New Zealand’s focus on China will boost sheep sector

Sheep producers in the UK were given upbeat predictions yesterday not only for the remainder of the current season but also in the longer term.

Analysts confident UK sheep sector will see high prices. Picture: Andrew Stuart

Paul Heyhoe, a senior market analyst with Eblex, the English meat promotion body, said the latest forecasts for the UK sheep sector continued to point to a tight supply situation for the remainder of the 2013-14 season and prospects for the next year were also still strong.

The Scottish supply situation for the rest of this season was also good as far as producers were concerned, according to Stuart Ashworth, who heads the economics services at Quality Meat Scotland.

“Since the turn of the year, Scottish auction prices for hoggs have increased by around 4 per cent and stand some 22 per cent better than last year,” Ashworth said. “One of the main drivers for this price increase is availability. Compared to this time last year, the auctions are handling 8 to 9 per cent fewer hoggs and volumes are also marginally below the levels in early 2012.”

Ashworth added that another element boosting the current price was the quality of the hoggs coming forward, higher than in the previous two years.

Looking forward, both analysts agreed that the influence of New Zealand lamb on both the UK and European market was diminishing as Asian markets grew to take a larger percentage of lamb from that country.

Ashworth pointed out: “New Zealand once again failed to make full use of its preferential import allocation, or tariff rate quota, in 2013 and instead grew its exports to China. New Zealand’s need to supply Europe in spring 2014 is then diminishing as it benefits from a growing Asian market which is increasingly taking higher-value cuts.”

Heyhoe believed that, with the continued rise in Chinese demand, it was possible an even greater percentage of New Zealand exports would be sent there in the future, diverting volumes away from the UK and Europe.

“With UK imports dominated by New Zealand product,” he said, “lower production and diversion to other markets means UK imports are forecast to be considerably lower in 2014. Production in other countries supplying the UK is also expected to be tighter, with both Ireland and Australia projecting falling supplies, particularly in the first half of 2014.

“Looking further ahead, supplies in 2015 are expected to increase to some degree, although this is based on a number of assumptions which may not transpire, the key ones being that UK ewe numbers will be broadly stable, weather patterns will be relatively benign and New Zealand production and trade patterns will not alter dramatically. While much could change, the expectation is that UK supplies are unlikely to recover to a large extent and certainly not to pre-2010 levels.”