Farm Ireland

Tuesday 21 November 2017

Four-week disaster as prices take hammering


Joe Healy

This month has been an unmitigated disaster for sun lovers, Galway GAA supporters and, last but not least, sheep farmers.

In the words of Pat Spillane, our footballers were feeble and an embarrassment. Well, unfortunately, the prognosis on the sheep trade this week could be described in the same way. Just four weeks ago farmers were being offered €6/kg or €126 for their 21kg carcass -- and in some cases more. At present, the farmer is getting €94.50 for a similar weight. This is a massive loss of €31.50/lamb and, at this year's production costs, much more than what is sustainable from a farmer's point of view.

The biggest drop over the past week is in Moyvalley, where 60c/kg has been cut off the quoted figure, leaving the plant on an all-in figure of 450c/kg, reflecting a loss of €12.60/lamb in seven days. It is not much better elsewhere as all of the other plants have dropped by 50c/kg over the same period to a low quote of 450c/kg plus the bonus for today. The top up of the 5c/kg quality assurance bonus from Kildare Chilling gives it the overall edge, albeit as small a margin as the Lilywhites' footballers lost out by to Dublin.

In response to the cuts, the IFA's James Murphy said farmers were very angry with the way the factories have slashed lamb prices and are refusing to sell at the lower quotes. He added that many producers are holding out for and getting up to 480c/kg to 22kg as lamb supplies remain tight with the factories finding it difficult to secure adequate numbers.

On a slightly more positive note, quotes for the cull ewes show little or no change in a range of 250-270c/kg. The ICMs and Kildare are at the upper end, while Kepak Athleague's 250c/kg is the lowest of the plants quoting. Dawn and Moyvalley are not quoting. Kepak Hacketstown is on 260c/kg.

Bord Bia reported that the sheep trade continued to struggle over the past week in response to a slower demand on both domestic and export markets as supplies remain stronger than recent years.

Quotes for spring lambs were under some pressure, with quotes by the end of the week making in the region of €4.80-4.85kg. Despite more lambs coming on stream, manufacturing demand remains steady, with cull ewe quotes typically still making around €2.50-2.70/kg.

According to the CSO, sheepmeat output for the first five months of the year is almost identical to last year's levels, at 16,000t.

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In the UK, the spring lamb trade weakened further. By the weekend, livemarket prices stood at the equivalent of €5.20/kg including VAT for new season lambs.

In France, the market was also weak, partly reflecting excess supplies against lower demand levels as the holiday season kicks in. Virtually all the increase in supplies is being driven by the UK. Towards the end of the week, prices for Irish grade 1 spring lamb were up to €5.37/kg inclusive of VAT.

Meanwhile, the latest annual outlook report from New Zealand forecasts some decline in export prices for its sheepmeat in 2012 and 2013. For the remainder of the outlook period, which stretches to 2015, prices are forecast to return to growth.

The report predicts that international prices will be affected by the effects of an increase in Australian sheep breeding numbers combined with a moderate rise in NZ lamb export availability. Despite an estimated fall of more than 3pc in NZ sheep breeding numbers to 23.1m between 2011-2015, an increase in productivity in terms of lambs born per ewe and average carcass weights will boost lamb production by 14pc to almost 400,000t, according to the report.

Looking at the short term, production is set to fall to just over 350,000t, the lowest level since the early 2000s. Export volumes are expected to grow by 12pc to 311,000t by 2015.

New Zealand lamb prices are set to gradually recover in 2014 and 2015 following an expected dip during 2012 and 2013.

Indo Farming