Despite a slight dip in prime sheep prices since the start of 2019, values remain 5% higher than a year ago, according to Quality Meats Scotland (QMS).
Moreover, the analysis by the meat industry promotion body – released today, January 25 – shows that the recent decline in prices slowed down modestly in the past week.
According to Stuart Ashworth, director of economic services at QMS, “early sales this week show some modest rebound in farm-gate prices”.
“European prices are also showing some firmness, sitting around 2.5% higher than last year,” he added.
This is partially as a result of a drop in supply: The figures show that the prime sheep kill for June to December 2018 was 5% lower than in the same period for 2017 – a figure that matches the annual increase in price.
“The conclusion is that the number of hoggs being carried forward into 2019 is 3% to 4% lower than last year which will, in itself, and everything else being equal, support farm-gate prices,” argued Ashworth.
The drop in supply can also be attributed to a slight change in what animals are being slaughtered.
“There has also been a sizable increase, of 5%, in ewe and ram slaughterings, which means the volume of sheepmeat produced in the UK in the second half of 2018 declined by 3.5%,” said Ashworth.
Export data shows a slight increase in trade during October and November – partially as a result of increased shipments to Germany and Italy – as trade with France continues to dip. On the other hand, imports decreased in general, leading to a decline in household sheep meat consumption, according to data analyst Kantar Worldpanel.
The firmness of meat prices is, however, somewhat offset by pressure on sheepskin prices, according to QMS.
Furthermore, the Brexit factor will have to be kept in mind, claimed Ashworth.
“Although the second quarter of the year – April to June – is usually the quarter with the lowest dependence on exports, they still account for 30% of production. If this trade is disrupted, or has to face tariff barriers, prices will inevitably come under pressure,” he argued.