Tight sheep meat supplies expected into 2014

Following the difficult conditions of the previous winter and the high culling rate recorded so far this year, the recent growth in the national flock is now expected to halt. The lamb kill has, however, been revised slightly upwards as a result of fewer ewe lambs being retained in the breeding flock, combined with the anticipation that recent good conditions will help with marketing lambs later in the year. The current projection for the 2013 lamb kill is now 12.3 million head, a rise of nearly four per cent on 2012 levels.

Adult sheep slaughterings so far in 2013 have been well ahead of the low 2012 levels, being 14 per cent (122,000 head) higher in the first six months of the year. This increase is expected to slow as the year progresses, resulting in the adult sheep kill for 2013 being 10 per cent higher year-on-year. As a result of the increase in slaughterings of both lambs and adult sheep, mutton and lamb production for the year is forecast to be up three per cent at 285,000 tonnes, following a decline of nearly five per cent year-on-year in 2012.

With production forecast to increase, there is an expectation that export volumes will also be higher on the year. While some of the more traditional markets, such as France, are expected to struggle, the strong growth in volumes to Hong Kong is likely to continue.

UK sheep meat imports in 2013 are expected to be above 2012 levels, following strong year-on-year growth in the first five months of the year. However, imports from New Zealand are expected to reduce later in the year, meaning supplies are likely to be tighter in late 2013 and early 2014. There are already some indications that New Zealand exports to the UK are starting to slow, with the volume for June only four per cent higher on the year.

Until Defra releases its June census results, there is little reason to adjust the previous forecast for the 2013 lamb crop. As such, it remains at approximately 15.8 million head, some 1.36 million (eight per cent) lower than the estimated 2012 crop. The breeding flock was marginally up in December 2012, therefore this fall is attributable to a significant reduction in the rearing rate for lambs, which is expected to have fallen by 10 percentage points from the relatively high levels of 2012.

With supply expected to be relatively tight at home and in key trading countries in the second half of 2013, robust demand should result in favourable returns. However, recent price variation indicates that there remains the potential for some volatility in the market.