Sheep trade: prices rising as factories struggle to fill lairages

The sheep trade is in uncharted but positive territory, with prices rising in the first week of July. Quotes for Thursday have increased by 10c/kg, but there are strong signs that there could be more potential in the market.

Kildare Chilling is offering the top base quote of €5.40/kg plus its 10c/kg quality assurance (QA) bonus. Kepak has also increased its base quote to €5.30/kg plus 15c/kg QA, while the two Irish Country Meats plants are offering the same base quote of €5.30/kg.

Prices paid to secure lambs for Thursday’s kill have increased well above quoted prices. Farmers handling average numbers are securing returns of €5.45/kg to €5.50/kg, while those with stronger negotiating power are securing 10c/kg to 15c/kg higher.

The upturn in the trade after weeks of downward pressure is being driven by tight numbers coinciding with strong demand.

Factory agents have become extremely anxious for stock, with buyers appearing in more mart sales and competing outside of their normal catchment areas. Reports in marts point to factory agents dropping well down in the weights to supplement numbers.

This is having longer-term benefits of lowering the volume of sheepmeat coming on to the market and taking these sheep out of the system earlier.

The message in this regard is simple – producers should continue to keep lambs moving as they come fit, as markets can quickly change at this time of year and there is no point in bringing lambs to heavy weights to add free meat on to the market.

The trade is being helped by a significant lift in UK prices, which is helping the competitiveness of Irish lamb in key export markets. Reports indicate that prices in Britain have increased to £4.85/kg to £5.00/kg as the week progresses.

This is the equivalent of €5.40/kg to €5.52/kg at a sterling to euro exchange rate of 90.5p and €5.65/kg to €5.82/kg including VAT at 5.4%.

Prices in Northern Ireland have also increased sharply, with quotes of £4.50/kg (€5.24/kg incl VAT) in no way reflective of the trade.

Factories and agents would bite the hand off you to get lambs this week

Reports indicate that sellers handling significant numbers are securing upwards of £4.70/kg to £4.75/kg (€5.47/kg to €5.53/kg), while reports point to intense bidding in mart sales between agents purchasing on behalf of northern and southern plants and also those purchasing sheep for export to Britain.

This is leading to at least 10p/kg to 15p/kg extra being required to breakeven.

The number of sheep exported south last week was recorded at 6,732, with volumes crossing the border remaining unchanged for the last three weeks.

IFA national sheep chair Sean Dennehy said: “Factories and agents would bite the hand off you to get lambs this week. Prices of €5.60/kg have been paid for Wednesday and farmers are holding out for more. The fact is that factories cannot get lambs at their lower quoted prices and are having to pay 30c to 40c/kg more in places.”

The ewe trade is solid, with 5c/kg to 10c/kg extra paid.

The mart trade has also recovered

Deals with farmers for ewes are generally in the region of €2.60/kg to €2.65/kg, with agents and sellers handling higher numbers securing 5c/kg to 10c/kg higher.

The mart trade has also recovered and is a good alternative outlet for farmers with small numbers on hand and struggling to negotiate with factory agents.