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Producers Need to Ensure Lambs are Sold at Target Spec

15 February 2016

ANALYSIS - UK sheep meat prices over the last year have been below previous years and well below the five year average.

While prices in October last year were the lowest since 2009, the start to 2016 has seen a rise in prices, AHDB senior analyst Mark Kozlowski told the Agricultural and Horticultural Board Outlook Conference in London.

The dip in prices last year was caused by a rise in production in 2015 of one per cent and a large carryover of lambs from 2014.

Slaughterings in the UK in 2015 were higher than in the previous year but again fell back in the last quarter of the year.

Mr Kozlowski said that fewer lambs were being sold at liveweight in the SQQ quality weight band as farmers held on to the animals in an attempt to get better prices.

Holding on to the lambs and selling at higher weights had the opposite effect on the market than intended.

“We have been seeing more lambs coming through at heavier weights suggesting that more lambs should be going to market when they are ready rather than being held back,” he said.

He added that adult sheep slaughterings were also well below those for 2014 and it would be expected to see more ewes being culled because of the market prices.

The UK’s sheep export market had been affected by the strength of sterling as the largest part of the trade is with France.

However as the exchange rates are correcting themselves the market is also changing.

Total exports fell in the first 11 months of last year.

Imports into the UK also fell, although more lamb came in from New Zealand, because of the favourable exchange rates for New Zealand.

Less New Zealand lamb also went to China and production in New Zealand rose.

The increase in the amount of lamb coming from New Zealand to the UK and the lower prices meant that the UK sector had to reduce prices to compete.

However, the global market is also going to be affected by New Zealand having the lowest lamb crop in 2015/16 for almost 60 year and production in Australia also expected to be lower this year.

Production in the EU has also continued to fall.

For the UK the breeding flock is expected to fall this year and Mr Kozlowski said that despite a currently high breeding flock fewer lambs are forecast to be born.

This will force down the numbers of lambs sent for slaughter this year and the number of adult sheep sent for slaughter is also expected to rise.

Overall production is expected to rise in the UK this year but fall back in 2017 and UK imports of lamb are expected to rise in the first quarter of the year but fall back as the year progresses.

Mr Kozlowski concluded that this year should see more favourable export conditions although disease, exchange rates and the weather conditions could have an impact to change this.

“The expected increase in supplies will put pressure on prices,” he said.

"However, anticipated improving retail and more competitive exports could give them some support.”

He added: “Making sure lambs are marketed when they are at target spec will help producers ensure maximum returns.”

Chris Harris

Chris Harris