New analysis launched of challenging picture for sheep sector

New analysis launched of challenging picture for sheep sector

As a cocktail of market challenges has combined to put pressure on lamb prices going into the new year, Hybu Cig Cymru-Meat Promotion Wales (HCC) has launched a Between the Lines analysis report of lamb supply and the wider factors impacting the market.

Increasing imports, the cost-of-living and its impact on consumers, as well as the after-effects of an unusually dry summer and high input costs, were reflected in volatile farmgate prices in Wales during the first few weeks of 2023. For the week ending 28th January, the prime lamb average price at auction markets in Wales stood at 227.8p/kg. This is a decline of 5p on the previous week, however the price remains some 9p above the longer term average.  

The report studies in detail how there is a greater carryover of old season lambs into the new year than usual at this time of year. Dry summer weather held back grass growth, while Russia’s invasion of Ukraine exacerbated high inflation in agricultural inputs. This meant that lambs were slower than usual to finish during 2022.

In addition, domestic demand has been subdued by consumers tightening their belts, and recently-issued November trade figures showed a rise in sheepmeat imports into the UK.

Imports and exports

“We have seen an increase in imports from New Zealand and this has come at a time when Welsh Lamb supply is itself higher than usual because of delayed finishing times caused by higher feed prices and the summer drought stunting pasture growth,” said Glesni Phillips, HCC’s Intelligence, Analysis and Business insight executive.

“We have recorded 1.2 million head throughput at UK abattoirs during December 2022; that’s five per cent higher than December 2021 and 7 per cent higher than November last year. We can expect to see this higher supply continue into 2023 because there is a larger carry over of old season lambs on the ground than we would usually experience at this time.”

She highlighted positive results for HCC’s export work, which saw volumes increasing month-on-month during autumn 2022, but said HCC’s consumer experts were reporting that domestic customers were spending less and feeling the pinch as inflation hit household budgets. “Although demand over Christmas was good, the January blues and continued cost of living crisis is not helping consumer demand for all kinds of premium proteins into the New Year.”

“There is evidence that consumers are looking to trade down at retail and cut back on eating out so sluggish demand is not unexpected.” said Glesni.

HCC’s Between the Lines Lamb Supply Report also looks ahead to the coming months, analysing a range of data to help farmers assess the potential supply of lambs onto the market for the coming season.

HCC’s market report is available here.

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