4th September 2015

Promotion May be Factor in Price Rise

Promotional activity behind lamb and the media coverage of the wider debate on farm prices, may be starting to exert some influence on farmgate lamb prices, according to the latest analysis by Quality Meat Scotland (QMS).

According to Stuart Ashworth, QMS Head of Economics Services, while it may be a little early to demonstrate cause and effect, it will be very welcome to livestock producers that farm gate prices have increased for cattle, pigs and sheep in the past week.

“The biggest movement has been in auction market prices for prime lambs which have shown a significant lift over the past week,” said Mr Ashworth.  However, he noted that lamb prices continue to struggle to match last year’s levels because, compared to last year, the market remains well supplied with British lamb. 

Slaughter statistics for Great Britain show a 3.5% increase in prime sheep slaughtering over May, June and July assisted by a higher than expected hogg kill in May and June. 

“Furthermore, a trend for producers to sell heavier weight lambs, resulting in the average carcase weight increasing by 0.5kg per lamb, has resulted in a lamb production increase of almost 8% in the first three months of the current lamb crop year,” he said.

“Meanwhile ewe slaughterings have fallen 10% and mutton production is down eight percent.  In this case, however, reduced production has not aided cull ewe market prices which have, since June, generally been lower than last year.”

Indications from auction market throughputs, said Mr Ashworth, suggest that August also saw an increase in lamb meat production compared to last year as the total number of lambs sold remained higher than last year.  This helps to explain the pressure that was applied to lamb prices during August.

Details of auction market throughputs over the past two weeks suggest the volume of prime lambs sold through auctions in the early part of this week have been lower than the previous week. 

“Thus, in the timescale of a single week a tighter supply has contributed to the lift in the auction price at the start of the week. 

“However by the middle of this week the volume of lamb in the auctions had recovered and exceeded the levels seen last week. However, market price was holding suggesting a general improvement in market conditions from those seen during August, possibly aided by promotional activities,” observed Mr Ashworth.

Also offering some support for lamb prices, he said, has been the weakening of sterling which has seen a move from one euro buying 70p in late August to buying around 73p currently.

This accounts for a four percent increase in sterling value without changing euro value, making UK lamb more competitive on the European stage. However, stated Mr Ashworth, the European export market remains challenging.

With a Muslim festival occurring on 22nd September, there remains some prospect of support for the market in the short term from this quarter as well, he added.

Caption: Banffshire farmer Blair Duffton of Backmuir Farm, Keith, who finishes around 8000 lambs, pictured today with Alan Bain, staff member at Asda’s Bridge of Dee store in Aberdeen ahead of a major weekend of sampling activity by QMS in Scotland. This see around 20 sampling activities in stores across the country, part of the 112 days of sampling being undertaken in the on-going QMS promotional push behind Scotch Lamb PGI.

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