Lamb prices may stabilise if pound weakens, analysts say

Low lamb prices could avoid a further seasonal slide if sterling starts to weaken, according to latest analysis.

New season lamb prices have dropped away sharply this season, sitting more than 40p/kg lower than last year already.

Stuart Ashworth, head of economics services at Quality Meat Scotland, said a long trail of heavier hoggets and a surging pound-to-euro exchange rate have made British lamb prices volatile.

Mr Ashworth said prices across Europe had been less significant than in sterling.

See also: Scottish farming income slides 18% in 2014

“Historically we get a significant fall in the price of prime lambs,” he said. “We have to keep our fingers crossed that we do not get the rise so we do not get the fall.

“If you get sterling in some sort of annual parity, it will help prices.”

Mr Ashworth was speaking at the launch of the 2015 Scottish Red Meat Industry Profile.

Figures showed that last year Scottish abattoirs handled fewer prime cattle. But heavier carcass weights pushed up beef production 2.5% to 169,750t.

Sheepmeat production also rose 2.5% to 27,900t and pigmeat output increased 0.5% to 24,200t.

Farmers enjoyed good weather, lower feed costs and improved productivity in 2014, but pressure was felt at the farmgate.

Across the year, deadweight steer prices were down 8.5% and pig prices were 4.5% lower, though prime sheep values were up 1.5%.

Finished cattle prices have also tumbled in the first half of 2015, before stabilising in the past few weeks.

The report showed beef-sired calf registrations in Scotland rose 1.5% in 2014, following two years of decline.

Looking back at 2013 registrations, Mr Ashworth said these were feeding through into the lower cattle numbers that were currently helping prices recover.

He said the higher numbers for 2014 might hint at higher beef supplies in 2016.

“The tightness we have got supporting the price currently will continue for the next four to six months and then we will see a volume of animals building again,” Mr Ashworth said.