Inside Milk
The price of phosphate rights cannot continue to fall
The price developments of phosphate rights are still very much on the minds of dairy farmers. Relatively many entrepreneurs still have to buy the necessary kilos of phosphate to ...
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The DCA quotation for phosphate rights has fallen this week by €7,50 to €252 per right, with trading not booming. In the meantime, the listing has been going on for 4 weeks downward trend to see. This is simply a result of increasing supply and weak demand.
Behind the apparently weak question lies a more complex reality. Relatively many dairy farmers still have to take action to get the phosphate balance in order. The time for this is until New Year's Day. Reducing phosphate production (by cutting livestock) is becoming less and less interesting. After all, the fourth quarter is almost a month old again.
€252
per right
weekend 43
Spread purchase moments
The purchase date of phosphate rights is often spread over the calendar year. A certain amount every quarter is a strategy that is quite common. It is expected that many entrepreneurs will still purchase phosphate rights in the fourth quarter. These are often small volumes, 100 to 300 kilos of phosphate. At the same time, there are also dairy farmers who still have to buy more than 1.000 kilos of phosphate, several traders say. For such volumes, partial leasing of rights is an alternative.
As long as the price continues to fall, potential buyers will wait and see. However, the necessary transactions are being prepared in the background. It often takes trial and error and waiting for the milk money to arrange the financing. Given the buyer pressure, the price is not expected to drop much further.