New Season Lamb Price High but Volumes Low

New season lambs are beginning to appear on the Scottish market and are continuing to benefit from a firm trade which, although they have dipped this week, sees prices some 10% higher than last year. 

According to Stuart Ashworth, Quality Meat Scotland Director of Economics Services, the poor spring weather and lack of grass has slowed the rate at which these new season lambs are reaching the market, with volumes considerably lower than last year. 

“Weather conditions have also contributed to the volume of hoggs on the market continuing at a higher rate than last year and they, similarly, are benefiting from firm prices,” said Mr Ashworth.

Influencing the market place is the timing of the Muslim Ramadan festival which began on 17 May and continues until 15 June and historically provides support for sheep meat at the start and end of the festival period.

So, it is perhaps no surprise, he said, that current market prices for prime sheep have eased slightly now that the festival has started, but may see some support again in the week before the conclusion of the festival.

“While these short-term influences are important the medium-term prospects for the current lamb crop are robust.  The legacy of the spring weather conditions will inevitably be a reduced lamb crop and a tighter supply of prime sheep,” observed Mr Ashworth. 

“Also contributing to a tighter supply will be reduced availability from New Zealand.  As New Zealand draws towards the end of its current lamb crop year, in September, New Zealand abattoirs continue to handle fewer lambs than last year.”

New Zealand trade data also shows New Zealand has increased global exports this lamb crop year, but not to the UK.  Last autumn New Zealand lamb slaughterings were high, influenced by weather conditions, and a return to a more normal season for their new lamb crop would potentially lead to a more balanced delivery of lambs into abattoirs and, in comparison to last year, potentially lowering autumn production.

In the European context, the firm UK sheepmeat price means that the current UK price is higher than the European average price, as it often is at this time of year, but unusually, it is higher than the French price. 

Consequently, in the short term, export competitiveness is constrained, but then so too is product availability and historically exports reach their seasonal low at this time.

Between June 2017 and March 2018, UK sheepmeat exports were 12% higher than the same period a year ago. December census results from across Europe show the breeding flock to be broadly unchanged but, with continued dips in two major producing countries - France and Italy - opportunities to export to Europe will continue.

“As a consequence, returns in the sheep sector will continue to be as vulnerable to exchange rates and the ebbs and flows of reactions to Brexit negotiations as to the volume of lambs in the market,” concluded Mr Ashworth.