As the turn of the year approaches, the trade in replacement processing agreements (VVOs) often rears its head. There is a lot of information this year, but concrete matters are often not forthcoming. Buyers hiccup at high prices.
The DCA quotation for replacement processing agreements (VVOs) increases this week by €0,11 to €1,36 per kilo. This means that the quotation is somewhat lower than the prices that the trade is betting on. A call round yields an offer of around €1,50 per kilo.
Higher than previous years
Prices are considerably higher than at this time of year last two years. Last year the market dropped to approximately €0,50 per kilo in the lowest weeks. Two years ago, the DCA quotation ended the year at €0,75 per kilo. Livestock farmers still remember such low prices. Although there is currently a lot of information about VVOs, buyers often do not take action.
At the same time, selling parties are not prepared to compromise on price. They claim that significantly less manure has been processed this year, which may result in fewer VVOs in circulation. Livestock farmers rely on the shrinking of the Dutch livestock herd, in particular the number of pigs has fallen sharply. This friction is likely to lead to an exciting denouement in the trade in the last weeks of this year.
See you on New Year's Day
The extent of the processing obligation depends on the region where a livestock farmer is located. As in previous years, this concerns 59% in the South region, 52% in the East region and 10% in the rest of the country. Livestock farmers have until New Year's Eve to get their manure accounts in order for 2021. The expectation is that trade will actually pick up after Christmas. Reportedly, many livestock farmers have yet to buy.