The Easter market and the decision to delay Brexit has helped to support the prime sheep market over the past few weeks, according to the latest analysis by Quality Meat Scotland (QMS).
Despite the recent strengthening, producer prices remain 10-15% lower than last year. The first of the new season lambs are beginning to arrive on the market in similar numbers to last year and trading at a similar premium over hoggs as this time last year - around 40p/kg lwt.
However, in line with normal seasonal trends, the completion of Easter buying has seen market prices dip slightly this week along with throughputs.
As would be expected, marketings via auctions increased in the fortnight before Easter to the highest throughputs since the turn of the year, however, they remained slightly lower than last year’s throughputs during the key Easter period.
Although trade data is not yet available for March, UK sheepmeat exports did see increased shipments during February. Provisional indications from New Zealand are that they shipped less lamb to both the UK and Europe during March in the run up to Easter. These trade patterns collectively point towards a tighter-supplied domestic market and rising prices.
“Lamb imports play an important part in maintaining consumer interest in lamb at this time of year,” said Stuart Ashworth, QMS Director of Economics Services.
“Kantar Worldpanel consumer market data highlights the effect of Easter on consumer behaviour. Purchases of lamb can double in the four-week period ending with the Easter weekend compared to other times of the year.”
However, this time of year also sees a change in consumers’ buying behaviour and demand for leg roasts can increase five or six-fold, said Mr Ashworth.
“The reality is that even if all the UK fresh lamb legs produced in the fortnight before Easter were all sold in the UK – and none were exported - there would still be a shortfall against demand.
“The challenge for processors is managing carcase balance, the key determinant of what they can pay producers, which comes from trying to meet the demand for leg roasts with the challenge of marketing those cuts of lamb not required by the UK consumer at Easter but which inevitably are produced,” observed Mr Ashworth.
Access to international markets is key to achieving return on the whole carcass, added Mr Ashworth, as a route to sell product not in immediate demand in the UK.
“The importance of this is well illustrated by the way New Zealand distributes different cuts of lamb to different parts of the world,” he said.
“New Zealand is increasing both the volume and value of its exports to China and is also seeing high value opportunities in the United States, reducing its dependence on the European market.
“A further consideration in international trade is the so-called non-tariff barriers and costs which may include administrative hoops in relation to notification and certification of deliveries through to inspection and approvals of abattoirs and processing plants. By delaying Brexit these uncertainties and costs have been temporarily removed for UK exporters but will of course return in coming months.”