Quota prices stable after year-end scramble

By FWi staff

THERE was a final scramble for leased milk quota last week with quota trading between 8-9.2ppl.

Demand was strong during the week and there were reports of quota trading at 10ppl. But despite these rumours, prices remained relatively stable, said Rachel Rutter of Wright-Manley quota agents.

“We still had producers phoning for quota in the afternoon of the 31st, and sold a total of 1 million litres last week, ” she said.

Forward leasing has started to come on to the market this week, with asking prices at a similar level to that of last year. Demand is slow and 4.1% butterfat is trading at 8ppl.

Supply of forward leased quota is slow to enter the market, too, with only the lower butterfats coming in at the moment, said Ms Rutter. “The market still has to recover from the rush last week, and is likely to pick up with the delivery of milk cheques next week,” she said.

The volume of clean quota coming on to the market has again increased this week , noted a spokesman from ADAS Quota Direct. “However, with greater supply and steady demand prices remain stable,” he said.

Clean quota of 4% is at 38ppl while 3.84% is 36.5ppl.

Demand is likely to be strong for back-to-back leases for 1998/99, as many producers planning to overproduce have not leased in this year because of the high prices, said Mark Dyson of Townsend Chartered Surveyors.

“One of the advantages from the lessors point of view is that this form of transfer is theoretically not subject to income tax because it involves two permanent transfers,” he said.

The supply of used quota entering the market has increased slightly, although prices remain stable with 4% butterfat at 31.2ppl and 3.80% at 28ppl.

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