As the volume of prime lambs reaching the market continues to build towards its seasonal high, farm gate prices have followed the usual price pattern and dipped sharply. Nevertheless, prices remain at a very similar level to this time last year.
The latest market analysis from Quality Meat Scotland (QMS) shows that, despite auction throughput increasing seasonally and reaching the highest level of the season so far, the proportion of heavy prime lambs, over 45kg liveweight, in the supply is higher than last year.
“Analysts are waiting for results of the June census to give an indication of the size of the 2017 lamb crop, although the expectation remains that it will be at least as big as last year,” commented Stuart Ashworth, QMS Head of Economics Services.
The market can be sensitive to both volume and Muslim festivals and the next Muslim festival is the end of the Hajj over the weekend of 1 September to 4 September.
“Last year this festival began on the 10th September and in the week running up to it prime lamb prices saw a lift of 13p/kg liveweight in the auctions before losing all of the increase in the following two weeks,” said Mr Ashworth.
The market place will also be influenced by international trade. New Zealand is struggling to make full use of its tariff rate quota with the European Union, with deliveries in the first half of 2017 down 21% on the year; some 25,000 tonnes.
Mr Ashworth said: “UK trade data shows deliveries of New Zealand lamb down 23% in the first half of 2017, although deliveries of fresh chilled product have seen a more modest decline of 17%.
“Meanwhile, Beef and Lamb New Zealand have released their estimates of the size of the current New Zealand breeding flock showing a fall of 0.9%. Nevertheless, because of improved ewe and hogg condition, they are forecasting an increase of 1% in their 2017-2018 lamb crop.”
He added: “Having achieved growth in markets closer to New Zealand it seems unlikely that New Zealand will make full use of their European quota for yet another year. Nevertheless, Europe remains a key and high value market for New Zealand exporters.”
UK trade data does indicate some significant growth in UK sheepmeat exports this year, undoubtedly helped by the continued weakness of Sterling and European prime lamb prices currently holding some 3-4% higher than last year; which means in Euro terms the UK lamb price is almost 1% lower than last year improving competitiveness.
“Provisional figures show UK exports of sheepmeat in the second quarter of 2017 to have climbed by around 25%, compared to last year, with a recovery in shipments to France and growth in shipments to Belgium and Germany,” said Mr Ashworth.
“Non-EU exports, which are mostly lower value cuts, have also grown but only make up around 7% of all exports.”
As a result of the change in trade patterns and level of domestic production the volume of sheepmeat on the UK market in the first half of 2017 fell around 7%. Domestic demand has not therefore been strong enough to hold sheepmeat in the UK and exports and currency weakness have again played a big part in holding farm gate prices where they are.