Sheep farmers across Europe are benefiting from improved market performance for over nine months, with prices continuing to run significantly ahead of recent year’s levels.
Price have also improved significantly globally as reflected in Figure 1 and this is also helping to insert a strong floor under the trade at a high price point.
New Zealand farmers are the most recent group to join the list of countries with buoyant market performance.
Their farmgate price is currently running at the equivalent of €5.25/kg, an increase of €1.09/kg on the corresponding period in 2020.
The market performed below par for much of 2020 and in contrast to the EU market did not experience the same bounce in demand.
Prices down under
The New Zealand lamb price has now moved above the Australian price, which has also performed at a higher level over the last year.
Prices in Australia continue to be influenced by the aftereffects of a prolonged period of drought and resultant tight supplies, which are influenced by lower production levels and flock rebuilding.
Closer to home, all of the main sheep-producing nations in the EU are experiencing prices running anywhere from 36c/kg to €1.35/kg higher, with British farmers enjoying the greatest lift.
This is in sharp contrast to farmers in Northern Ireland, with a differential of 90c/kg to €1/kg developing in recent weeks.
While the differential between 2021 and 2020 prices has narrowed somewhat in recent weeks, market predictions point to a much steadier trade for the second half of the year in 2021.
Production in almost every significant sheep-producing nation in Europe is forecast to decline and contribute to a drop in production of 1.3% to 1.5% in 2021.
Added to stronger confidence is the fact that prices have increased in New Zealand on the back of a recovery in demand and returns from the Chinese market.
Industry sources predict that New Zealand will fail to reverse the declining trend of sheepmeat exports on to the European market, with New Zealand only filling less than 50% of its tariff-free quota in 2020.