Deadweight lamb prices continue upward trend

Deadweight lamb prices are continuing to rise, driven by favourable export conditions on the back of the weaker pound.

New-season lamb SQQ prices rose 16p/kg in the week ending 18 July, taking prices from 418.8p/kg to 434.8p/kg, according to the AHDB. 

Deadweight prices are now almost 100p/kg higher than in July last year, when a supply glut saw an extra 900,000 lambs slaughtered over the season, sending prices down to 345p/kg. 

Deadweight prices are now well above the five-year average for this time of year of 410.4p/kg.

The trend is in contrast to liveweight lamb prices, which have started to slip. 

AHDB Beef and Sheep senior analyst Mark Kozlowski said speculation, caused by the EU referendum, had seen exchange rates fall from €1.3:£1 to €1.19:£1.

“That has made British lamb prices more attractive to buyers in France,” said Mr Kozlowski. 

“When you put that in context with the price being paid by French buyers, you can see how marked an effect that has.”

See also: Liveweight lamb prices start to slip as pound strenthens

Where British lamb had been trading in France at 564 cents/kg DW in early June, it was now 45 cents lower at 521 cents/kg DW.

“Because the drop has been so marked, the seller has the scope to raise prices and still remain competitive. Hence the price rises on the domestic market,” Mr Kozlowski said.

Price rise despite depressed demand in France

He added that this summer’s price rise had come despite a depressed market across the Channel, where increased production and lower consumption had forced prices to the lowest level for four years. 

Over the first five months of 2016, production was 8% up on the same period in 2015 at 36,300t – the highest production level for this period since 2011.

See also: Don’t finish lambs early to chase high prices, farmers advised

As production in France increased, the need for imports has declined and overall imports in the first five months have fallen by 10% compared with a year earlier at 34,400t, an AHDB report shows.

Export volumes of UK lamb were down by 18% at 13,500t. This resulted in the share of the total volume shipped to France coming from the UK falling by 4% to 39%.

High UK prices may not last, though. “Normally we see a fall in prices between June and August as an influx of new-season lamb comes on stream,” said Mr Kozlowski.