QMS outlines reasons for fall in lamb price
The current auction market price of lamb is lower at this time of year than it has been for more than four years, and a complex range of factors is the reason why, according to Stuart Ashworth from Quality Meat Scotland (QMS).
The number of lambs reaching the market was significantly higher earlier in the season, but more recently the volume of lambs in the market has fallen. Therefore Ashworth, head of economics at QMS, explained that “the recent fall in prices cannot be laid solely at the door of a high volume of lambs and other market elements must be at play”.
However, while volume has gone down, the number of heavier lambs in the market has increased, and this is acting as a “brake on trade”. The current price of 155p/kg liveweight is 9% lower than this week last year, although QMS reported that, in 2013, the price did fall steeply in the second half of September.
Another issue was a reduced consumer demand for lamb. Recent consumer market information showed a growth in demand for beef and a fall in lamb consumption, suggesting that people are switching from lamb to beef. Ashworth said: “Lamb is not a popular dish when the weather is hot and some build-up of roasting joints will have occurred as, for example, demand for leg roasts has come under pressure while demand for lamb chops has remained good.”
Ashworth said a large factor in the decline of demand in prime lamb cuts and joints was a drop in the supply of imported lamb, which “translated into a fall of more than 50% in consumption of imported lamb prime cuts over the four weeks to mid-June”.
He went on to cite more causes of the current price movement: “Two other potential drags on lamb prices are changes in sheepskin prices and the sterling-euro exchange rate. Sheepskin prices have come under pressure in recent months standing some 25-30% lower than this time last year as demand from China has eased. This inevitably puts some pressure on the live lamb price.” Exchange rates show that sterling is around 7% stronger against the euro compared with this time last year, thus negatively impacting UK lamb prices.
Furthermore, relative movement in domestic lamb prices in major trading partner and competitor countries is not helping: “Light lambs under 12.5kg deadweight are trading 14% down on the year in Spain, but prices are 2% higher in Italy. The downturn in lamb prices across Europe alongside a reduced supply points towards sluggish consumer demand for lamb as European economies continue to struggle,” Ashworth added.
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