Price leakage plugged for now
I REFERRED to the sheep trade as being like Noah’s Ark last week, but an ark that had sprung a leak as regards prices. I am happy to report that factories seemed to have plugged, at least temporarily, those leaks. However, the boat is now riding very low in the water from the farmer’s point of view.
Before getting into the detail on the domestic price front, I took a look at sheep reports from the Southern Hemisphere. Prices in Australia for lamb hit a high of Au$8.90/kg or about €4.80/kg in July, while yesterday that price had slipped to around the €4.18/kg mark.
In short, the Australian sheep producer has been having quite a good time of it, aided by the fact that the national flock has contracted while additional markets, particularly in China and South East Asia have become very active. An outbreak of African Swine flu among the pig population in China may yet see the authorities having to implement a slaughter out policy which may further increase demand for sheep meat.
What has all this to do with trade in Europe? Quite a lot, actually. With demand strengthening closer to home, both New Zealand and Australian lamb processors and shippers have been concentrating a greater proportion of their sales efforts in securing these markets from competition from further afield.
Combined with the strength of sterling, supplies of Southern Hemisphere sheep meat into the UK has fallen this year, which means, in theory, a greater opportunity of Irish lamb in France. The reason being France has tended to import large volumes of British product, but with Southern Hemisphere supplies limited, any traditional excess is being absorbed domestically in Britain.
So while Irish supplies of sheep to the factories are up almost 55,000 year on year to date, the reason you don’t hear any complaints about oversupply is the markets are there to take those extra numbers.
On the flip side, because those numbers keep coming factories have been able to keep, farmers off balance and prices well under control. Quotes for ewes and lambs yesterday morning were no worse than they were last Monday morning, they aren’t any better either.
Kildare Chilling still lead the pack on lamb price with their offering of €4.60+10c/kg QA (Quality Assurance) with Kepak Athleague next up on €4.55+5c/ kg QA. Dawn Ballyhaunis and the two ICM plants all continue on €4.50+10c/kg QA.
On the cull ewe side, Kildare Chilling were not in a position to quote yesterday, while all the other plants on our table continued at last week’s €2.40/kg.
IFA sheep chairman Sean Dennehy claimed lamb supplies are tighter this week, with factories paying €4.70/kg. He said ewes are making €2.60/kg.
Mr Dennehy said farmers were frustrated with the way the clean sheep policy was being implemented. He said some plants had hijacked the policy to impose unacceptable charges and lecturing farmers about clipping. In some cases, the factories and the Department are sending lambs home.