Increased demand for finished lambs, coupled with reduced supplies look set to bolster the sheep trade in the run up to Christmas.

With the big event just six weeks away, Jonny Williams, joint business director of Farmstock Scotland, says there is a strong demand for standard weight lambs 16-22kg due to shortage on the continent and reduced numbers south of the Border.

As a result, he said prices have generally been 50-70p per kg better this week compared to the same week last year which equates to approximately £10-14/hd more per lamb.

"My gut feeling is that the increase in prices has been driven by tightening volume of finished lambs coming forward, especially in England in Wales.

"AHDB figures point towards a 4% decline in sheep slaughtering in September 2023 which would back this up. We are now seeing the impact of the drought of 2022 which led to reduced ewe scannings nationally in England and Wales, and now a smaller lamb crop to sell. Wet and stormy weather in all parts of the country will have probably slowed up finishing slightly too."

Add in the drought conditions on the continent earlier in the year, and he said Farmstock has secured increased provisional orders from processors for lighter weight lambs for the Southern Mediterranean Christmas market.

"With numbers likely to remain tight short term, and New Zealand and Australian lamb yet to arrive in large volumes, it's extremely encouraging for our farmer members in Scotland and Northern England that we have strong provisional orders from processors looking to supply the Southern European market.”

Joint business director, Vicky Warcup added however that lambs need to be fleshy, typically 3Ls, and need to be in the 10-15kg deadweight range.

Most livestock markets have also seen increased demand for the finished product this week with some centres averaging as much as 273p.

Looking further afield, the latest report from Beef and Lamb New Zealand (B&LNZ), shows their new season lamb crop is expected to be up at 20.4m head – a rise of 0.6% compared to the same period last year. There has however been a slight fall in the number of breeding ewes compared to last year, with numbers forecast to fall again with farmers expected to retain fewer for breeding.

As a result, lamb slaughter levels are expected to be up 2.5% to 17.6m head, but this remains lower historically.

There is the potential for exports to China and Europe to grow to fill demand from the holiday season, but they are limited due to the lower priced Australian product.

B&LNZ does however expect demand for New Zealand lamb to grow globally, as Christmas approaches in the EU and UK, Chinese New Year in February 2024, and as China clears its inventories.

Similarly, a projected weaker NZD to EUR/GBP will boost price competitiveness in these markets. B&LNZ is predicting a slight rise of 0.7% in prices, which AgriHQ notes is the lowest beginning price of a season since 2017.

Furthermore, future New Zealand lamb prices and exports are expected to be affected by the growth of Australian production.

According to AgriHQ, New Zealand’s exports are limited by Australian products being sent to countries at an incredibly competitive price. The price of Australian lamb on the international market could fall further, as Australia’s production grows and previously delisted processing plants come back online, increasing the supply available for export.

So far this year – from January to August – the UK has imported just under 20,000 tonnes of sheep meat from New Zealand, which is down 7500 tonnes (28%) from the same time last year.

New Zealand has shifted its export volumes into Asia, as well as growing volumes into the EU. Hence, AHDB expects a seasonal uplift in sheep meat imports in the coming months, as Christmas and Easter approach with the price and scale of these imports a key determinant for domestic prices.