Firm start for sheep market in 2015

Hogg prices have started the New Year more strongly than is typical for the start of January, according to Stuart Ashworth, Head of Economics Services with Quality Meat Scotland (QMS).

“Typically the first few weeks of the year is a period when the market rebalances itself after the turmoil of the festive period,” observed Mr Ashworth.

“Consumers become more frugal with their regular food budget as they adjust to the eating and spending excesses of the holiday period.  It is not uncommon to see cattle and hogg prices drift lower through January as the market adjusts.”

This year, however, hogg prices have been edging higher at auction markets and comparing favourably with prices 12 months ago.  What is equally pleasing for producers, he said, is that this price increase has occurred despite a higher volume of prime lambs and hoggs reaching the market than last year. 

From June to November UK prime lamb slaughterings have accounted for some 350,000 head, five percent more than in 2013, and auction throughputs during December continued to run ahead of last year for GB as a whole but were similar in Scotland. 

“An equally striking feature of the current sheepmeat market is the particularly firm price of cull ewes. The strength in the cull trade is a reflection of the reduced numbers of cull animals reaching abattoirs,” observed Mr Ashworth.

Over the period from June to the end of November cull ewe slaughterings across the UK have been some 13% lower than last year.  The volume of ewes passing through auction markets during December continued to be lower than last year so, by historic standards, cull sheep are in tight supply. This, said Mr Ashworth, may also have helped demand for heavy lambs/hoggs which have been selling well.

“There is, then, some underlying strength in the UK sheepmeat market.  A contributory element here may well be that although the UK may be well supplied in sheepmeat this is not the case on a wider European stage,” added Mr Ashworth.

“With the exception of Italy and Romania, all the major sheepmeat producing countries of Europe, and most of the small producers as well, have seen stock numbers slide.  Ireland, for example, has seen lamb slaughtering in the final quarter of 2014 run around seven percent lower than 2013.”

During November, French lamb slaughterings fell below year earlier levels having run slightly higher earlier in the year. Nevertheless, lamb consumption in France is still under pressure and UK exporters are struggling to maintain export volumes but they are holding onto volume better than Irish and New Zealand suppliers. 

French statistics show that during October, GB deliveries of sheepmeat were up a fraction while New Zealand supplied three percent less and Ireland eight percent less.

Typically, exports of sheepmeat as a proportion of production, are at their highest in the first quarter of the year and often reach their high point for the year in March. 

“Over the past three years sheepmeat exports during the first quarter of the year have averaged 35% of production, while they often exceeded 40% of production in March,” stated Mr Ashworth.

“Consequently the sheep sector will be paying great attention to the political turmoil in Greece and the reaction of the European Central Bank to this and also the wider challenges of the Eurozone economy and its impact on exchange rates. 

“These actions may have a greater impact on producer prices than the supply and demand balance of sheepmeat on the wider European market in the short term.”