Prime lamb prices are at a three-year low and could dip further, but long-term, the future for the sheep industry is a lot more positive than expected.

With demand for sheep meat rising in the EU and further afield, Northumberland-based livestock agent, Stephen Kirkup believes there is a lot more money in sheep than cattle – a trend that is likely to continue once the industry gets over that big Brexit barrier.

"There will still be demand for British lamb on the continent once we get to November 1, we just have to get through the next six months or so, for trade deals to be established," said Mr Kirkup who buys and sells prime, store and breeding stock here and throughout Europe.

"There are companies that are already selling British lamb into new markets in America, China and the Middle East, and while they will not be able to take all the lamb that would normally be sold into Europe over the next year, they are new and growing markets that have money to spend and want our lamb."

Add to that a growing demand for organic lamb on the home market, with one major retailer about to offer contracts for such naturally reared and finished lambs, and the phenomenal grass growth witnessed up and down the country and he said sheep farmers are a lot happier compared to this time last year.

"We've had such warm, wet conditions – perfect for growing grass – that prime lamb numbers have come forward at a much faster rate than last year. Farmers have also got plenty of forage in store and still have huge amounts of grass that they are not feeling the pressure of last year's drought and lack of winter feed," said Mr Kirkup.

"This time last year, there was no grass and people had suffered huge losses at lambing time, that there was no demand for store lambs or breeding sheep, but I've already sold three lots of breeding females this year.

"Sheep farmers were unable to re-stock last year due to the lack of cash, but cull ewe values have been good which added to the huge amount of grass available will allow farmers to either stock up with store lambs or breeding females. Farmers have so much grass they have to do something and sheep certainly look a better option than cattle at the minute," he said.

With perfect grass growing conditions for much of the year, Mr Kirkup said that prime lamb numbers were coming forward faster than demand, hence the reason behind the fall in values when sterling has weakening. However, he is hopeful next weekend's Muslim festival will help to bolster trade over the following week.

Mr Kirkup's statements appear to ring true going by the first of the store lamb sales too with Tuesday's sale of 2397 head at Longtown, selling to a top of £72.50 for Texel crosses and all classes of lambs keenly bid for.

"Lambs were returning prices £1-£3 up on the year," said C and D Auction Marts' sheep auctioneer, John Walton.

"Lambs are in better form than last year because of the serious amount of grass keep that has been available since the beginning of spring, so they will be running at very similar rates to last summer."

Store lamb values were also well up at United Auctions' opening sale at Stirling on Monday where the 3932 were forward and sold to a top of £73 for Texels.

Suffolk crosses levelled at £64.23 (+£4.74p) on the year; Texel crosses at £61.16 (+£2.05p); Beltex crosses, £61.59 (+£0.66p); Cheviots, £57.74 (+£4.11); Mules £57.50 (+£5.90p) and Blackfaces at £40.00.

Such has been the good weather that prime lamb numbers have come forward faster not only in the UK but also throughout much of the continent, which coupled with an increase in carcase weights, have seen GB prices fall to a three-year low.

For the week ending July 27, the GB average of 399.9p per deadweight kg was 5.6% lower than this time last year, with prices in Ireland down 9%. It's a similar situation in France and Spain too with values some 7% and 4% less than the same week in 2018.

However, sterling weakness has contributed to stronger exports in first five months of 2019 with a particularly firm trade during May.

Growth in exports has benefited from reduced deliveries to Europe by New Zealand. According to Beef and Lamb New Zealand, their deliveries to Europe were down 22% in the first half of 2019 while their global exports only dipped 1%.

“In short, New Zealand is sending more product to China and the USA at the expense of the EU,” said Stuart Ashworth, director of economic services at Quality Meat Scotland.

“This has created an opportunity for UK sheepmeat exporters who have seen significant increase in deliveries to Germany, the Netherlands and Italy as well as growth to France.”

Deliveries of New Zealand lamb to the UK over the first half of 2019 were 22% lower and more than 40% lower during June alone.