Demand gives a healthy shine to new lamb prices
Demand gives a healthy shine to new lamb prices
By Simon Wragg
NEW season lamb prices are set to hold firm for the next few weeks as supermarket demand rises, and there may also be scope for exports to shore up values later in the season.
Meat and Livestock Comm-ission economist Jane Connor says new season supplies are climbing, with over 17,700 lambs marketed last week. This is slightly down on last year, due to poorer conditions this spring, though the overall lamb crop is expected to be up 4%.
The short supply, coupled with increasing demand as big retailers switch to new lambs in preference to hoggets, is helping to firm the market. Values are up 1.5p/kg on last year to average 128.5p/kg, according to the most recent MLC figures. "I expect prices to hold firm for two to three weeks," says Mrs Connor.
John Thorley of the National Sheep Association welcomes the news. And, having spoken to producers, he expects to see a levelling out of supplies compared with last year. That should reduce the risk of gluts of lambs entering the market, which would force down prices as the season progresses.
Tescos meat division boss, Steven Murrell, reckons the switch to new season supplies should be completed within 10 days, by which time the company expects to handle an average of 18,000 lambs a week.
While Mr Murrell agrees the smaller number of lambs coming forward may help to prop up prices, it will not encourage Tesco to substitute UK product with chilled New Zealand lamb, he stresses.
This was used earlier in the season to satisfy demand when home-produced lamb was scarce. "These contracts have been completed; there no more boats on the water," says Mr Murrell.
Mr Thorley welcomes this declaration. "If retailers say they will stick to sourcing from the home market, given the present climate and on-going (Competition Commission) inquiry they will have to."
Supermarkets are paying about £2.50/kg deadweight, says John Bailey of Cullompton-based processor Lloyd Maunder. That is for a 16kg to 18kg R3L carcass before adjustments. Bonuses for farm-assured supplies are worth an extra 12p/kg.
But prices will have to fall between 7-10% before the UK can pitch successfully for export markets against countries like Ireland, adds Mr Bailey. This is entirely due to the strong £, which is pushing up the cost of home-produced lambs.
Such a fall is likely as the season progresses. But Mr Bailey urges producers not to increase lamb weights to compensate for the lower price. "It is light, lean lambs which are needed for retailers and export markets," he warns. *