SHEEPTRADE CONFIDENCE UP

17 November 2000




SHEEPTRADE CONFIDENCE UP

SHEEP returns are still below their 1997 level but they have improved on the dark days of 1998 and 1999 with the prices graph now much steadier.

There are two main reasons for this, says Lesley Green, MLC senior economic analyst. First is the restoration of the sheep skin export trade with good quality skins now bringing up to £5.50 each – and most of that price finding its way back to the producer.

Second is an expected 5% drop in the clean sheep kill for this year as a whole and which has helped to put a firmer bottom in the market.

Ms Green says: "Slaughterings and production are likely to fall in 2001 and while slaughterings are forecast to be only some 1% down, a decline in average carcass weights could mean that production will be about 3% down.

"Additional processing costs and the k exchange rate still exert a depressing effect but confidence is gradually seeping back throughout the industry. The market is settling down and coming to terms with its problems. Cull ewe prices have improved and this has encouraged producers to clear out the older females instead of tupping them, a practice which just depresses prices the following season. The same goes for surplus ewe lambs and there has been a huge drop in their retention compared with the last two years.

"Finishers who bought stores last autumn generated modest returns and this has helped to put a bottom in the autumn 2000 store trade. Hill farmers are coming to terms with changes in support with the emphasises on area as against headage payments, agri-environment schemes and the inducement to reduce stocking rates.

"Altogether it is a brighter sheep picture and though it is still hard for producers to achieve a satisfactory margin, there is at least an element of greater stability on which to base rational business decisions. Similar contraction in sheep numbers have also been taking place in France and Ireland . Though a few live lambs are now coming in from eastern European countries, breeding stock numbers all but disappeared following the collapse of Communism and there seems little cause for concern on that front," says Ms Green.

Euro rates will continue to have a major effect on UK sheep prices. Exports, still mainly to France and which only produces one third of its total requirements, continue to claim some 30% of total UK production. This trade in both carcass and live lambs will continue to set the tone for prices of all categories of sheep in the UK.

Lesley Green… Fall in clean sheep kill will give market firmer bottom.


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