Sheep prices set to struggle into 2015

The UK sheep trade is set to remain under pressure into the new year due to various reasons, according to Eblex.

The organisation said a combination of subdued demand, plentiful supply and an increase in the number of out-of-spec animals being marketed are likely to see prices continue to struggle.

Defra statistics suggest that the kill level is only up by 1% this August year on year. However, average carcase weights are up 2% while lamb numbers for September are estimated to be up 3% year on year.

The Muslim festival of Eid-al-Adha, which falls on 3 October, may provide some short-term relief for prices, and a significant uplift is already being seen this week. However, Eblex sector director Nick Allen said supplies are likely to remain high into next year: “There is always a seasonal drop in price as we hit peak supply levels for the market for sheep meat in October, but there are a number of factors at play, which mean, this year, numbers are higher and they are coming onto the market sooner.

“There is no question that supply is outstripping demand at the moment, not just here but on export markets too. France, for instance, is our most important export market for sheep meat and they are struggling with a poor economic situation. The strengthening of sterling against the euro has done no favours for the trade in this region.”

While there have been complaints of too much imported product from New Zealand, levels were around 5% down in August, while prices were up 14% compared to a year ago, meaning that it is unlikely imports are having a significant impact.

The increase in average weights, from 0.4kg to 19.1kg year on year, has pushed the supply up, mainly due to increased food availability and better weather.

Allen added: “Estimates indicate lamb numbers have been over 3% higher this September compared to last. These increased numbers have likely been compounded by increased carcase weights, which also suggests more are being slaughtered out of spec. This pulls down the average price – though it should be noted that good values can still be obtained by those marketing in-spec.

“The price will recover, but it will take time. It is vitally important that producers sell when they hit spec rather than holding on to them just hoping for the price to turn the corner. It may be a while before it goes up significantly. In the meantime, you have the costs of keeping them and you may find that too much weight is added, meaning that less-than-optimal prices will ultimately be achieved anyway.”

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