence, the longer term quota price will increase.
But despite this stronger demand and limited supply, prices have remained stable with 4% butterfat at 30ppl.