Prime Lamb Market Remains Resilient

Scottish prime lamb producers continue to benefit from market prices which are 7% above this time last year, according to Stuart Ashworth, Head of Economics Services with Quality Meat Scotland (QMS).

Although prices dipped in the first week of August, they quickly regained ground with sales in the first half of this week generally showing small gains.

Since the beginning of June, however, the lamb market has been volatile with much greater variability in prices from one week to the next than is normal.

“Contributing to the strength of the market is a continued lower volume of lambs reaching the market place”, said Mr Ashworth

“Poor weather has slowed lamb growth rates and also created backlogs of work on farms as both the grass and cereal harvest has been delayed.

“Evidence from the auction markets suggest lamb availability is 10% lower than last year, although quality is similar. Nevertheless, although supplies are tighter, Scottish abattoirs have maintained their kill levels at similar levels to last year.”

A lower Scottish ewe population than last year, combined with some regionally heavy losses at lambing due to wet weather, is likely to have resulted in a smaller Scottish lamb crop.  However, across Great Britain as a whole, these shortfalls are likely to be offset by the higher Welsh and English ewe population reported in the December 2011 census, up 5% and 2.5% respectively.

Lower levels of marketings across Great Britain over the past eight to ten weeks, suggests some backlog building on farms consistent with poorer lamb growth rates. The challenge for the producer going forward is to manage the delivery of these lambs to the market, Mr Ashworth said.

“In Ireland we are beginning to see the consequences of a reported increase in Irish ewe numbers, 4% in December 2011”, he added.

“Since the beginning of June, the volume of lambs reaching Irish abattoirs has been 7% higher than last year and prices are struggling to hold onto last year’s levels.

“There are some assertions that the Irish price is only holding steady because of the lack of competition from UK lambs in the French market through a combination of lower volumes and stronger sterling exchange rates.”

Market research is beginning to show signs of a revival in UK lamb consumption, suggesting that the volume of lamb bought in retail stores during June increased by 27% with roasting joints benefiting at the expense of mince.  While some of this may have been driven by the poor weather, some will have been driven by the improved price competitiveness of lamb in store.

Information from the Office of National Statistics suggests that in July the average retail price of lamb was 1% lower than twelve months ago while beef was 10% more expensive and pork 5% more expensive.

However, within the portfolio of lamb cuts, the price of lamb mince has increased while loin chops and bone-in roasting joints have become cheaper.

Encouragingly, despite the strength of Sterling, exports of sheepmeat have stayed stable. Provisional data for exports during June show they were barely 2% lower than last year.

“The current level of supply is facing a ready demand which is supporting current prices. However, prices will remain sensitive to the volume of lambs reaching the market”, said Mr Ashworth.