QMS chief economist Stuart Ashworth said NZ lambs reaching the United Kingdom in February 2018 failed to match the volumes moved in the same month last year.
He also reported that the volume of NZ lamb shipped to the UK between October 2017 and February 2018 was little changed, with any increase in NZ output resulting in more NZ lamb heading for China and mainland European Union countries like Germany and France, rather than Britain.
Speaking on Good Friday, Ashworth said UK lamb prices are 30% higher than last year despite some inevitable cooling of farmgate values once the Easter weekend demand was covered.
“Auction market throughputs during March were above last year’s levels while the UK weekly slaughter of prime sheep ran well ahead of last year throughout January and February.
“As a result, despite strong supplies of hoggs, farmgate prices have strengthened suggesting a basic strength in demand.”
The lamb price rise isn’t just affecting the UK, however. Ireland, France and Spain also report farmgate prices 15-20% higher than last year.
A lot can change once the Easter trade passes, with Kantar Worldpanel reporting a multi-year analysis of UK retail sales shows the volume of lamb sold in the four weeks that includes Easter can be double the levels sold both during the month before and the month after the holiday weekend.
“All of that Easter growth in sales is put down to purchases of leg roasting joints,” Ashworth said.
“This can leave processors with a major challenge to sell the remaining cuts from a lamb carcase when demand for leg roasts is so high. Nevertheless, to meet orders, demand for slaughter stock inevitably increases.
“In this context, UK imports of NZ lamb usually peak at this time of year to meet this seasonal demand.
“This year, though, NZ traders have not been as active as usual, partly because the dry weather in NZ led to an early slaughter of the lamb crop.
“In fact, slaughter statistics from NZ suggest that between October and the end of January 10% more lambs were killed than last year although their January kill struggled to match year-earlier levels.
“Not surprisingly, NZ saw some growth in exports over this period but the latest data suggests that the volumes exported to the UK in February failed to match last year.”
France, meanwhile, has reported lower slaughter volumes throughout the autumn and into 2018, which led to increased imports initially from Ireland and NZ.
As 2017 drew to a close, however, the UK also increased deliveries to France with some exta growth in exports to Germany and Belgium.
“Europe also sees a lift in demand for lamb over the Easter period, which will have supported prices there,” Ashworth said.
“The additional decline in French production for the first half of 2018, estimated to be 2% by French sources, suggests there will continue to be a demand in key European markets for sheep meat this year.”
With high farmgate prices in Scotland and the UK clearly drawing hoggs onto the market, he concluded British supplies might become tighter through April and May with prices remaining firm as a result.
