In keeping with the most recent market commentary from High quality Meat Scotland (QMS), a diminished provide of completed lambs throughout Nice Britain (GB), rising export volumes and decrease imports from overseas have been supporting the lamb worth in Scotland.
Given indications of a smaller lamb crop this 12 months, lamb market provide appears to be like set to stay low if the current image of agency export demand and gentle import volumes continues. In the meantime, home retail lamb worth inflation has slowed, which might assist to underpin gross sales volumes this autumn, given persevering with sturdy worth will increase for different proteins, said Iain Macdonald, market intelligence supervisor at QMS.
He mentioned: “Regardless of a gradual begin to the season, weekly completed lamb public sale volumes have reached a traditional autumn vary in Scotland. Completed lamb costs stay under the brand new season peak, reached in Could, however started September at a report stage for the time of 12 months at Scottish marts. At a median of 245p/kg lwt within the first week of September, costs have been up 6% on the identical week in 2022 and by 20% on the five-year common.”
GB prime lamb public sale gross sales trailed 12 months earlier ranges in seven out of the eight weeks main as much as sixth September. In Scotland, though the variety of 2023-born lambs traded at marts has began to meet up with 2022 over the previous month, it has been down 6% on 2022 within the season-to-date, with an identical story throughout GB.
“Nevertheless, worldwide commerce is a big a part of the equation. In 2022, round 1 / 4 of UK sheepmeat manufacturing was exported, with imports contributing round 1 / 4 of whole UK market provide in carcase weight equal. HMRC information for the primary half of 2023 highlights a agency export commerce, with the amount shipped abroad rising by greater than 14% year-on-year, and the typical export worth remaining near the highs of 2022, down 2% year-on-year at £6.64/kg.”
Import weak point in late 2022
QMS states that import weak point within the remaining quarter of 2022 persevered into 2023, with UK sheepmeat import volumes down 32% within the first half of the 12 months, regardless of extremely aggressive import costs averaging almost 19% decrease than in 2022, down from £6.40/kg to £5.21/kg.
Macdonald added: “The mixture of an increase in export volumes and a fall in import volumes acts to scale back provide within the home market. Within the first half of this 12 months, this variation in commerce transformed a slight rise in home manufacturing into a big discount in whole market provide, down by 11% on 2022 in product weight.”
Though home demand has skilled a blended 12 months to this point, with Kantar retail gross sales information for GB typically pointing to weak point apart from a powerful Easter, within the year-to-date as much as early August, the amount retailed was solely down 1% year-on-year. Given diminished provide, this is sufficient to have ensured a decent market steadiness.
Macdonald mentioned: “Tight EU provide has supported our export alternatives, with EU sheepmeat manufacturing falling 6.5% year-on-year within the first 5 months of 2023, in response to the EU Fee, whereas within the 12 months as an entire, EU consumption is about to rebound to its highest stage since 2019. Though the worth of GB lamb carcases has dipped from the highs reached earlier in the summertime at Rungis market in Paris, costs edged up once more throughout August, and have begun September up barely on the 12 months.”
Low import volumes
Regardless of agency costs obtainable for imports to the UK, improved market entry for Australian lamb for the reason that Free Commerce Settlement got here into drive on the finish of Could, and comparatively low costs within the Southern Hemisphere, import volumes have been surprisingly sluggish.
Macdonald mentioned: “Lamb costs in New Zealand are down by round a 3rd on final 12 months, clearing at £3.24/kg dwt on the South Island in early September, whereas Australia’s Commerce Lamb Indicator has plummeted to as little as £2.26/kg dwt and £54 per head.”
Home provide missing for the rest of 2023
Wanting ahead to the rest of the season, QMS mentioned that home provide is about to stay tight. Following a dry autumn in 2022, there have been reviews of poor scanning charges, notably south of the border, and June census information from England seems to assist this view, with a 5% year-on-year discount in lamb numbers. With England accounting for round half of the GB flock, a smaller GB lamb crop this 12 months appears nearly sure.
Whereas the decline in public sale advertising to this point factors to room for a catch-up in slaughter numbers over the rest of the season, reflecting that the proportion fall in lamb crop might be smaller than the 6% discount in public sale volumes to this point, this may not essentially be the case.
“Home retail gross sales volumes might be underpinned by lamb retail worth inflation slowing.”
Iain Macdonald, QMS market intelligence supervisor.
Macdonald defined: “Given an annual kill of round 12 million head throughout GB, a 3% discount within the slaughter lamb crop would equate to round 350,000 fewer lambs. To date, the autumn in GB public sale throughput is roughly equal to round 200,000 head, after factoring in that near half of lambs shall be offered within the ring. Subsequently, a scenario of comparatively tight provide might persist. In an additional indicator of the potential for tight provide later within the season, retailer lambs seem to have been sluggish to come back ahead to this point at Scottish marts.”
In keeping with QMS, on the commerce aspect, export demand ought to maintain comparatively agency given the tightly provided EU market. Nevertheless, there may be vital uncertainty across the outlook for imports. Extremely aggressive pricing in Australia and New Zealand and a substantial growth in Australia’s sheepmeat manufacturing might result in vital upwards stress on UK import volumes. This market danger has been vital all through 2023, however import volumes have but to surge.
Macdonald concluded: “Home retail gross sales volumes might be underpinned by lamb retail worth inflation slowing. Within the 12 weeks to early August, Kantar figures point out that the typical worth paid for lamb was 1% decrease than a 12 months earlier, pushed by cheaper roasting joints, though the chops/steaks and mince classes nonetheless confirmed increased costs than in 2022.”