Irish sheep prices are running significantly ahead of the corresponding period in 2019 following sharp upward trajectory in the trade in recent weeks. The latest Bord Bia price analysis shows prices for the week ending 22 February listed at €5.56/kg, an increase of 60c/kg on the corresponding week in 2018. This price excludes the flat rate addition of 5.4% paid to Irish producers (not registered for VAT).

The upturn is welcomed by producers following a challenging trading environment in the latter half of 2019. It is interesting that prices are running significantly ahead of 2019 despite the latest Department of Agriculture throughput records for the week ending 22 February showing 34,101 head more sheep slaughtered in the first eight weeks of the year.

On a per-head basis, throughput of lambs/hoggets increased 347,280 head to 12,770,457

The reasons for the subdued trade in 2019 and much sharper trade in 2020 are both partly related to production trends in the UK. Sheep producers worried by the prospects of a no-deal Brexit pushed sheep on to the market, often at a much lower cost than competing exports, resulting in a lower price trading platform.

AHDB analysis shows export volumes increasing 13% on 2018 levels to 93,600t. On a per-head basis, throughput of lambs/hoggets increased 347,280 head to 12,770,457, while the ewe and ram kill increased 92,263 head to reach 1,667,941. Imports of fresh/frozen sheepmeat also fell by 19% to 62,500t, with domestic demand also weakening.

Changed environment

The intensity of sheep slaughtering in 2019 and also the fact that production has been hampered in recent months by adverse weather and hoggets performing poorly on forage crops has left supplies much tighter in the UK.

British factories have been doing all they can to attract higher numbers forward, with prices for the week ending 22 February 2020 running the equivalent of a massive €1.48/kg ahead of the corresponding week in 2019.

AHDB reports throughput in the week ending 22 February falling 18,000 head on the week previous

The higher prices have delivered somewhat in attracting higher numbers forward but there are signs that supplies are drying up despite the higher prices. AHDB reports throughput in the week ending 22 February falling 18,000 head on the week previous and 38,500 on the corresponding week in 2019. Year-to-date throughput is running 59,000 head lower.

Prices appear to be steadying in Britain with consumer opposition reported and in cases leading to a switchover to other red or white meats.

Spanish trade

The other aspect helping the competitiveness of Irish lamb in EU markets is a stronger Spanish trade and firm French trade. Normally at this time of the year, Spanish lamb would come on to the market in higher volumes and reduce the competitiveness of both Irish and UK exports. Spanish lamb is also benefitting from relatively tight supplies, with prices running well ahead of 2019.

This is occurring against a backdrop of lower supplies influenced by ongoing drought and recently as a result of prolonged wildfires

Looking further afield, Australia continues to take advantage of higher sheepmeat exports to the US and China. This is occurring against a backdrop of lower supplies influenced by ongoing drought and recently as a result of prolonged wildfires.

The one concern in a global context is a dip in New Zealand prices. Reports indicate there are significant volumes of sheepmeat waiting to enter China but it is hoped this situation is rectified ahead of higher volumes of new season lamb coming on stream.