Selling hoggs at the optimum weight and cleanliness will help to maximise producer margin in what seems likely to be a well-supplied domestic market in the coming weeks, according to the latest analysis by Quality Meat Scotland (QMS).
With June census figures revealing the current lamb crop is almost 2% larger than last year, there is the likelihood of a higher volume of hoggs to be marketed this year, according to the latest Quality Meat Scotland analysis. This will have the potential to constrain producer prices.
As the lamb crop year advances towards April, there is typically an increase in the proportion of hoggs heavier than 45kg liveweight, and outside the standard quality quotation (SQQ), observed Stuart Ashworth, QMS Head of Economics Services.
“In January heavy hoggs can make up more than 25% of the auction offer, rising to more than 30% of the offer as we reach April,” said Mr Ashworth.
“This year the proportion of heavy hoggs is currently higher than for several years. These heavy lambs are heavily discounted on a pence per kilo basis, but they often return the same income, if not margin, per head as hoggs in the more desirable retail specification of 40 to 45kg liveweight.”
The volume of heavy lambs and hoggs can, however, act as a break on the SQQ price, he warned.
“In 2015 and 2016, the proportion of heavy hoggs in the auction offer was higher than the five year average and began to exceed 30% in March and April 2015 and 2016 when the SQQ price lost momentum. Presenting hoggs to the market which meet buyer specifications will help to maximise the return farmers can achieve,” said Mr Ashworth.
The pressure which prime sheep prices have come under in the past week is in part due to a lift in the volume of hoggs reaching the market. The latest price information from across Europe shows both heavy and light prime sheep prices coming under pressure post- Christmas, this general malaise in the wider European sheepmeat market is also having an impact.
Prices for heavy lambs have dipped 10% since Christmas in France, 12% in Spain and 2% in Ireland. When quoted in Euros the GB price has fallen 4% since Christmas. Light lamb prices across Europe are also under pressure with the main lamb producing countries - Spain, Italy and Greece - showing falls of up to 13% since Christmas.
Compared to this time last year, the Euro price in France for a heavy lamb (or UK-type lamb) is 8% lower with the Spanish price 2% lower, the Irish price 13% lower and GB 15% lower, said Mr Ashworth.
“Light lamb prices are from 4% to 10% lower across the main lamb-producing countries. The weakness of Sterling compared to this time last year means that in Sterling terms the current hogg price, some 5% lower than a year ago, is sheltering the producer from some of the price pressure found in other parts of Europe,” he said.
The wider European market is clearly under some pressure with demand cooling now that the Christmas festive period demand has passed, Mr Ashworth added. Slaughter statistics are not yet available for France and Spain, but Irish abattoirs have been slightly better supplied through December and into January.
However, in the second half of 2016 Ireland slaughtered fewer lambs than in 2015 but according to their June census they had a slightly larger lamb crop and so may have heavier supplies in the first quarter of 2017.
“The continued decline in the French breeding flock suggests they will be slightly less well supplied with domestic product, but the Spanish ewe flock expanded slightly in 2016.
“Despite the fall in French production the longer-term decline in French sheepmeat consumption means that this market remains well supplied. French trade data shows that, with the exception of February, imports have been lower in each month from January to October 2016 with the UK, Ireland and New Zealand all under pressure,” observed Mr Ashworth.
Meanwhile supplies of UK prime sheep have been creeping ahead of year-earlier levels through December and January. However, over the second half of 2016 total prime lamb slaughter numbers failed to match those of 2015.