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LAMMA 2021

LAMMA 2021

Strong lamb trade brings heady prices

Tight lamb supply has brought higher prices, but will prices sink with a no-deal Brexit? Hannah Binns and Ewan Pate report. 

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Strong lamb trade brings heady prices

Strong trade has continued as prices for new season lambs rose up to 25 per cent higher than the five-year average, at 215-225p/kg, despite auction volumes building quickly.

 

The strong lamb market is thought to be driven by a shortage of numbers, with less lamb and mutton imported than usual and UK processors filling market gaps in the UK, according to AHDB lead red meat analyst Duncan Wyatt.

 

Mr Wyatt said: “Lamb sales have been held up by strong retail demand, although this has fallen short of replacing the loss of food service demand, with mutton sales struggling.

 

“Imports are lower year-on-year, with reduced volume from New Zealand and China continues to show strong demand for protein drawing product from New Zealand, affecting availability to Europe and the UK.”


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Another reason behind the shortage of lamb numbers is the dry weather, with farmers in eastern counties finding it slightly more difficult to finish lambs, added Paul Ashton, Sedgemoor auctioneer.

 

He said: “Trade remained strong on Monday, August 10, averaging 211p/kg, with catering and butchermen buying.

 

“Compared to 12 months ago, prices were up 50p/kg on the week, and for June, July and August fat lamb numbers were up by 28 per cent.

 

“There is still potential for prices to dip and killing-out percentages have begun to drop as they usually do at this time of the year.”

 

 

Additional

 

 

Volume growth and pricing in the second half of July also reflected additional processing requirements ahead of the Eid al-Adha festival, which took place this year from July 29 to August 3.

 

Iain Macdonald, senior economics analyst at Quality Meat Scotland, said: “Now that Eid al-Adha has passed, a further lift in marketing appears to have placed some seasonal pressure on lamb prices, which have slipped to their lowest of the season.

 

“But, at 211p/kg, they still averaged 16 per cent higher than the same week last year.”

 

Spending

 

Latest Kantar data for the 12 weeks up to July 12 showed a rise of almost 20 per cent in spending by Great British households on lamb compared to last year, with consumer spending on lamb across all GB retailers increasing by 19.2 per cent to £139.6 million.

 

Households with children saw a significant increase of 25.7 per cent in the volume of lamb purchased, as did households with three or more members, up 21.3 per cent.

 

Mr Macdonald said: "A higher share of households bought lamb and they bought it more often.

 

“The scale of this increase is likely to have more than offset the weakness in sales through the hospitality sector.”

 

Hybu Cig Cymru (HCC) said it was pleasing to see such strong spending on lamb across a variety of retail outlets.

 

HCC’s data analyst Glesni Phillips said: “The most encouraging aspect of the data is new consumers, particularly the larger households, such as families with children who have been key targets of promotional campaigns, seem to be trying fresh lamb.”

 

Future

 

Looking at demand, future trade relationship between the UK and EU will likely factor in as processors begin to negotiate export contracts with a delivery date in 2021, Mr Macdonald added.

 

“Last autumn we saw a significant lift in the lamb trade as soon as the October 31 Brexit deadline was extended, providing certainty around trading conditions," he said.

 

But, even with an agreement in place, UK exporters and EU importers will have to adapt to new administrative procedures, with technicalities, such as certification and labelling rules, potentially not being finalised until late in the year.

 

“If an agreement is not reached in time, importers will have to factor in significant tariffs when bidding for UK lamb, but it is too early to tell if this uncertainty will have an impact on the store lamb market," he added.

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