Sheep farmers continue to enjoy market dynamics breaking from the normal downward pressure at this time of year and gaining upward momentum.

Factory agents have been very active over the weekend and are working hard to try to entice higher numbers forward.

Prices are largely unchanged on last Thursday’s 10c/kg increase in quotes, with base quotes ranging from €5.30/kg to €5.40/kg excluding quality assurance (QA) bonuses.

This represents an increase of 40c/kg to 50c/kg on the corresponding week in 2019, with prices running €8 to €10 higher on a 20kg carcase.

Higher returns

Farmers with significant numbers and greater negotiating power are achieving returns of €5.50/kg to €5.55/kg, while those trading through producer groups and at the top of the market are securing returns ranging from €5.60/kg to €5.65/kg on average and slightly higher when allowances on transport are included.

Northern Irish farmers are enjoying an even greater price lift

The trade is being helped by a marked improvement in the UK trade, which is providing a better trading platform in key export markets, while numbers have tightened at a time of solid demand.

Northern Irish farmers are enjoying an even greater price lift in comparison with 2019 levels. Prices are currently ranging from £4.65/kg to £4.75/kg on average.

This is the equivalent of €5.14/kg to €5.25/kg at an exchange rate of 90.5p to the euro and the equivalent of €5.42/kg to €5.53/kg VAT-inclusive at 5.4%. This represents an increase of 60p/kg to 80p/kg on the corresponding period in 2019.

The strength of the British trade was outlined by AHDB livestock analyst Hannah Clarke last week.

Clarke reported that for the week ending 1 July, the new-season lamb SQQ liveweight price increased by just over 2p/kg to an average of 228.7p/kg. This is the equivalent of €2.52/kg at 90.5p to the euro.

UK lamb prices are at their highest level for at least the last five years.

As reflected in the price graph, this is the highest price for the time of year in at least the last five years.

Future outlook

It is always hard to forecast the trade in early July, given the effect that changes in lamb numbers coming on stream and volatility in markets can bring.

The AHDB is cautious about the prospect of higher numbers coming on stream and putting pressure on prices, but with the festival of Eid al-Adha edging closer, there is more optimism that markets may perform better than in recent years.

Domestic market

Looking back to the domestic market and it is likely that numbers may remain tighter in the next few weeks. Farmers kept lambs moving in recent weeks due to a combination of taking advantage of prices on offer and also in response to tight grass supplies in the east of the country.

This has resulted in the lamb kill of 368,278 for the week ending 30 June 2020 running over 55,000 head above the corresponding period in 2019.

Weaning in mid-season flocks and less pressure on farmers to now move stock due to a recovery in grass supplies has slowed numbers coming on to the market.

Factories will also soon be starting to make arrangements for Eid al-Adha, which should also help to bolster demand. It takes place from the evening of Thursday 30 July to Monday 3 August.

The festival has underpinned the largest weekly kills in recent years. This included 2019, despite disruption at factory gates.

In the week preceding the festival, throughput was recorded at 66,960 head, while, in 2018, throughput was recorded at a substantial figure of 78,428 head, followed by throughput of 72,400 in the week of the festival.