Lamb prices have stabilised somewhat since last week, with more confidence being inserted into the factory trade. Reports of prices received have been hot and cold, with some processors willing to pay more to secure numbers.

Factory agents were offering farmers as low as €4.60/kg including bonuses for quality assured (QA) lambs, but some were quick to up their bid to €4.70/kg if the farmer declined the initial proposal. QA lambs are making a 10c/kg premium over non-QA lambs. Some producer groups which bargained very hard secured €4.75/kg.

The total kill surpassed the 60,000 mark last week and ran 4% ahead of the same week in 2015. However, this increase was driven by a higher ewe and ram kill. The lamb kill was actually 2,037 head back on the same week last year.

Consistent lower lamb kills and poor killout percentages are causing difficulties for factories to fill orders. Kepak Athleague is leading the way with its quote of €4.50/kg excluding bonuses, while Kildare Chilling and ICM are on a base quote of €4.40/kg excluding bonuses. Moyvalley Meats and Ballon Meats have all-in quotes of €4.60/kg and €4.50/kg respectively.

IFA national sheep chair John Lynskey said demand remains steady in the lamb market, with factories paying from as low as €4.60/kg to as high as €4.80/kg this week. He said the general run is €4.70/kg. He also welcomed confirmation of the new €10/ewe sheep welfare payment negotiated by the IFA and announced by Minister Creed in the budget.

Exports

The French sheep flock remains in decline (breeding flock down 2% in 2015), but slaughterings increased 5% from January to July, according to figures obtained by Bord Bia. This could leave domestic French supplies tighter for the remainder of 2016 and start of 2017, with processors reporting lower throughput since August.

Hopes of resultant higher demand could be scuppered by sterling continuing to weaken (average 90p to the euro this week), making British lamb exports more competitive in EU markets, a factor blamed by Irish processors for the recent weakening trade.

Market forecasts are not straightforward. UK supplies have historically peaked at this time of year, but, like Ireland, reports also point to lower lamb performance, which could limit the number of lambs coming on stream.

While a weakening sterling will make UK exports more competitive, it will not favour imports and may lead to New Zealand targeting other markets, especially with a lower lamb crop.

This could see higher domestic demand for British lamb, but it is early days to see how markets will play out.

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Stability back in the marts