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AHDB Cattle and Sheep Weekly

08 September 2014

EBLEX Sheep Weekly - 5 September 2014EBLEX Sheep Weekly - 5 September 2014

Pressure on lamb trade resumes

In week ended 3 September, the pressure on the liveweight lamb trade resumed following the August bank holiday disruptions of the week earlier. With the supply side of the equation being the key driver of trade, the GB NSL SQQ price reverted back onto its downwards trajectory by falling 7p on the week to average 157.3p/kg. Throughputs were recorded to be up over a quarter on the week earlier, not only due to the shorter trading week last week but also because of the increased numbers of finished lambs coming forward. In addition to the week-on-week fall, the price trend across the week has also been downwards. The SQQ on Thursday 28 August was 165.8p/kg. It had fallen to 151.5p/kg by Wednesday 3 September which represented the lowest point in the trade so far in 2014.

The deadweight trade for week ended 30 August was also back on the week earlier. At 374.7p/kg the SQQ eased 2p to its lowest point since February 2013.

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.

Producer share of retail price falls again

Despite retail prices easing on the month the producer share of the final retail price declined in August compared to the month earlier. This comes as farmgate prices fell to greater extent than retail prices. At 46% the final share of the retail price that producers received was back 3 percentage points on the month and has fallen from 60% over the past two months. While this fall is part of the usual pattern, the current August share is well below the level recorded for the same month in recent years; In August 2013 producers were receiving 53% of the final retail price.

Despite easing slightly in August, retail lamb prices are still at a high level in a historical context. Having moved up at the end of last year and the early part of this year, by May prices obtained by the AHDB/EBLEX retail price survey were the highest they have ever been. The modest easing since then demonstrates that trade in the UK has been supported by good demand, both domestically and on the export market. In addition, 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.

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