Inside Milk
Price phosphate rights makes strange jumps
The price of phosphate rights shows erratic movements. The rapid price increase of last week is followed by a sharp correction this week.
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The DCA quotation for phosphate rights rose last week by €15,50 to €239,50 per right, but from that point onwards the downward trend has started again. The rapid price increase makes potential buyers cautious, while the selling parties have started offering phosphate rights. As a result, the price has fallen, because the rights are now traded for a price below €220 per right.
The DCA quotation for phosphate rights drops this week by €20,50 to €219 per right. The price of leasing rights is also declining; these are now trading for around €40, while last week a price level of €55 was on the boards. The rapid price drop is related to a wide range of leasing rights.
Many rights traded
Despite the price drop, buyers are not waiting, because traders report that many rights are being traded again this week (both purchase and lease). In a way this makes sense; Dairy farmers don't have much time left to watch the market, given the phosphate balance should be in order within 4 weeks.
The market is expected to remain erratic in December, because the necessary volumes are likely to still be traded. The erratic price movements create a tense market situation, because in a few days the price for purchasing rights per dairy cow (43 kilos of phosphate) can easily be €1.000 higher or lower.