Volatile prices create uncertainty in sheep industry

Price volatility in the sheep sector remains a huge problem, and market experts expect fewer lambs to be hitting the market this year, delegates to the Outlook Conference in London were told.

Paul Heyhoe, senior analyst with Eblex, said the difficulty with volatility in the sector was that it created uncertainty for farmers and processors. That uncertainty was also reflected in the census, which while showing a rise in numbers, is doubted by market watchers, he said.

“The Defra UK June 2013 census showed a 1% rise in lamb numbers, but this was driven by unexpected results from Wales, which indicated lamb numbers up 7% on the year. Industry opinion suggests these numbers are too high, so these forecasts continue to assume a lower figure for lamb numbers.”

He said lower volumes of New Zealand imports had also helped keep the market stable, and that was unlikely to change. “In addition to tightened domestic production, imports are expected to be tighter for much of the year. This follows the decline in the New Zealand lamb crop for 2013, with its forecast export slaughter down 7% on the previous season. With the continued rise in Chinese demand, it is possible an even greater percentage of New Zealand exports will be sent there, diverting volumes away from the UK and Europe.”

He told delegates the overall European sheep flock was in decline, with only a few exceptions, one of which was the UK, which he said offered positive news for UK exporters. However, he added that lack of profitability across the UK sheep sector was still an issue and continued to pose a major challenge to the sector.

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