21 March 1997

Lamb prices start climb to Easter

By Robert Davies

HOGGET and lamb prices have started their traditional pre-Easter rise, but seem likely to level out well below the 1996 BSE-induced peak of over 190p/kg.

This season, the strength of sterling means it is hard for exporting abattoirs to profitably exploit still firm markets in northern Europe.

"Customers would like to take more of our hoggets, but the exchange rate and rising prices are creating difficult trading conditions," says west Wales exporter Oriel Jones.

"Demand from southern Europe for lightweight lambs has been poor since Christmas, and countries like Spain now have access to home produced lamb."

The home market is proving equally problematic for slaughterers, who claim they are losing money on sheep bought to maintain plant throughput and to meet orders from valued customers.

They blame auction prices running around 10p/kg ahead of last year and rising, a fall in skin prices, and the reluctance of supermarkets to switch from imported chilled and frozen lamb.

While price is influencing the buying policy of the multiples – home killed loin chops are retailing for £1.87/kg more than imported chops – the main factor is continuity of supply.

Major chains will not start buying again until there are enough new-season lambs forward to guarantee supplies.

On Monday, hoggets averaged 151p/kg at markets in England and Wales, compared with 142p/kg last year. The rise continued the trend of the week before, when the standard quality quotation (SQQ) climbed by over 5p/kg.

With many very early lambs being produced on contract, the number of new season lambs reaching MLC monitored auctions continues to be low.

Last week 1600 head averaged 165.53p/kg, or 15.15p/kg more than identical entries in the same week of 1996.

Numbers are expected to increase over the next fortnight, but auctioneers still anticipate that Easter demand will firm up prices.

"At Christmas we forecast that hogget prices would rise to around 155p/kg by Easter and this looks likely," says MLC economist Sally Doyle.

"It is difficult to predict what will happen after the holiday. Returns are very unlikely to match those of April, May and June 1996, but there is nothing in sight indicating that the market will not be strong."n