Entitlement demand outweighs supply as May deadline looms
Single Farm Payment entitlements trading has stepped up a gear in recent days as the closing date of May 15 looms.
Demand for entitlements is high, with potential buyers outnumbering sellers by at least two to one. However, the mismatch between demand and supply has affected the volume of trading that has been completed in some areas.
Trader Helen McGee described her office as "like something out of Wall Street" in the past week, with buyers demanding entitlements of all values from low to high.
"The volume of trading is twice that of last year," said Ms McGee. "Demand is very strong."
In recent days, entitlements of €200 sold for 1.6 times their value, while those of €300 sold for a multiple of 1.7-1.8.
Units of €400-500 sold for twice their value, according to Ms McGee.
Wexford-based trade Jay Brennan said units worth more than €1,000 were selling for at least twice their value, while lower value entitlements were selling for 1.5 and upwards.
"Up to €200, you're talking (a multiple of) 1.5, from €200-300, it's 1.6-1.7 and from €400-500 they're paying 1.75-1.85," he said.
Entitlements of €600-800 sold for twice their value and units of €1,000 or more sold for a multiple of 2.1-2.2.
Mr Brennan said first-time entitlement buyers were typically seeking units of €100-350, while buyers with entitlements were keen to upgrade to higher value units of at least double their original unit.
"The volume of trading has picked up this week but there is a reluctance on the part of sellers to close a deal as many of them are waiting to see what the new single payment regime will hold for them," he added.
In Cavan, auctioneer Liam Reilly said availability was holding back the level of trading.
"The demand side is busy but not supply," he said. "Availability is a problem because people are holding onto their entitlements. They are afraid to sell in case they lose out in the CAP reform."
Some buyers are keen to secure low-value units in the hope they will be upgraded in the new SFP regime.
"Units of €50-150 are making 1.5 times their value, while units of €250-300 are making 1.5-1.6," said Mr Reilly.
Mallow-based trader John Cronin maintained that low-value entitlements were in higher demand because buyers could not access the capital to buy high-value units.
"Once you go over €400, people are finding it hard to procure the money. It's that money factor and also buyers think the lower value units are better value because they expect them to be increased in the new SFP system," he remarked.
Mr Cronin said units of under €200 were selling for a multiple of 1.2-1.3, while units of €250-400 were making 1.5 times their value. Units over €400 were selling for 1.6 times their value.
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