Sheep Sector Outlook
The outlook for the Irish sheep sector remains very positive as global availability of sheepmeat is expected to remain tight, keeping prices relatively strong.
The Irish sheep sector has had an unprecedented start to 2021. A firm demand for Irish sheepmeat on both the domestic and export markets combined with extremely tight supplies for processing have been key factors in taking the deadweight trade to new heights.
Hogget throughput in Irish processing plants during 2021 to date was back significantly from year earlier levels. Higher lamb throughput during summer/autumn 2020, increased levels of ewe lamb retention for breeding and reduced imports from Northern Ireland for direct slaughter have all contributed to this downward trend. Hogget throughput up to the week ending 23rd May 2021 totalled 680,544 head, back 86,061 head from the corresponding period in 2020.
Strong demand and prices around Easter and Ramadan encouraged some producers to push spring lambs to finish slightly earlier this year, however, the unseasonably cold weather in May impacted grass growth and lamb performance around the country, which has delayed finishing dates in some cases.
While numbers have now started to pick up there has been a firm demand from processors for the lambs coming available and this has helped keep a floor under the deadweight trade. As 2021 progresses and lamb availability improves deadweight prices are expected to come back in line with normal seasonal trends. However with the global availability of sheepmeat expected to remain tight, and reduced availability in the EU market in particular, prices are expected to remain relatively strong compared to previous years.
The average deadweight price for lambs/hoggets for 2021 to date (to week ending 23rd May) was 691.9c/kg, significantly higher than the same period last year. Current lamb prices are trending 30% above the rolling five year average.
The EU 27 continues to be our most important, and valuable, outlet for Irish sheepmeat. During 2020 exports to the region were valued at €260 million, accounting for more than 70% of total sheepmeat exports in value terms. France is still the largest market in the EU for Irish sheepmeat with exports accounting for 45% of all exports to the region in value terms last year. There has been some important volume and value growth recorded in exports to other EU markets in recent years including Germany, Belgium and the Nordics while opportunities in central and Eastern Europe are continuing to develop.
While the EU is by far our largest market in both value and volume terms there has also been some encouraging growth in some third country markets. One notable example is Switzerland where sheepmeat exports in 2020 were valued at €23.5 million, up from €15.3 million in 2019. Exports to other important markets in the Middle East and Asia were negatively impacted last year by Covid-19 restrictions and the closure of foodservice on a global scale however exports to these regions have recorded a recovery in the early months of this year in terms of both value and volume.
A total of 16,000 tonnes of Irish sheepmeat have been exported during the first quarter of 2021, back by just over 12% from 2020 levels. The marked reduction in processor throughput in the early months of this year due to the significant tightening in hogget supplies have negatively impacted the availability of product for export however the strong deadweight trade has meant that the value of exports increased by just over 7% year on year to €93.6 million.
Sheepmeat exports to the UK were valued at €67 million last year and it remains an important outlet for Irish sheepmeat, particularly for foodservice customers. The level of export recorded some decline in the early months of the year in response to new trading requirements and the high deadweight prices although the level of trade has gradually picked up. Exports up to the end of March were back by approximately a third in both value and volume terms when compared to the same period last year.
While the UK is an important customer for Irish lamb exports they are also our biggest competitor in key EU markets. An increased focus however on the domestic British market for lamb resulted in a 12% reduction in the volume of UK lamb exports last year which created valuable opportunities for Irish exporters in key markets. Further declines in both lamb production and export availability have been forecast for the UK in 2021.
China has continued to drive the global sheepmeat market with sheepmeat imports during the first quarter of 2021 totalling 123,460 tonnes, a notable increase from 99,378 tonnes in the corresponding period in 2020. China’s demand for sheepmeat has removed a lot of sheepmeat off the global market and this combined with reduced availability for export from both Australia and New Zealand has markedly reduced the volumes of sheepmeat available for export to the EU.
Securing direct access to China and the US for sheepmeat remain a key priority for Bord Bia as both markets offer huge potential to the Irish sheepmeat industry. There is ongoing engagement with officials in both countries in an effort to further progress market access. Having full and free access to a wide range of international markets will future-proof the Irish sheepmeat industry and ensure we are not overly reliant on any one target market or region.
The strong deadweight prices for sheep in recent times has injected some positivity and renewed interest in the sector. There were 2.64 million breeding ewes recorded in the December 2020 census, a 2.8% increase from December 2019 levels. This combined with reports of good scanning results and low levels of lamb mortality this spring should all contribute to a larger lamb crop. However despite the expected increase in lamb production the outlook for the Irish sheep sector remains very positive with firm demand for sheepmeat on domestic and export markets combined with tight supplies globally.