Sheep prices continue to strengthen
Sheep prices have continued their seemingly inexorable rise, smashing the 400p/kg barrier for deadweight sales, and with new season lambs topping 230p/kg in the live auction ring.
According to latest data from AHDB Meat Services, R3L carcasses were valued at 419p/kg dw this week, as tight supplies outweighed the effects of weaker consumer demand. That is up 6p/kg on the week and 93p/kg higher than the same time last year.
Richard Phelps, managing director of Southern Counties Fresh Foods, which slaughters about 24,000 lambs a week through its Dorset plant, said there were just not the lambs available and competition with other abattoirs – especially for export types – was driving prices higher.
“We are paying more than we had anticipated two months ago,” he said. “Our export customers prefer a carcass of 18-20kg, but there are not many new season lambs available yet and hoggets typically produce a carcass of 21-23kg.”
EBLEX economics manager Mark Topliff added that the weakness of sterling was continuing to offer support to the sheep trade. “There is still good export demand, but there are not a lot of new season lambs coming forward yet. If we had more lambs we would be exporting more.”
Recent trade data shows that clean sheep slaughterings in February came to about 530,000t, which was 10% down year on year. Export volumes were also 14% lower, though the better returns meant the value of exports increased 18% to almost £22m.
The buoyant sheep trade has also been seen in the live auction marts. The Standard Quality Quotation (SQQ) for hoggets last week came to 184p/kg, with new season lambs averaging 232p/kg – up 9.6p on the week.
Paul Griffin, who sold 880 hoggets and 422 new season lambs at Exeter Livestock Centre on Monday (13 April), said the trade seemed to be getting stronger every week.
He also noted that there were many more ewe hoggets coming forward. “Farmers who would normally keep their ewes to sell as two-tooths in the summer breeding sales are selling them for slaughter now. At £85 to £100 a piece, and with EID still on the cards, you can’t really blame them.”
But there are concerns that demand is starting to suffer with these high prices. Speaking at the recent EBLEX/BPEX Outlook 2009 conference in London, Ed Garner of market researcher TNS Worldpanel explained that retail purchases of fresh lamb had dropped a massive 35% by volume in the four weeks to 22 March, and by 17% in expenditure terms.
Stuart Ashworth of Quality Meat Scotland agreed that falling disposable income as a result of the recession was a threat to the sheep sector. Other “wild cards” he mentioned included a possible recovery in the value of sterling, the shortage of skilled labour and tight margins higher up the supply chain.
- For more on the EBLEX/BPEX Outlook 2009 conference, see Phil Clarke’s Business Blog
