The new season lamb trade has got off to a disappointing start after the highs of last year, with prices falling again this week.

Having started the campaign at around 260p/kg, new season prices had dropped to nearer 210p/kg by Wednesday (16 May) as increased numbers met a market that was still well supplied with old season hoggets.

Tuesday was the first day more new season than old season lambs were sold at GB auction markets, with 12,600 head coming forward, out of a total of 25,000, AHDB analyst Paul Heyhoe said.

But this had weighed on market prices, with the combined old and new season average price having dropped by about 10% (20p/kg) in the past four weeks to 199p/kg. That was about 50p lower than at the same time last year, he said.

“Prices are still dropping, but the rate of decline seems to be slowing. It’s not surprising we’re below last year’s levels, which were off the chart, but it’s encouraging to see we are virtually on a par with 2010, which had been a record prior to 2011,” he said.

Average prices at Welshpool livestock market were about 13p/kg down on the week at Monday’s sale, at an average of 209p/kg, auctioneer Jonathan Evans said.

Numbers were similar to last year, with 1,934 spring lambs under the hammer, but there were more heavier lambs coming forward, he said. “Over 36-38kg they get a bit harder to sell, but we’ve seen a large proportion nearer 41kg. The rough April has seen some farmers keep them on a bit longer, while others have been waiting for markets to pick up.”

While increased new season supplies were a factor in the falling prices, so was the weakening euro, which was close to a three-and-a-half year low at 79.99p (£1: €1.25070) as Farmers Weekly went to press.

“About 37% of production is exported, so the pound’s relative strengthening against the euro means exporters can’t pay as much. The large number of heavier lambs is also adding pressure as most export markets have a cut off at 43kg.”

Continued pressure on consumer spending and worries of a double-dip recession were also holding back domestic demand and retail prices, Mr Heyhoe said.

But with global supplies still relatively tight, he said the outlook was not all bad.

“UK exports were up around 3% in the first two months of 2012 and while 2011 prices are unlikely to be reached again, if we can hold somewhere around 2010 levels, it should be a broadly positive year.”

James Evans, from Shrewsbury auction mart, suggested that once more supermarket buyers switched over to new season lamb, there might be scope for prices to improve. But currently there were sufficient hoggets to meet demand.

Read more

For more market reports see our dedicated Prices and Trends page.