Lamb prices to ease into autumn on weak demand

Lamb prices are forecast to ease downwards into the autumn after the heavy falls of the past month.

Producers have brought new-season lambs to market earlier than usual, keeping numbers high and leading to a sharper seasonal drop compared with last year.

Weak consumer demand exacerbated by hot weather and the impact of sterling’s strength on exports could continue to add price pressure, analysts have said.

The GB new-season liveweight SQQ dropped 39.68p/kg in a fortnight to hit 174.57p/kg for the week ending 12 July, but this week’s daily averages have shown signs of slight recovery.

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UK spending on lamb fell 18% on the year in the four weeks ending 25 May and volumes purchased were 27% lower, according to figures from Kantar.

AHDB/Eblex senior analyst Paul Heyhoe said the end of Ramadan on 27 July could help demand that had been burnt off by the barbecue weather.

But he said British and Irish lamb supplies could stay high due to the good quality of this year’s lamb crop.

“The fundamentals of the world market are pretty good,” he said. “There are strong prices in Australia and New Zealand, with tighter supplies in this year pushing into the next.

“The Continent is still seeing a drop-off in breeding flocks and lower volumes in the European market will hopefully offset the increase in the UK.

“When you look at the past 12 months, not many [British] producers could have hoped for a better season.”

The heavy-finished price drop was almost identical in scale to the one in 2013, but it arrived two weeks earlier.

New-season lamb numbers through British markets were up 12% on the year in June and the first week of July, while slaughterings were 20% higher.

Stuart Ashworth, head of economics services at Quality Meat Scotland, said that strong supplies had cooled prices in the past few weeks, but consumer confidence and the exchange rate would be bigger factors going forward.

“The challenge for the UK is that with E1 currently buying about 80p compared to around 86p a year ago, the European price for UK lamb is, like Ireland, France and Spain, little changed on the year but the sterling price is much lower,” he said.

Harrison & Hetherington auctioneer Mark Richardson sold 1,226 prime new-season lambs at Borderway mart, Carlisle, on Monday (14 July), with an SQQ of 187p/kg back just half a penny on the week.

He said numbers were considerably tighter as farmers held lambs back in anticipation of improved prices.

“There is a better crop of lambs on the ground and more came forward earlier [last month], which probably led to the drop coming earlier,” he said.

Mike Davies from Monmouthshire Livestock Auctioneers said numbers started to tail off a fortnight ago after previously running at about 2,500-3,000 a week.

He said producers had been selling lambs at lighter weights than normal to take advantage of better prices.

Are New Zealand lamb imports hurtingUK  prices?

Last week NFU livestock board chairman Charles Sercombe wrote to the biggest supermarkets, asking them to promote British lamb instead of imports from Australia or New Zealand.

But imports do not appear to have been behind the recent sharp falls in price.

Shipments of lamb from New Zealand were 13% lower in the first five months of 2014, as the country sold higher volumes to China.

“I do not think [New Zealand] is a factor in driving the price drop,” said AHDB/Eblex’s Paul Heyhoe. “It is a seasonal price drop on a par with last year.”