Milk quota prices inch upward
By FWi Staff
QUOTA prices inched up further this week in response to an increase in demand as we enter the final three months of the year.
ADAS put leased 4% butterfat at about 8.1ppl this week and 3.76% at 7.6ppl.
Mark Dyson of Townsend Quota Plan warns that the supply of leased quota may be less this year as most producers winding down or selling up are tending to sell their quota rather than lease it. “Most expanding producers prefer to lease rather than purchase because of uncertain profitability in the next few years.”
“It now seems highly unlikely that leasing prices will fall below 8ppl again this year, although the monthly production figures start to have more of an effect now,” said Mr Dyson. The UK September production figures are due out this week and will be a factor in how the market now develops.
The supply and demand for clean milk quota sales remains steady. Buyers are still looking to pay no more than 36ppl for 4% butterfat, with 3.86% moving at 34ppl, said a spokesman for ADAS this week.
The volume of used quota coming onto the market also remains stable. 4% butterfat is trading at 28.6ppl and 3.89% at 27.5ppl. However, Mr Dyson believes that with more used quota entering the market prices will have to drop before much is taken up.
“The demand, such as it is, is mainly from producers who want unused quota but prefer to purchase used quota and lease in as well. This will offset the cost of leasing against income tax,” said Mr Dyson.