Standoff in milk quota market

By FWi staff

THE milk quota market is in deadlock at present as those looking to secure quota are reluctant to pay current values and lessors are unwilling to drop their prices.

Lessors will continue to hold off while they await the July production results unless they are desperate for money, believes Mark Perry of agents ADAS Quota Direct.

Last weeks confirmation of a £9 million super-levy could underpin the lease market this year, he said, because farmers will be keen to obtain quota.

If farmers feel milk production is over quota, there could be a huge impact on quota prices, which could rise later this season, added Mr Perry.

But an anticipated fall in the price of milk following last months Monopolies and Mergers Commission report is limiting how much producers are paying for quota.

If producers are looking for cover they should be getting some in now at about 5ppl, advised Mr Perry.

Leased quota at 4% butterfat slipped 0.29p to 5.25ppl over the week with quota at 3.75% available at 5ppl.

The volume of quota offered for sale market remains stable although demand is poor.

Clean quota offered for sale fell 1.56p to 27.86ppl for 4% butterfat, and quota at 3.69% butterfat is available at 26ppl.

But poor cash flows and uncertainty in the future milk price mean buyers are reluctant to pay these prices, said Mr Perry.

“Sale values will also depend on what production does and could come back further,” he added.

Nigel Astbury, of quota agents Townsend, said that although demand is weak the limiting factor is vendors.

“Those especially nervous of the current climate have sold all they wish for the time being, with the remainder happy to weather the storm.

“Further market falls cannot be ruled out,” he added.

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