Factories pull quotes by 20c/kg

QUOTES this week are as low as €4.50/kg for lamb, 20c/kg back on last week. This being a short working week, factories will probably claim to have enough stock due to the Bank Holiday. However, most processors never actually drop a day’s kill as most kill for just thefour days anyway.

This can see an edge of panic creeping into some farmers’ minds as they multiply up the possible imagined effect of this temporary disruption to the trade.

Looking back to this time last year, prices ranged from €4.904.80/kg but by the end of the first week of August that had risen to €5.00/kg so the sheep trade is not in that bad a place with my information being that actual prices this week will be in the €4.70-4.80/kg bracket.

As one supplier told me, though, “factory prices only ever seem to go up in fives and tens but they drop them in tens and twenties”.

The factory league table reads as follows: Moy Valley are tops with an all in price of €4.70/kg plus 10c/kg quality bonus followed by both the ICM plants and Kildare Chilling on €4.50 plus 10c/kg bonus. Then comes Kepak Athleague also on €4.50 but their bonus is only 6c/kg for quality. Dawn Ballyhaunis were unavailable for a quote.

Ewe prices have also taken a hit this week back 10c/kg to a general quote of €2.30/kg while actual prices paid range from €2.40-2.60/kg.

When questioned on the rationale for what in effect is now a 60c/kg cut in prices in three weeks factory men offered theories such as: “there’s a lot of extra lamb coming on the market from England,”, “the weakness in the fifth quarter trade is dragging prices back” to “we need them at that price”. And what of my margin, my costs say you.

Supply has increased and total sheep throughput to July 23 stood at 1,372,000hd as against the 2015 figure of 1,302,000 which translates into a rise of 5.3%.

The increase in lamb throughput is only 2.7% or 1,191,000 as opposed to last year’s figure of 1,159,500.

While numbers of lambs have risen week on week and factories have reacted by pulling the price, the role of this year’s mart trade in slowing the flow of sheep to the factories should not be under estimated.

Referring back to last year’s prices, the fact is that both traditional sheep farms and a lot of new entrants from the cattle sector have over the last number of weeks being very active ringside in buying up very large numbers of lambs.

The effect is to some degree like that of a safety valve relieving pressure as large numbers of lambs have been taken, at least temporarily, off the market for further grazing.