Exports put brake on lamb prices
By Robert Davies
By Robert Davies
STERLINGS strength continues to limit exports and peg finished lamb prices well below the record levels of 1996.
And new season lamb marketings are now on a par with last year, putting further pressure on hogget values.
Supplies of grass-finished animals could now rise, as pastures benefit from recent rain. This, in turn, could make it more difficult for farmers who still have hoggets to recoup high prices paid for them as stores.
At the same time, the declining quality of hoggets has turned many slaughterers away from them.
Traders say there is a market for the small number of hoggets still on farms, but warn that prices will reflect exporting problems and the weak domestic demand.
Last week auction prices struggled to reach 115p/kg, compared with 138p/kg a year ago.
Lamb exports have held up, despite a 20% plus change in exchange rates.
But exporters claim that few consignments are making a profit, and forecast that difficult conditions are likely to remain.
"Market prices would be even lower now but for the fact that serious slaughtering over-capacity means that hooks are chasing sheep," said Edward Hamer, managing director of Edward Hamer International, Powys.
"Abattoirs want throughput, so the question seems to be: Who can pay the most for lambs today to sell for the least tomorrow?
"This benefits producers in the short term, but some plants could be put out of business."
The slaughterers situation will not be helped by any post-election interest rate hike, the phasing out of government subsidies to renderers, which could add 30p a lamb to abattoir offal disposal costs, or the impact on skin prices of gloomy news from the Far East about unsold soft leather stocks.
Mr Hamer is worried about prospects for exporting light lambs to Spain, Italy and Portugal, where some retailers believe that if meat is British, it must be bad.
Finishers who invested in producing for early new-season markets continue to be disappointed by returns averaging almost 40p/kg less than in 1996. *