Sheep market prospects remain positive until at least the end of the year, reveals the latest mid-season outlook from EBLEX Ltd, the industry body for beef and lamb levy-payers in England.
A continued weakness in sterling against the euro and tighter supplies of new season lambs seem likely to keep prices above long-term average levels. However, producers are advised to keep a close eye on rising costs to assess the true profit or loss position for their enterprise.
High slaughterings of old season lambs pushed sheepmeat production up significantly in the first four months of the year. The favourable exchange rate, however, meant a healthy demand for exports, with year-on-year volumes up by around 2000 tonnes (8%). It also had a marked impact on imports which were 1600 tonnes (3%) lower, with chilled imports showing a decline of 12% on the previous year.
Buoyant demand coupled with very tight supplies of new season lambs contributed to increasingly attractive market returns over the first five months. From 3% lower than the long-term average in January, deadweight lamb prices strengthened to become 19% higher than the average in March and 26% higher – at 370 p/kg – in May.
These prices attracted an increase in imports and some export resistance from April, contributing to a cooling-off in levels. Even so, returns only fell back in line with the normal seasonal pattern to the end of June, remaining 23% above their long-term average at 330p/kg deadweight.
With sterling around 15% weaker against the euro than in 2007, export prospects for the rest of the year continue to look good – barring any unforeseen marketing disruptions. Overall, sheepmeat exports are expected to reach 82,000 tonnes in 2008, compared with the 78,000 tonnes forecast at the start of the year and the 70,000 tonnes actually exported last year in the face of FMD restrictions.
Imports are now forecast to reach 132,000 tonnes – 1000 tonnes less than envisaged at the start of the year. This and the probable increase in exports means we are likely to see a particularly favourable annual balance between imports and exports.
At the same time, the continued decline in the national breeding flock and lower lambing rates than last year’ s historic high are forecast to result in a lower overall 2008 lamb crop. While the larger than normal carryover of lambs from 2007 means total slaughterings for the year are expected to be up by around 2%, the underlying trend points to falling lamb availability over the rest of the season.
Indeed, supplies of sheep meat available to the domestic market – after exports and including imports – could well be 2% lower than last year, with a further 2% decline anticipated in the year ahead. This should mean a favourable trading position for producers to set against increasing costs.
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