The first full week of trading in 2018 has seen farmgate prime hogg prices stabilise, standing 6% higher than last year, 2% higher in Euro terms. This left them trading 13% above their autumn low point. Prime sheep prices have also firmed across Europe, according to Quality Meat Scotland.
Compared to a year ago French producers are receiving about 3% more, Spanish heavy lamb producers about 18% more - although their prices have cooled over the post-Christmas trading period - with Irish prices nearly 5% higher.
“However, while the Spanish heavy lamb price has been particularly firm, prices for Spanish light lamb (under 12.5kg dwt) which are generally the highest in Europe are particularly depressed. They are some 15% lower than a year ago, having fallen dramatically after the Christmas demand was met,” said Stuart Ashworth, QMS Head of Economics Services.
However, other markets where light lamb production is important - for example Italy and Portugal - have seen light lamb prices marginally ahead of last year. Lamb is a traditional New Year dish in southern Europe, with a small roasted carcase being the main course at large celebration meals.
One factor which has supported French prices has been lower production in the final quarter of 2017, said Mr Ashworth.”
As a result, producer prices increased from a position where they were 0.5% lower year-on-year in September, to 2% higher during November and 3% higher at present.
“This reduced supply encouraged France to import more sheep meat than a year ago during November. This growth came from trade with Ireland and New Zealand as the UK failed to match deliveries of a year ago. Though, supported by a competitive exchange rate, the UK did see significant growth in exports to other EU countries, particularly Germany and Belgium. This was sufficient to achieve an overall gain in export activity in late 2017,” said Mr Ashworth.
Irish lamb slaughterings so far this lamb crop year have, he added, been much higher than last year. In the second half of 2017 Ireland slaughtered 8% more lambs than in 2016.
“Although there has been some increase in imports from Northern Ireland, this would suggest a lower Irish carryover into 2018, given that their June census showed a growth of perhaps 3% in the Irish lamb crop,” observed Mr Ashworth.
French data suggests that the shortfall in their slaughter numbers is likely to continue as their breeding ewe flock continued to decline.
Meanwhile, further afield, New Zealand has had a good lambing. Despite 2% fewer ewes being put to the ram, a record lambing ratio meant that the lamb crop was 2% higher than 12 months before.
However, Beef + Lamb NZ has forecast a stable supply of export lambs onto the market as strong prices encourage flock rebuilding. However, a drought at the end of 2017 may have upset this forecast, leading to a short-term rush of lambs onto the market, just in time to meet demand from China for its upcoming New Year celebrations, plus Easter in Europe. Indeed, slaughter numbers rose 15% year-on-year in October and November.
It should, however, be noted, said Mr Ashworth, that farmgate lamb prices in NZ remain elevated, up 33% on last year in local currency, 25% in sterling and 18% in euro.
As a result, New Zealand lamb is significantly less price competitive in early 2018 and Australian lamb has also begun 2018 dearer than12 months ago, with farmgate prices up 5-10%.