Prices and cashflow cut quota demand

By FWi staff

FALLING milk prices and poor cashflow are limiting demand for milk quota, and prices have eased on the back of this.

Leasing values have slipped slightly with plentiful supplies and limited demand.

With the next couple of milk cheques being the lowest many producers have ever received, it is hard to see the market becoming frantic for some time, said a spokesman from Hamiltons quota agents.

Quota of 4% butterfat has slipped to 6.7ppl this week with 3.70% at 6.1ppl.

Traders now expect the lease market to remain quiet for the next week as producers wait until the latest milk production figures are released.

With the error made by the Intervention Board last month, it is expected that farmers will want to see where the nation actually stands on production.

As more quota enters the market, reasonable volumes have started to be traded, although many buyers continue to hold off at current prices.

Sales of quota at 4% have eased to 33.7ppl, with 3.78% at 31.5ppl.

Any interest in the purchase of clean quota is thought to be generated by the extension of quotas until 2008, giving a longer period over which to write off investments. Reasonably low interest rates may also be an influencing factor.

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