The lamb market has risen to "record levels" for the time of year, according to Quality Meat Scotland (QMS) and Hybu Cig Cymru - Meat Promotion Wales (HCC).
The Scottish trade body reported that after a "firm end" to 2023, as hoggs averaged "well above" 300p/kg lwt in Scotland during February. In the second and third weeks of February, hoggs averaged 315/kg.
QMS observed that price rises had also been seen at abattoirs across Great Britain (GB), with the deadweight average for medium R3L grade carcases reaching 696p/kg in the week to 17th February.
Iain MacDonald, QMS market intelligence manager, said: "Compared to February 2023, when the lamb market had a weak start to the year, prices have been running 35-40% higher at Scottish marts, with the increase on the five-year average closer to 30%.
"Store markets have also rebalanced substantially higher, with finishers paying an average of £101 for hoggs at Scottish marts in mid-February. This compares with £65 in the same week of 2023."
MacDonald commented that lamb prices have increased despite auction throughput "holding up". He said that between late January and the third week of February, lamb numbers at Scottish Marts were running around 4% above those seen a year earlier.
"This is in line with the increase seen in the season-to-date," said MacDonald. "Given Scottish Government estimates of a 4% smaller lamb crop in 2023, there could be a tightening of availability later in the spring."
Defra also reported a year-on-year uplift of 3.4% in hogg throughput at GB abattoirs in January. QMS said that this means the total slaughter between June 2023 and January 2024 was almost exactly the same as 12 months before, despite the lamb crop across England, Wales and Scotland falling by 6.3% year-on-year.
MacDonald said: "It is possible that attractive prices have drawn stock out in January and February... While wet winter weather may also have affected hogg condition, the share of carcases grading at E,U or R and 2 or 3L at GB abattoirs has been lower than in recent years."
Imports and exports
QMS said that during the final quarter, at over 25,100 tonnes, sheepmeat exports rose by 18% year-on-year and remained more than double import levels of 11,400t, despite imports showing a 57% rebound from Q4 2022.
"2023 Q4 imports also proved significantly cheaper than the previous year without any significant dampening effect on the domestic market," said MacDonald. He observed that the average price per kilo of imported sheepmeat was down 15% on the year as higher import costs from the EU were more than offset by highly competitively priced lamb from Australia and New Zealand.
"More recently, it is possible that longer shipping journey times to Europe from Oceania could have delayed import shipments and resulted in a risk premium in the marketplace, where concern around the arrival of imports may have brought forward purchases of domestic product. This may have also supported export demand from the EU, where traders will have faced the same concerns."
Looking forward, QMS said that domestic and export demand is "set to remain firm" through March and into April, as Ramadan, Eid al-Fitr and Easter approach.
MacDonald stated: "While underlying demand is expected to stay strong, if the sharp price increases of recent week and months begin to pass through the supply chain and into consumer prices, then this could start to be tested.
"On the supply side it seems likely that numbers could tighten significantly as the spring progresses as there was a significantly smaller lamb crop in 2023, and auction and abattoir throughput, so far, is holding up well.
"Although export demand is set to hold firm as the EU ewe flock contracted further in 2023, export volumes could be limited if domestic production falls."
Lamb market in Wales sees prices rising
HCC's report 'Lamb Supply: Update and Outlook' has noted the "challenging external pressures" that lamb producers across Wales continue to experience, including cost-of-living concerns, heightened farm input costs, changes to farming support schemes and livestock disease.
Glesni Phillips, HCC's intelligence, analysis and business insight executive, said that the last Defra annual June survey revealed a notable decline in the size of the Welsh flock. She said: "The June survey data for Wales suggests that the total number of sheep and lambs on Welsh farms on 1st June 2023 was 8.7 million head - some 7% below numbers recorded in June 2022.
"The number of lambs on the ground on 1st June 2023 in the UK stood at 15.5 million head - down 6% on the year... As the current throughput of lambs up until December 2023 is ahead of what would be expected, given the size of the lamb crop, this could mean the market will likely experience a tightening in supply during the first few months of 2024.
"The current lamb crop was smaller in size because drought conditions restricted scanning. In 2024-25, we'd expect scanning rates to be higher but the lamb crop is forecast to be similar in size due to a smaller breeding flock."
The HCC report reflected that the demand for lamb during 2023 overall has been firm, despite the continued pressures from the cost-of-living crisis. HCC said that figures from Kantar suggested that almost 45% of GB households bought lamb at some point during the year, which HCC said amounted to an increase of 3% in terms of volume sales.
Phillips said: "This year, both the start of the Islamic festival - Ramadan - and Easter occur during the month of March. Looking at the expected levels of lambs remaining on the ground, it is likely that supply ahead of these key dates in the calendar will be tight.
"So far this year, the deadweight price has been notably stronger than previous years. It is the first time lamb deadweight figures have gone over £6/kg in the opening weeks of February.
“Lamb numbers coming forward have been below the corresponding weeks in 2023 for each week so far this year and total almost 221,600 head, some 8% below year-earlier levels. This tightness in supply of lambs was anticipated and is likely providing support to the deadweight average. Both the prime liveweight and store average prices are also strong currently.”
This story was originally published on a previous version of the Meat Management website and so there may be some missing images and formatting issues.
