Livestock auctions have reported a 36 per cent drop in lamb price on the week after recent periods of high throughput and strong trade, with Covid-19 weighing on the supply chain.
Cancellation of EU orders and the realignment of the food service sector, which has seen more produce destined for retail has seen buyers reporting struggles to source outlets which has resulted in reduced numbers.
Speculation around border closures were also ongoing, with lorries on the continent rumoured to be unable to unload goods to destinations and hauliers reluctant to travel due to backlogs.
Across the UK, auction marts, such as Hexham and Kirkby Stephen, have cancelled upcoming sheep sales this week to negate the situation.
Branding Monday’s (March 23) sheep sale as a ‘nightmare’, Sedgemoor auctioneer, Paul Ashton, said trading was difficult with new vendor restrictions and fewer buyers on site.
He said: “Recent weeks have seen more lambs flooding the market, but the demand has gone due to the virus, and the market has subsequently collapsed."
“There was also a significant £40-45 price drop for hoggs and sheep with lambs at foot.”
Richard Findlay, NFU livestock chairman, said: "Following a week of panic buying causing market disruption, the situation could be made worse by farmers panic selling.
"Farmers should be sensible and keep prime stock on farm where possible until the market stabilises and there has been a realignment of the red meat food supply chain in retail."
Stuart Ashworth, director of economic services with Quality Meat Scotland, said: "The indications are exporters cannot get product out of the country because of border confusions.
"The assertion is international hauliers do not want to put drivers at risk outside the UK never mind all the other issues of border checks.”
Dr Phil Hadley, international market development director for AHDB, said: “We have seen a recent lamb price drop that is undoubtedly linked to the current coronavirus pandemic.
“Firstly, we have seen a drop in food service sales across the EU as lockdowns and self-isolating make an impact. This was mitigated, to some extent, by an early rise in retail demand, but this has now largely abated.
“Currently, there are no significant border hold-ups that we are seeing, but some businesses may well be taking a cautious approach to trading while they see how the situation develops.
“It is also fair to say that lamb is not the go-to protein of choice for many because of its price point. Financial concerns, with many people seeing a loss of income – or potential loss – mean they are trading down rather than looking to the more expensive proteins.
"This is coupled with the fact that lamb is popular at family gatherings and these are currently being curtailed, with Mother’s Day very much a non-event and Easter likely to be the same.
“All of these factors have contributed to ample supplies being available and there being downward pressure on prices.”
By Cedric Porter
The fall in auction lamb prices is dramatic but not unprecedented. Over the last ten years prices have mainly peaked around the third week of May, often falling quite rapidly, analysis of AHDB liveweight figures show.
There were two notable exceptions to that trend.
In 2018 the beast from the east in February disrupted sales and led to high prices in March and April.
But values peaked in the second week of April falling by 14.0% over the following week.
The other exception was the very wet year of 2012 when prices also peaked in the third week of March.
The average fall from the annual high to the annual low over the last 10 years has been 31 per cent.
If that was repeated this year and the 21 March weekly average price of 249.42p/kg lw was the peak price, then the low would be 172.10p/kg, which would be the highest-priced low point of the last ten years.
“The situation is so fluid at the moment as to provide any real analysis, but stocks remain relatively tight and imports of New Zealand lamb still look as though they will be historically low, both of which could support prices once things settle to a new normal,” said Duncan Wyatt, lead analyst at AHDB.