Sheepmeat uncertainty due to Brexit confusion

Economist says lack of clarity over trade terms will lead to caution among buyers

Brexit confusion is adding to uncertainty in the UK sheepmeat market, says Qualitymeatscotland(qms) economist Stuart Ashworth.

Reporting that prime sheep prices in the UK have fallen by 4% over the past month, he said that uncertainty over the terms of the country’s future sheepmeat trade will inevitably lead to extreme caution among buyers.

“At the time of writing, importers and exporters have no clarity on the rules for exporting sheepmeat to Europe beyond the 29th of March,” he said, pointing out that British exporters are about to enter what has traditionally been one of their biggest trading months of the year, with April 2018 accounting for around 27% of UK sheepmeat exports to Europe.

The recent downturn, however, which currently sees UK prime sheep prices 14% lower than a year ago, is not all due to Brexit, he added, commenting that prices were rising steeply across Europe at this point in 2018, but certainly are not this year.

“Most European producers have also seen a reduction in prices over the past month, leading to lower prices than a year ago, although to a lesser extent than in the UK,” he said, pointing out that prices in Spain are 4.5% down on last year, France is 3% down and Germany is running 7% behind 2018 levels.

While rising supplies appear to be behind the price changes in France and Spain, however, the downward trend in the UK and Ireland, where prices have also fallen 4% in the past month, has happened despite a reduction in supplies reaching abattoirs.

“Although increased supplies in France and Spain would encourage lower producer prices there,” said Mr Ashworth, “lower supplies and lower prices in the UK and Ireland would point towards sluggish demand for British and Irish sheepmeat, rather than oversupply.”

Rising supplies in Europe does affect the UK trade, of course, with increased domestic supplies in France contributing to French importers taking less sheepmeat from the UK than 2018.

All of which brings Mr Ashworth back to the conclusion that the UK sheepmeat market is cooling as Brexit uncertainty continues. in