Surplus quota could herald price fall

By FWi staff

QUOTA markets are quiet as producers work out the significance of last weeks milk production figures and the Monopolies and Mergers Commission milk report.

Leasing prices have eased as the volume of quota entering the market increases but demand remains static.

“We look to be heading for another fall in prices as more quota comes onto the market and trade continues to be slow,” said one agent.

The general feeling is that prices wont rise in the near future. Many producers are holding back in the belief there are few indicators to firm the market for a few more months.

As the stand-off between lessor and buyer continues, a number of lessors have started to accept offers.

And quota will trade if the price is under 6ppl, said a spokesman from ADAS Quota Direct.

The value of leased quota weakened slightly over the week with 4% butterfat at 6.2ppl and 3.59% at 5.4ppl.

Demand for clean quota remains limited and prices have also eased. Poor cashflows and the uncertainty of milk prices is resulting in many producers waiting to see if values fall further.

“With the barley harvest about to start in some areas, there are plenty of distractions for producers not to be too concerned about milk quota at present,” said a spokesman from Exeter based agents, Townsend.

Clean quota of 4% butterfat has fallen back this week at 32ppl with 3.78 % at 30ppl.

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