Prime lamb prices still remain lower than this time last year, but with the latest forecasts showing a smaller 2019 lamb crop than expected, supplies are expected to tighten in the coming months.

According to Stuart Ashworth, director of economic services at Quality Meat Scotland, this year's lamb crop is expected to be down on 2018 figures on the back of a 3.9% reduction in the UK breeding flock reported in December 2019.

Add to that the increased number of lambs already slaughtered this year following the early spring and Mr Ashworth is hopeful supplies will tighten and prices will hopefully improve later in the year provided a positive Brexit deal is achieved.

“Given the higher levels of lamb slaughterings so far this year, this would suggest a tightening of prime lamb supplies to come over the coming months," he said.

Trade data from HMRC also shows a substantial reduction in deliveries of sheepmeat into the UK from New Zealand in the first seven months of 2019 and also significant increases in UK exports.

“This change in trade pattern reduced the quantity of sheepmeat on the home market by almost 9000 tonnes in the three months to the end of July, more than offsetting the increase in the volume of sheepmeat leaving UK abattoirs and resulting in the home market being more tightly supplied,” said Mr Ashworth.

“Nevertheless, to achieve this growth, exports did need more competitive pricing and hence pressure on the farmgate price to balance the trade opportunity with the supply available.”

According to Mr Ashworth, updates of New Zealand sheepmeat prospects from Beef and Lamb New Zealand suggest that New Zealand will continue to have limited interest in the UK and European market.

“The initial expectations of their new lamb season, which began this week, is that their breeding flock has declined slightly as will their lamb crop. They do, nevertheless, expect slightly higher lamb slaughter as the need for breeding replacements adjusts slightly.

“However, they have seen export sales to China grow 18% in the past year to 37% of all their lamb deliveries, while deliveries to the EU have fallen 20%. New Zealand’s third largest export market, the USA, has also seen growth in sales and of the highest value cuts, lamb racks,” added Mr Ashworth.

These positive developments in China and the USA alongside the confused state of Brexit and implications for tariff rate quota flexibility, will limit New Zealand’s interest in supplying the UK and Europe in the short term.

“Thus, the building blocks of the UK market point towards some support for prime lamb prices, however there remains the significant destabilising risk of Brexit and it’s threat to tariff free access to the important European market,” concluded Mr Ashworth.