Media Release: Positive outlook for lamb producers as new season gets underway

StuartAshworth (2)

THE prime sheep market is currently going through that annual period of uncertainty as old season hoggs dry up and new season lambs pick up in volume.

Around this time of year, said Stuart Ashworth, Quality Meat Scotland’s Head of Economics Services, major retailers make a judgment call about switching solely to new season product and the market can be a little nervous until that happens.

“This year, of course, the process has been complicated by the slow growth rates of new season lambs and the negative impact of Schmallenberg on early lambing flocks, particularly in Southern England, and the higher volumes of hoggs available late into the season,” observed Mr Ashworth.

Slaughter statistics show that hogg slaughterings during March were nine per cent higher than last year and over the first quarter of the year overall slaughterings were 12 per cent, or some 300,000 head, higher than last year.

“This trend continued through April with auction sales being more than 20 per cent up and in some weeks being more than 40 per cent up.

“However, most of these hoggs have been marketed at lighter weights, so although slaughterings in March may have been up nine per cent, the weight of bone-in meat produced was only three per cent higher,” said Mr Ashworth.

“As we move through May there are still significant numbers of hoggs on the market with volumes more than one third higher than last year. In early May, hoggs were still accounting for around 80 per cent of all prime sheep marketings compared with 60 per cent at this time last year,” he added.

However, hogg prices are now falling quickly. This is in part because the cost of managing stock in abattoirs increases due to the risk of some hoggs having two teeth erupted, and the resulting changed requirements for handling these carcasses.

However, the emergence of new season lambs onto the market is also having an impact.

“Even so, new season lamb volumes in auctions are trailing behind last year by some 40 per cent. Year-on-year new season lambs are currently trading around 15 per cent higher than last year, while hoggs are trading eight per cent higher,” said Mr Ashworth.

“At current values new season lamb prices are almost reaching the levels of 2011.  However, experience from 2008 to 2011 would suggest that lamb prices fall steeply through late May and June as new season lamb availability increases quickly – something that did not happen in 2012,” said Mr Ashworth.

“During 2012, there was an almost seamless move to new season because of a long tail of hoggs with only a small price surge.

“Although there was a seasonal decline through June it was not as dramatic because lamb volumes were lower than year earlier levels during July and August,” he said.

Trying to make a judgment call on the rate of increase in lamb availability is complicated this year by both a smaller lamb crop and poor grass growth slowing lamb growth rates.

However, said Mr Ashworth, it does seem likely that in comparison to the 2008 to 2011 experience supplies will be tight through the next three months.

At the same time, lamb has gained consumer interest through a combination of concerns over meat provenance after the horsemeat scandal and the ability of retailers to offer more competitively priced product because of the lower prices earlier in the year.

Indeed, it is a positive sign, said Mr Ashworth, when despite increases in both domestic production and imports from New Zealand over the first quarter of the year, producer prices have increased.

With cattle and pig farm gate prices continuing to be well ahead of last year, up 15 per cent and ten per cent respectively, prospects for farm gate lamb prices over the next year remain positive.

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Contact: Carol McLaren
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