Inside: Dairy Market
Trade in phosphate rights is picking up again
After a few weeks of price declines, there is a trend break in the phosphate rights trade. Due to various developments, demand is picking up again, but at the same time the market is limping in two minds. What does this do to the price?
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Brokers in phosphate rights report interesting market developments. On the one hand, the brief, which Minister Schouten sent to the House of Representatives, for relief. However, there is still uncertainty about how exactly it will be implemented. On the other hand, there is the possible 'stand still' at FrieslandCampina. This stirs up uncertainty here and there.
Light to lively trading
Depending on the region, trade is described from bland to lively. There is talk of an improving trade compared to last week. Although not every call means actual business, the majority confirm that they have done business. Incidentally, dairy farmers are only now realizing that the increasing milk yield per cow since the reference date requires additional phosphate rights. However, the majority seem to have a reasonably good idea of how many extra kilos of phosphate need to be purchased.
Commission agents report that dairy farmers opt for distribution to create the required phosphate space. This means: extra phosphate rights, keeping fewer young cattle and taking cows to the slaughterhouse. The latter is less preferable, given the current milk prices. Spread is also applied at the moment of purchase.
As the week progresses, decisions are made, traders report based on transactions that are made. The main focus of the transactions is for 200 to 600 kilos of phosphate. The volumes above that can usually be counted on one hand. There are also dairy farmers who absolutely want to wait until January 1.
Offer in the South of the Netherlands
Various parties say that the supply can mainly be found in the South of the Netherlands. The options on phosphate rights are often traded from the intensive areas to the less intensive regions (Northeast Netherlands). It is also learned that banks are becoming more willing to finance phosphate rights. The assessment of commission agents is that the majority of trade is financed from their own resources.
On balance, trade is picking up, but at the same time the prices are and will remain daily. For now, selling under €200 is not an option anyway. In week 48, options on phosphate rights are traded on average for €202 per phosphate right. This is an increase of €1,25 compared to last week.
The price of traded options in phosphate rights is picking up again.