8 January 1999

Lamb prices seem set to disappoint

By Robert Davies

FINISHERS hoping that a weaker £ will bring a significant new year improvement in lamb prices are likely to be disappointed.

And while economists at the Meat and Livestock Commission are reluctant to pre-empt the revision of market forecasts, they say many of the factors which depressed prices at the end of the 1998 are unchanged.

Auctioneers and abattoirs say the pattern of marketing will have a profound impact on the trade. The rush to sell slow finishing lambs in November pushed slaughterings 200,000 higher than in the same month in 1997, and pushed prices below 60p/kg. The bad weather which distorted supplies in 1998 is continuing to make it difficult to plan selling.

With EU markets awash with cheap pig and poultry meat, exporters see potential for only a small increase in shipments, even if lamb quality can be maintained.

"Traditionally demand is good in January, but there is a lot of New Zealand lamb about in the rest of Europe, and domestic demand is sluggish," said Iolo Povey of exporters Cwmni Cig Arfon, Caernarfon.

"Generally supply exceeds demand and there is a question mark over the quality of some of the lambs coming forward. We expect any movements in price to be small for the next month."

Demand for the lightweight hill lambs that once made good prices for export to Mediterranean countries remains particularly weak, and whatever happens now it is too late to recover the 9% fall in year-on-year in total sheepmeat exports up to December 19.

This was clear as markets re-opened after Christmas and the standard quality quotation (SQQ) settled at 62.56p/kg, compared with 87.07p/kg in the last week of 1997. On Monday entries climbed by 16% to 44,524 and the average price fell 2.66p to 65.55p/kg.

Producers who were paid around 30p/kg less in December than the year before could cast an envious eye at returns in the rest of the EU. Between Dec 7 and Dec 13 the average EU deadweight price was 48% higher than the UKs. The French price was 69% above the UK average and Spanish lambs were making 84% more on the hook than lambs in Britain.

Immediately before Christmas even good-quality 16 to 22kg lambs exported to France were wholesaling for 96p/kg less than home produced carcasses on Rungis Market in Paris. &#42

Looking up? Not really, with sheep prices unlikely to rise much in the short term.