Dark clouds have been gathering amid concern over a recent fall in sheep prices.
As with any news suggesting impending doom, irrespective of the subject, it often prompts panic and the knee jerk reactions that go with it.
But let’s take a step back, draw breath and give the issue some perspective. A variety of factors have come together to influence the price over the last month and the reality is it is following an annual trend but simply running a few weeks earlier than normal.
Historically, we do see a dip in price in early to mid June. We are slightly ahead of ourselves this year with lambs finishing two to three weeks early, perhaps as a result of the favourable weather conditions. Also, prices this time last year were exceptionally high so may make the gap between then and now look artificially big. The price trend is actually in line with 2009 and 2010 early season, which in hindsight were seen by producers as good years.
Other factors have played a part – a fall in lamb prices across the board, including in New Zealand, Australia, France and Ireland. Strengthening Sterling also impacts on the price, though this does not necessarily significantly affect volumes we export so there is no collapse in trade, just the money we get for the product sold is lower.
Significantly, there is also clear evidence of farmers holding on to their lambs too long waiting for the price to go up, which can create a sudden spike in supply which of course affects the prices. Recently, we have seen around 35 per cent and 20 per cent more lambs coming on to the market than their preceding weeks respectively. The problem is compounded when a lot of those animals are overweight so we have a glut of sub-prime quality lambs, which drives the price down further.
Sending lambs to market that are “fit not fat" is the best way for producers to maximise returns as sheep prices fall. Producers should really concentrate on selling stock as they reach the target specification for weight and fatness to maximise returns and benefit from the higher end prices hidden within the SQQ average.