Range of Factors Affecting Prime Hogg Prices

A range of factors is affecting the current prime hogg trade, according to Stuart Ashworth, Head of Economics Services with Quality Meat Scotland (QMS).

Historically after a short dip in early January, prime hogg prices have increased through late winter and spring. This year’s prices, however, have remained fairly flat and, as a consequence, are currently 10% lower than this time last year. 

“The publication of census results for December from England and Northern Ireland offer some clues to the difference in this year’s prices,” said Mr Ashworth.

“They show a growth in the carryover of lambs into 2017 of over 5% in England and 13% in Northern Ireland. 

“Scottish results will be published next week but it seems unlikely they will show a different trend to those already published in England and Northern Ireland,” added Mr Ashworth. 

UK slaughter statistics show a higher weekly prime sheep kill during January than last year although auction sales were slightly lower. 

Auction throughputs in January and February also show a higher proportion of prime hoggs above 45kg liveweight than last year, while figures from deadweight price reporting abattoirs reveal a lower proportion of R3L grade carcases than last year.

“In other words,” said Mr Ashworth, “there have been higher numbers of heavy hoggs on the market and higher numbers of over-fat hoggs on the market. 

“Both these factors act as a break on price as they result in more out-of-spec lambs that abattoirs need to trade at lower price or with higher dressing costs incurred.”

According to Mr Ashworth, despite the weakness of sterling, exporters are finding trade difficult and, although there was a reasonably strong end to the year, sheepmeat exports in 2016 dipped by just over 1%.

“Domestic farmgate prices in France, our main export market, are 10% lower than this time last year and have fallen more steeply since Christmas than the previous year. 

“In Ireland, which is one of our main competitors in France, producers are seeing prices 9% lower than this time last year.” 

With an exchange rate 8% weaker than this time last year most, but not all, of the 9-10% fall in Irish and French prices could be covered by a steady sterling price and lower prices in euros.

Trade data shows some growth in exports to France during December, but the long-term trends show that export demand is weaker in January and February, picking up during March ahead of Easter, before easing back. 

“Although French sheepmeat consumption has been in decline, so too has their sheep flock,” said Mr Ashworth. “There may, therefore, be some growth potential for exports into France for the Easter trade because of lower French domestic production.”

Looking to the domestic lamb market, after some growth in demand during 2015, Kantar World Panel market research data shows that demand has cooled slightly in late 2016. 

“Some of this will have been due to more aggressive retail pricing of beef and pork,” said Mr Ashworth. 

“Nevertheless, there is significant demand for lamb at Easter and in recent years there has been some growth in demand at this time of year.” 

According to Mr Ashworth, capturing the value of the Easter market will mean, however, avoiding overweight or over-fat carcases. 

“The most recent week’s market information would suggest that in respect of fat cover, the proportion of hoggs of R3L grade and better has improved slightly,” said Mr Ashworth.

“The number of hoggs presented to the market over 45kg lwt has also diminished from the levels seen in mid-February and, auction prices have also edged higher.”