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More Pressure Ahead for Lamb Markets

07 May 2015

ANALYSIS - High lamb supplies have taken their toll on UK prices since Easter and things don’t look like improving.

This has brought the market down following a steady start to 2015, say analysts at EBLEX.

Looking ahead, EBLEX says that, despite reports of poor scanning results, good weather and an ever increasing sheep flock will mean an even bigger lamb crop after last year’s bumper effort.

Sheep numbers continued on a five year upward trend since 2010, partly attributed to switching from suckler beef systems in tuberculosis areas.

Defra figures show the national flock was three per cent higher in December. EBLEX says forecasts are for a 2 per cent lift in lamb crop to around 17.9 million head, 300,000 above last year.

All across Europe, lamb prices have plunged since Easter. Stewart Ashworth, Quality Meat Scotland’s Head of Economics Services, has noted year on year farmgate drops in Spain, Ireland, Romania and Italy.

He described the 2014 lamb crop as finishing off on a somewhat ‘low note’ and added: “New season lambs are slightly more abundant than this time last year.”

Hoggs, on the other hand, had backed off in volume in recent weeks, as is to be expected.

“The concern for producers is that prices are starting the season at around 206 p/kg lwt - a price reduction on a par with that of prime hogs,” said Mr Ashworth.

“With the 2015 lamb crop generally expected to be larger than last year and Sterling remaining strong, despite the uncertainty generated by the approaching general election and the implications of its outcome, the outlook remains uncertain.”

Northern Irish Woes

And in Northern Ireland, hogget prices are £25 per head below the same time last year.

The post-Easter dip has also been experienced here, not helped by confusion over labelling changes within Europe.

This has resulted in a ‘marked decline’ in direct slaughter exports across the border to the Republic of Ireland.

This is according to the Livestock and Meat Commission for Northern Ireland which said a strong pound is making northern Irish lamb less attractive.

Explaining the impact of changes to EU labelling legislation, the LMC said: “Under the new legislation meat from sheep born in NI and killed in ROI needs to be labelled as born in the UK and slaughtered in ROI.

"Reports have indicated that these labelling changes are causing some issues for ROI processors in servicing certain markets."

LMC’s understanding is that animals that are exported from NI for slaughter in ROI plants and then exported in carcase form are not affected by these changes to labelling legislation, however this is a lower value market when compared to boned out lamb.

“Figures from Eurostat for January and February 2015 indicate that 70 per cent of Irish lamb exports were boned out as this is a higher value market. The remaining 30 per cent exported in carcase form.”

Furthermore, Irish sheepmeat production is up this year, which EBLEX says is largely due to high carryover from 2014.

Global Market Pressure

Elsewhere, exports from New Zealand and Australia to the UK have been falling, while lamb production has lifted.

More product will be put into stocks for later in the year on account of slack Chinese buying.

EBLEX said: "Both New Zealand and Australia are reporting that global demand for lamb will remain subdued in the coming months, not helped by the current build-up of stocks.

"China had been the main growth market, to become the largest sheep meat importer, so the lower demand there inevitably has an impact.

"On the other hand, export availability is also expected to tighten given expected developments in New Zealand and Australia."

Given this, EXBLEX says there are ideas that the UK could be allowed to increase its market share of trade. A strong pound, however, will be a considerable hurdle to overcome.

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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