Inside Milk
Phosphate law was never as expensive in 2020 as it is now
Whether phosphate rights are currently expensive is debatable, but the price is moving to the highest level since November last year. Whence this revival?
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The demand for phosphate rights has increased significantly, compared to the extremely quiet weeks during the summer holidays. Prices have exceeded €140 per right since the middle of last week and remain at that level. There is no direct explanation for this small revival.
The fact is that milk prices in the Netherlands have picked up somewhat in recent months, after the corona setback in the second quarter. At the same time a average basic milk price of about €32 per 100 kilos, but in the middle of the lockdown period there was fear of worse. This may create additional demand, just like the rainy weather conditions that postpone the grass harvest and the increased livestock population in the Netherlands.
Rights temporarily non-transferable
What is also playing a role in the background is that phosphate rights will soon be temporarily non-transferable. Between September 18 and October 5, RVO will adjust the site, meaning that transactions cannot be processed. Traders indicate that dairy farmers are anticipating this by carrying out their planned transactions before then.
A further increase in the rights price is not necessarily likely. At the same time, neither will there be a decline, now that sellers have smelled price levels above €140 per right and want to hold on to them. The DCA quotation therefore remains at €141 per right this week.