Production critical as clean quota prices plummet

By FWi staff

AS the value of used quota fell again this week, the production figures due to be released on the 5 March become critical.

Clean quota prices have plummeted, from 41ppl for 4% butterfat in the new year to just 34ppl this week, and 3.86% butterfat has fallen to 33ppl.

A plentiful supply, along with little sign of the UK deficit falling, has been the cause of this weeks fall, noted a spokesman from ADAS Quota Direct.

But the clean quota has now shown signs of levelling out as the differential between unused and used has reduced to 2.5ppl, said Mark Dyson of Exeter-based Townsend Chartered Surveyors.

“While the used prices stay firm, the clean prices are unlikely to further reduce because there is always a chance the UK may meet quota, and 2.5ppl premium can be regarded as a cheap insurance against a possible 25ppl levy,” he said.

Used quota prices have also eased in recent weeks, falling from 39.5ppl a few weeks ago for 4% butterfat to 32ppl this week. Quota of 3.69% is at 29ppl.

Values wont come down much because the 100% used quota is dictating the price, said George Paton of Lovedays National Quota Agents.

But Mr Dyson believes that the firm prices could be short-lived as buyers have been switching from purchasing clean quota as the perceived threat of a levy this year recedes.

The volume of forward leasing quota available has been steadily increasing since the start of the year and, with this extra supply, the price has slipped, with 4% butterfat at 6.9ppl and 3.79% at 6.6ppl.

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