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Sheep Matters_Aug-Sept 17 (redesigned)

Sample copy of new publication aimed at the progressive farmer and professional in the UK sheep industry. For further information and to register your interest go to www.sheepmatters.co.uk

Making sense of live and

Making sense of live and deadweight prices Focussing on price alone misses the bigger picture. Can you afford to just focus on the income generated from lamb sales and not consider the costs and profitability of producing those animals? The way to maximise financial returns to your business is to produce and sell the type of lambs that buyers want and are willing to of production? SHEEP Ma(ers - September 2017 edi7on - Liveweight and deadweight price ar7cle Q pay for. The most profitable farmers match their production to market demand by adopting appropriate breeding, feeding and health strategies. Whether you are marketing liveweight or deadweight, market prices are widely reported in the farming community and press but what does this actually mean for you? How do prices per kilo translate into a price per animal? How does this relate to your costs Standard Medium Heavy 38 kg 42 kg 47 kg £71.59 £81.94 £91.46 Liveweight marketing commentary The average number of New Season Lamb sold in auction markets has risen to over 117,000 per week during the first two weeks of August. As a consequence the average SQQ price continues to drop from the highs seen in early June and this drop is reflected across prices for all other weight categories. The increase in NSL has predominately been in Medium grade lamb (39.1 to 45.5 kg) which now trades at just over 60% of all stock sold, with the proportion of Standard grade (32.1 to 39 kg) dropping towards 20% of lambs sold. The number of Heavy lambs (45.6 to 52 kg) is slowly beginning to rise, reaching nearly 10% of stock sold. The Old Season Lamb trade is now virtually finished with approximately 300 animals sold in the week ending 12 August 2017. As has been the case for the past eight weeks, there is no price premium for producing a Standard or Medium lamb rather than a Heavy one. This market signal will encourage producers to increase the size of animals marketed to maximise revenue earned. What impact will this have on the quality of carcass produced? Will the animals remain lean or carry additional fat? Using our spot price, a typical 42 kg lamb would achieve a price of £81.94 versus £91.46 for a 47 kg animal. The heavier lamb provides a premium of £9.52 per animal. This will be very attractive to the bank manager but are there any hidden costs or consequences to your business? 4 AUGUST & SEPTEMBER 2017

Deadweight marketing commentary Moving beyond the third week of May, the data reported are for New Season Lamb from a sample of abattoirs in Great Britain with 448,353 animals being reported during June and July. This represents approximately 21.4% of the national stock being slaughtered during this period and is therefore indicative of prices and quality being achieved. The average price paid has continued to drop from the highs seen in early June with this SQQ price per kilo now reflecting the price reported for the specific R3L category. Prices for conformation R and above, with fat class 2 or 3L continue to attract a premium over the same shape animal with fat class 3H. This reflects the continued demand for leaner types. Using our spot price, a typical 19kg carcass would achieve a price of £83.94 at R3L versus £82.86 at R3H, obtaining a premium of £1.08 for the leaner animal. Can you afford to not meet R3L or better specification? The data reported in this article are GB weekly average prices from AHDB Beef & Lamb with the spot prices used in the infographics taking data from the week ending 12 August 2017. These infographics have been designed to specifically highlight the price (before abattoir, mart Q or Levy deductions) that you would receive for a representative animal that meets a specific grade requirement. ‘Can you afford to lose £1.08 per 19 kg carcass by not producing lambs to meet R3L or better specification?’ Using our analysis, over the 13 week period of the current NSL marketing period, the premium paid for producing the leaner lamb has averaged £1.35 per animal. Why would you not produce the leaner animal to achieve this premium? What is the true cost (direct and indirect) to your business of producing the fatter animal? R3L R3H 19 kg 19 kg £83.94 £82.86 2017 AUGUST & SEPTEMBER 5

Sheep Matters - August/ September 2017