Lamb prices plunge below the €5/kg mark

FACTORY QUOTES for lamb have slumped under the €5/kg mark in some plants for the first time this year.

Farmers have seen 50c wiped off lamb quotes over the past fortnight — this equates to a €10/hd price cut on a 20kg carcass.

Both ICM plants cut their quotes by 30c/kg over the weekend, leaving them on €4.90/kg - plus an additional 10c/kg for quality assured (QA) stock. Meanwhile, Kepak Athleague’s €5.05+15c/kg is 20c/kg less than last week.

Lamb prices had held up well until this point, with French imports of Irish lamb up 4pc this year, and overall sheepmeat exports up by 3pc.

Underpinned

Eid al-Adha, which came to an end yesterday, had underpinned the trade in recent weeks and Bord Bia has reported that demand for Irish lamb was very high in the lead-up to the Muslim festival.

IFA national sheep chairman Sean Dennehy said a lot of lambs were sold over the last few weeks, with 74,535 sold in the past week alone. He said the lamb kill is running 14pc ahead of last year or up 75,000. “This should mean supplies will be tighter in the coming weeks, and this should help steady the trade,” he said.

“I think farmers that have gone through their lambs and taken two or three pulls already, have large numbers moved, and they will want to see the trade settle before they move again.”

Our sheep price table now includes base quotes as reported by Northern sheep plants yesterday to the North’s Livestock and Meat Commission (LMC). Conversion from sterling to euro is €1 to 90p.

The two ICM plants slashed 30c/kg off their quote for lamb over the weekend, leaving them on €4.90+10c/kg QA, while Kepak Athleague are down 20c to €5.05+15c/kg QA. Dawn Ballyhaunis and Kildare Chilling both declined to offer an official quote.

The LMC reported Northern plants as quoting from €5.005.11/kg for lambs up to 21kg. So why would a Northern producer bother trading with Southern plants when prices here are really no better? Or put another way, how much do

Southern plants have to pay to tempt Northern lamb south?

For cull ewes, the ICM plants raised their offer by 10c/kg to €2.60/kg, while Kepak dropped 15c/kg to €2.50/kg.

So where are we at? With this year’s sheep kill up over 92,000 on this time last year there is a feeling on the ground that despite factory prices falling, the lack of sheep in the system could help push prices higher over the next few months.

Kevin Murphy of Enniscorthy

Mart said: “Everyone expected prices to soften once the factories finished buying for Eid but with a lot of heavy sheep gone, if lads hold tough and squeeze supplies, who’s to say in two weeks’ prices won’t improve?”

With Kepak’s base 15c/kg above the two ICM plants, there appears to some room for optimism. I asked a representative of Kepak why they had increased the gap between themselves and ICM for lamb from 5c to 15c/kg. I was told the company wants to “keep supplies coming”.

Another industry observer commented that while we’re all on the same road, “factories appear to have wandered off into a fog and got lost”.

And with two plants not quoting, some on the processor side seem intent on creating a fog of doubt in farmers’ minds as to where the trade is at post-Eid.

Dramatically

The mart trade has slipped but remains reasonably steady.

While prices have eased by 5-10/hd over the last fortnight, Patsy Smith of Dowra Mart reckoned that most of that hit happened two weeks ago.

“Prices here fell by around €5-8/hd a fortnight ago but last week the trade was far more stable,” Patsy explained.

Others in the marts sector pointed out that the sheep trade is far from dead, since heavy lambs appear to be scarce, while store lamb buyers have been very active.

Depending on how farmers now manage supplies, there could still be a lot to play for.