QMS (Quality Meat Scotland)
20 October 2014
Prices and Supplies
Lamb prices at GB price reporting abattoirs stabilised in late September and early October. In the first week of October, the standard quality quotation (SQQ1 ) price edged over the 354p/kg dwt mark as increased demand from the Eid al Adha Islamic festival was largely offset by a surge in supplies. This was 15p lower than in the opening week of September and 30p below the same week last year; a decline of 8%. Prices have exhibited a similar seasonal trend to last year, meaning that the annual discount has been relatively stable at 8-10% since August. During September, 69% of price reported lambs graded at R3L or better compared with 65.5% 12 months before.
However, the proportion dipped to 65% in the final week of September before falling further to 61% as October began. Nevertheless, it remained marginally ahead of 2013 levels. Scottish auction prices for prime lambs have followed a similar seasonal pattern to last year. However, the October lift has come two weeks earlier this year. The most likely explanation is that the Islamic calendar has brought Eid-al-Adha forward by two weeks. After falling to 143.5p/kg lwt in the week ended September 24, prices then picked up ahead of the festival, rising 10p at the end of the month. This increase came despite increased volumes at the GB level, demonstrating the strength of demand.
Although prices eased a little at the start of October, they remained higher than in the first three weeks of September. At 151p/kg lwt, the average SQQ lamb was valued 9.5% lower than in early October 2013. An increased proportion of heavy lambs has continued to place downwards pressure on market prices. Indeed, in the week ending October 8, 29% of the total weekly volume of lambs sold at Scottish auctions were too heavy to be classed as SQQ compared with 22% in the same week last year. The average weekly lamb kill at UK abattoirs continued to build through August, rising 13,000 head on the month to 267,100 head. However, relative to last year, growth in lamb slaughterings slowed further. Having risen by 10.5% year-on-year in May and June, and by6.5% in July, the monthly kill was just 1% higher in August at 1.068m head. Supplies continued to exceed year earlier levels in Scotland and Northern Ireland but were fractionally lower in England & Wales.
The average lamb carcase weighed 19.1kg at UK abattoirs during August. This was up by 0.1kg on the month and by 0.4kg on the year. As a consequence, the 1% rise in throughput converted into a 3% year-on-year rise in lamb production volumes. Scottish abattoir throughput continued to exceed last year’s levels through August with monthly lamb kill numbers, at 114,500 head, showing an annual increase of 3%. This was slower than the previous month’s 6% ncrease. Meanwhile, a 5,000 head increase took the average weekly kill to a 2014 high of 28,600 head. Carcase weights also rose seasonally. At 20kg, they reached a 4-month high and were 0.2kg higher year-on-year.
Following 7 consecutive weekly declines from mid-August up to the end of September, cull ewe prices then lifted into October as auction supplies tightened. At nearly £49 a head, the average cull ewe sold for £6 a head (14%) more than in the same week of 2013. The rate of annual decline in slaughterings of ewes and rams at UK abattoirs slowed slightly in August to 9.5% having held in double-digit territory since March. The monthly kill totalled 154,200 head. On a weekly basis, average throughput lifted seasonally to 38,600 head; the highest of the year-to-date. UK abattoir sheepmeat production was 1% higher than a year earlier during August at 24,600t. This was the fifth consecutive month of increases. Lamb accounted for 83% of the total; up from 81.5% in August 2013. Having declined throughout the first half of this year lamb consumption turned round in the four weeks to August 17.
According to Kantar Worldpanel figures, sales picked up by 20% year-on-year compared with a year-to-date-decline of 9%. While there were significant increases in sales of chops & steaks (7%), leg roasts (58%) and shoulder roasts (25%), mince sales declined by 5.5%. Whereas lower sales of mince are likely to have been influenced by its cost going up by an average of 6%, cheaper prices for chops & steaks and leg roasts are likely to have helped sales volumes. Nevertheless, a 4.5% average price increase did not put consumers off shoulder roasts. Seasonal pressure continued to bear down on heavy lamb prices across much of the EU in September. As a consequence, the EU average was 2% lower in the first week of October than it had opened the previous month, trading at €4.65/kg dwt (364p/kg).
The largest declines of 6-8% came in Holland and Romania. However, there was a more modest downwards move in France, GB, Poland, Austria and Germany. By contrast, there were increases of 1% in theIrish Republic, 3% in Spain and 4.5% in Northern Ireland (NI). The EU heavy lamb average was 2.5% lower on the year, with the declines led by Romania (-12%) and France (-8%). However, prices were 1% higher in Spain, 3.5% higher in the Republic of Ireland and up 5.5% in NI; though in sterling terms, these were all still lower.
Whereas heavy lamb prices fell back, the EU light lamb average rose 2.5% in the month to October 5, reaching €6.14/kg dwt (480p/kg). Significant gains to producers in Spain (6%) and Portugal (8%) were set against no change in Italy and 1% declines in Greece and Hungary. Though higher on the month, Spanish prices remained well down on last year (- 11%). Meanwhile, prices were 3% lower in Italy and Greece. By contrast, Hungarian and Portuguese light lamb producers saw respective annual gains of 2.5% and 7%. UK sheepmeat export volumes decreased by 9% year-on-year during July, slipping to 8,200t. With domestic production running well in advance of July 2013 levels, this meant that the export share of production fell to 28.5%, compared with 33% a year earlier.
The export trade faced an unfavourable exchange rate which meant that although average euro terms prices were down by just 1%, they were 9% lower in sterling. The largest buyer of UK sheepmeat, France, took delivery of 3,950t during July. Although this was down by a quarter from the same month last year, exports to France accounted for their highest share of total shipments since January (48%). Meanwhile, export volumes to Holland fell by a similar degree. Though also lower, trade with Belgium and Germany fell by less than the EU average of 13%. By contrast, exports to Ireland and Italy grew strongly. 8.5% more lamb was exported outside of the EU in July 2014 than 12 months before.
Of the 1,550t exported, two thirds went to Hong Kong. This meant that Hong Kong bought 4% more UK sheepmeat than a year earlier. Other prominent markets in July were Norway, Ghana, Thailand and Singapore; the first three bought around 100t while the latter took 50t. The volume of sheepmeat brought into the UK from overseas was unchanged from a year earlier in July. Volumes totalled 7,550t. However, with domestic production rising and exports falling, imports took a 27% share of the UK sheepmeat market in July, compared with 29% 12 months before. At 5,250t during July, deliveries from New Zealand (NZ) covered 70% of UK imports and were up by 7% from a year earlier. The average value was 16% higher at £4,600/t without appearing to affect trade. Having risen considerably in recent months, trade with Australia showed a more modest 3% increase to 1,250t. The average cost of this sheepmeat reached a two-year high of £4,500/t and was up by 13% on July 2013. With overall shipments flat but deliveries from Oceania rising, it meant that less sheepmeat was imported from other suppliers such as Ireland, Holland, Spain and the Falklands. However, Uruguay, Chile and Argentina all supplied more.
News Round up
Scotland’s 2014 June census showed a slightly smaller ewe flock than in 2013. Numbers were down 0.5% at 2.604m head. This was the fourth consecutive year to show a small decrease. However, the number of gimmers retained for breeding in the autumn was back 4% at 631,200 head. By contrast, there was a considerable expansion in the lamb crop. Numbers increased by 5.5% year-on-year to 3.27m head. This gives a national lambing percentage of 126%; up considerably from 119% in 2013. This saw the lamb crop nearly recover to its 2012 level. The 2014 June census reported a slight expansion in the English female breeding sheep flock. Overall numbers edged 0.3% higher on the year to 7.115m head. Within the breeding flock, the number of ewes to be used for breeding this autumn increased by 1.5% to 5.605m head, but there were 4% fewer gimmers for first-time breeding as numbers slipped to 1.062m head.
Meanwhile, marginally more ewes had been earmarked for slaughter; numbers edged up to 448,000 head. With new season lamb slaughterings running well ahead of last year’s levels this summer, it was not surprising to find that lamb numbers increased significantly, rising 6.5% to 7.936m head. Provisional June census estimates for Northern Ireland indicated that the breeding flock contracted by 3% to 889,700 head. By contrast, lamb numbers lifted by 1%, reaching 953,600 head. In August 2014, NZ abattoirs slaughtered 725,150 lambs. Though 3% below last year’s level this was nevertheless 5% ahead of the August 2012 kill. This was the second consecutive month of decline relative to last year, and taking the first eight months of 2014 as a whole, numbers were 4% lower than in the previous year at 15.1m head.
Compared to the January to August period of 2012, they were up by 4.5%. Data from NZ export abattoirs (accounting for 95% of the August kill) shows that although slaughterings ran behind last year’s level in August, the total volume of lamb produced increased by 0.5% to 13,900t as carcase weights lifted by 0.6kg, to average 20.1kg. In Australia, the average lamb skin was worth A$4 (£2.20) during July; a decline of nearly two-thirds on the year. However, Merino skins fared slightly better as prices reportedly fell 15% to A$9.40 (£5.20). During the month, Australia exported 2.6m sheep and lamb skins; 1% lower than a year earlier. This was in fact higher than the monthly abattoir throughput of 2.4m head as some of the exported skins were sold out of inventories. With 90% of the skins being sold to Chinese buyers, a significant contributor to the downturn in sheepskin prices has been enhanced environmental regulations in China.
Due to the additional costs of meeting new regulations, a number of fellmongers were forced out of business and skins have consequently been building up in Chinese warehouses, pushing down prices. Slaughter data for Uruguay shows that having fallen marginally behind year earlier levels in May, lamb throughput was significantly lower than in 2013 during June and July. The June kill was nearly 20% lower year-on-year at 63,800 head. The rate of decline then accelerated in July to 29% with kill numbers totalling 69,400 head. However, due to a strong start to the year, they remained ahead of last year’s levels for the January to July period. 667,400 lambs were slaughtered in the first 7 months of 2014; 0.5% higher thanthe year earlier total of 663,800 head.
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