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What's Causing Lamb Market Pressure?

09 September 2014

UK – Many factors have led to Scotland’s recent fall in lamb prices, including a rise in beef demand, a Scottish analyst has said.

Lower sheepskin prices, a stronger sterling and 50 per cent lower imported lamb consumption this summer have combined to put pressure on the market.

This is according to Stuart Ashworth, head of economics services at Quality Meat Scotland (QMS), who said it was wrong to blame oversupply for falling lamb prices.

“The recent fall in prices cannot be laid solely at the door of a high volume of lambs and other market elements must be at play,” said Mr Ashworth.

However, he added that the correct weight of lambs is an issue now that more heavy lambs are being marketed.

IMAGE NAME/DESCRIPTION
Much more than high lamb supplies are causing pressure in the markets - Stuart Ashworth

“The increase in heavy lambs outside the standard quality quotation, or preferred market specification, will act as a brake on the trade,” he explained.

This was echoed by English Beef and Lamb Executive analysts who reported choosier processors now that supplies were strong.

They reported a seven pence drop on the prior week to average 157.3 p per kilo.

EBLEX said: “Despite the market being under pressure, reports continue to indicate that correct marketing of finished lambs is still delivering better returns.

“Lambs either under finished or too fat will always be more difficult to sell. However, with ample supplies in the market place processors currently have the opportunity to be more selective.”

In Scotland, the current auction market price of 155 p/kilo is nine per cent lower than at the same point last year and is at a four year low for the time of year, QMS statistics show.

Consumer information shows growing beef demand both sides of the border. Mr Ashworth said mince is steady but summer weather may have switched people off from lamb, he explained.

“Lamb is not a popular dish when the weather is hot and some build-up of roasting joints will have occurred as, for example, demand for leg roasts has come under pressure while demand for lamb chops has remained good,”

EBLEX confirmed that beef has followed a similar trend.

“With retail beef prices having strengthened considerably since the start of 2013, the ratio between the two meats has been maintained, resulting in limited, if any, downwards pressure on lamb prices at retail level.”

Mr Ashworth said that low lamb demand was a pattern seen across Europe as a whole, pinning the blame on the ‘struggle’ of member state economies.

“Light lambs under 12.5 kg deadweight are trading 14 per cent down on the year in Spain but prices are 2 per cent higher in Italy.

“The downturn in lamb prices across Europe alongside a reduced supply points towards sluggish consumer demand for lamb as European economies continue to struggle.”

Adding more pressure on the market is a 25-30 per cent drop in sheepskin prices due to Chinese demand easing.

Addressing UK exports, Mr Ashworth underlined the importance of exports growing through autumn and into winter, when a large portion of UK lamb is shipped abroad.

This means market confidence and exchange rates ‘weigh heavily’ in the fourth quarter, he added.

However, Beef and Lamb New Zealand forecasts a 2.6 per cent drop in lamb production for the 2014/15 year. Mr Ashworth said this may limit New Zealand’s impact on the UK market.

Michael Priestley

Michael Priestley
News Team - Editor

Mainly production and market stories on ruminants sector. Works closely with sustainability consultants at FAI Farms.



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