Buoyant lamb trade back £3 a head, but bright outlook remains

Finished lamb prices slipped this week, but the trade is forecast to remain strong, as firm demand and rapid farmer selling looks set to moderate the seasonal autumn glut of lambs.

The UK average liveweight lamb price for the week ending 19 August fell from 215.6p/kg to 208p/kg, knocking about £3 from the value of a 40kg lamb.

Lamb has traded above £2/kg for all but one week of the year to date and remains 32p/kg above year-earlier levels.

See also: How to make best use of teaser tups to tighten lambing

Markets report strong demand for lambs at the heavier end of the spectrum are still in short supply, as finishers have been selling at lighter weights to catch the exceptional trade.

 

Jonny Williams, joint operations manager at Scottish livestock marketing co-operative Farmstock, said the drop in value this week was due in part to weaker demand from buyers for halal outlets.

He said the sector often works on 30-day payment terms and firms will be waiting for money to come in after the spike in sales at the end of last month for the Eid-al-Adha festival, but that demand would likely increase in a few weeks.

Meanwhile, Scottish producers are racing ahead with sales as they have enjoyed better grass-growing conditions than farms further south after having less of the severely dry weather.

“Lambs are finishing well. March-born lambs are well gone, but I think hill-born lambs are going to be slightly later,” he said.

“There won’t be any more lambs available than last year.”

What is helping the red meat trade?

  • Fewer families leaving the UK for foreign holidays has seen retail demand for meat higher than normal for the time of year
  • Eat Out to Help Out scheme is encouraging people back to restaurants, with 35m meals claimed for in first two weeks
  • Farmers selling lambs at a lighter weight (down 0.3kg on the year to an average of 19.2kg deadweight) means buyers need more lambs to fill order books

However, amid reports that store lamb prices are some £10-£15 a head higher than last year, he said he would caution buyers not to expect finished lamb prices to go significantly higher.

Trade had been expected to fall more sharply after Eid-al-Adha ended, but domestic demand has sustained the strong prices.

The most recent data from retail analyst Kantar reported that consumer spending on lamb was almost 20% higher than year-earlier levels in the 12 weeks to 12 July.

The boom in high street butcher’s shops has been even larger, with sales growth of 45% across the same period.

Help from holidaymakers

This is likely to have been sustained into August as the traditional lull in sales during summer holidays has evaporated as many holidaymakers have chosen to stay in the UK rather than go abroad.

National Sheep Association (NSA) chief executive Phil Stocker said there were reports of good demand, both from domestic and export markets at the moment.

“Generally the supply-and-demand balance is favourable,” he said.

“There is a lot of confidence around. All the indications are that trade will stay strong for the foreseeable future,” he said.

However, uncertainty does remain over whether a trade deal with the EU will be reached by the end of the year, with the NSA pushing hard for agreement to be reached to sustain confidence in the industry.

Border friction

NFU chief livestock adviser John Royle said even if a deal is reached, there will still be a period where the industry will have to adjust to increased friction at the border as paperwork and inspections increase.

He said the main concern is that additional delays in getting fresh meat to buyers on the continent will devalue carcasses by shortening their shelf life.

The NFU is pushing for red meat to be added to a proposed list of products to be fast-tracked for trade leaving Dover in a current consultation published by the Department for Trade.

Currently, only fish, shellfish and live chicks have been designated necessary for prioritisation.

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