QMS speaks out about factors affecting prime hogg trade

QMS speaks out about factors affecting prime hogg trade

Stuart Ashworth, head of economics services with Quality Meat Scotland (QMS), has spoken about the range of factors affecting the current prime hogg trade.

Stuart Ashworth.

Historically after a short dip in early January, prime hogg prices have increased through late winter and spring. This year’s prices, however, have remained fairly flat and, as a consequence, are currently 10% lower than this time last year.

“The publication of census results for December from England and Northern Ireland offer some clues to the difference in this year’s prices,” said Ashworth.

“They show a growth in the carryover of lambs into 2016 of over 5% in England and 13% in Northern Ireland. Scottish results will be published next week but it seems unlikely they will show a different trend to those already published in England and Northern Ireland.”

UK slaughter statistics show a higher weekly prime sheep kill during January than last year although auction sales were slightly lower.

Auction throughputs in January and February also show a higher proportion of prime hoggs above 45kg liveweight than last year, while figures from deadweight price reporting abattoirs reveal a lower proportion of R3L grade carcases than last year.

“In other words,” explained Ashworth, “there have been higher numbers of heavy hoggs on the market and higher numbers of over-fat hoggs on the market.

“Both these factors act as a break on price as they result in more out-of-spec lambs that abattoirs need to trade at lower price or with higher dressing costs incurred.”

According to Ashworth, despite the weakness of sterling, exporters are finding trade difficult and, although there was a reasonably strong end to the year, sheepmeat exports in 2016 dipped by just over 1%.

“Domestic farmgate prices in France, our main export market, are 10% lower than this time last year and have fallen more steeply since Christmas than the previous year.

“In Ireland, which is one of our main competitors in France, producers are seeing prices 9% lower than this time last year.”

With an exchange rate 8% weaker than this time last year most, but not all, of the 9-10% fall in Irish and French prices could be covered by a steady sterling price and lower prices in euros.

Trade data shows some growth in exports to France during December, but the long-term trends show that export demand is weaker in January and February, picking up during March ahead of Easter, before easing back.

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