Time to take stock after second FMD hit

By Peter Young

News of the second strike of FMD in Britain had an immediate impact on the trade last week. Lamb prices shot over 400c/kg and with the factories desperate for lambs 425 to 430c/kg was widely available by Friday. In the marts prices were up by €10 to €20 a head.

As always in a rising market, farmers became more fond of their stock and factories had to give 440c/kg and even as high as 450c/kg to get a few to sell. It was only when factories started talking prices down that numbers really started to come out, helping their cause.

In France, prices quickly jumped to 600c/kg the day after the FMD news. The high prices dragged lambs in from Spain, Romania and Bulgarian (and a few other countries that I didn't know had sheep) flooding the market. On Monday the price was back down to 500c/kg excl VAT and dropped to 480c/kg excl VAT on Tuesday. Factories are now reporting a major stand off between French buyers who are determined to buy lambs for less.

In the end, where the price settles will all come back to supplies, just like last time. Last time farmers panicking to sell lambs played into the factories hands and allowed them to pull prices all the way back to 360c/kg within a week. This time their target appeared to be to get it quickly back to 400c/kg. I hear some factories have already done this, buying lambs for a s low as 390c/kg for today (Thursday).

They certainly had plenty of lambs in the last few days. The kill this week will be well up but will not get close to the 80,000 that happened after the last FMD outbreak. The reason is that supplies are just not there. Good quality lambs are scarce especially in the marts which are now dominated by stores.

IFA's Henry Burns said that it is clear with the ongoiing FMD cases in Britain the retrictions will last significantly longer and it makes no sence for farmers to sell under finished lambs".

So with Britain out until mid October at the earliest, the trade should stabilise at 400c/kg. It even has the potential to rise if supplies are tight. Based on this farmers should not be a rush to throw lambs at the factories, especially if they could do with a bit more feeding.

Britain

Through all this spare a thought for British farmers, who have suffered another major blow. Their lamb sales normally reach a peak in mid September when one third is exported to France and across Europe.

A few red markets (straight to slaughter) have been run. The SQQ was reported to be at 85pstg/kg (284c/kg incl VAT).

However with few buyers, prices in some sales were as low as 65pstg/kg liveweight (217c/kg incl VAT), leading to other marts cancelling their own sales.

The factories are buying direct for 190pstg/kg deadweight (283c/kg icnl VAT). There is some talk of a Aid to Private Storage Scheme (APS) for lambs. However the drop in value of frozen lamb means there is little appetite for the move.

Ewes

Factories are not really interested in ewes at present and prices have remaining around 120 to 140c/kg. Light lambs have surprisingly not budged from the 330c/kg they were before the latest FMD outbreak. Farmers would be better off adding weight to the lambs if they could carry it.