By Simon Wragg
A SENSE of déjà vu crept across sheep quota markets this week as prices began to slip ahead of the 4 February deadline for transactions.
Mirroring the recent closure of suckler cow quota trading, some producers were eager to lease out non-LFA supplies cheaply to protect individual holdings.
Under MAFFs use-it-or-lose-it rules, 70% of the quota held by a producer must be used each year or it will be subject to a clawback.
“There is no doubt that lowland quota has been plentiful,” says Tom Taylor of Aberdeenshire-based Hayes McCubbin MacFarlane.
Reported values have slipped this year for leased supplies, from 4 a unit earlier this month down to as little as 50p now, he says.
The fall had been prompted by suggestions that the sheep annual payment would be significantly lower than earlier predictions of 16 a ewe.
This week MAFF announced that payments would be just 13.58 due to a recovery in sheep prices across the EU and the strong Pound which has eroded the Euro-based subsidy.
Quota auctions last weekend helped clear some brokers books and farmers picked up reasonable deals on many lots.
But there were significant regional differences.
Non-LFA supplies at Skipton averaged 1.60 to lease (and failed to make a reserve of 8.50 for sale).
However, Greenslade Taylor Hunts offering at Taunton was much lower, at 75p-1 for lease deals (sale at 5 a unit).
LFA quota has held its value well. Many centres report strong demand for limited supplies and nearly all available lots have been cleared.
“Scottish LFA units are still trading at 26 to buy and 8.50 to lease. It has not moved much at all,” adds Mr Taylor.
English and Welsh LFA units performed equally as well, says Hereford-based Richard Hyde of Sunderlands.
“There is usually a 3:1 ratio between sale and lease prices, but this year sale values have remained firm.”
That gap has now opened up to as much as 4:1 at some centres. “But there has never two years the same,” he adds.
Early indications suggest quota has been moved between producers in bigger lots this year.
Initial figures from MAFF suggest transactions are down by a third compared with the 11,000 applications received by this time last year.
Many brokers will stop trading mid-week to clear paperwork ahead of the transfer deadline.
But for last minute quota hunters, there will be some cheap non-LFA deals to be had, say traders.