Lamb market outlook

*Please note the sheep meat production forecast has been revised as of November 2024 - read the latest forecast*

• Total sheep meat production is expected to fall by 3% to 278,000 tonnes in 2024.

• Retail and foodservice demand for lamb will remain pressured by consumer budgets despite the strong start to 2024, as consumption is set to decline by 1% compared to 2023.

• Imports have grown in the first quarter of 2024 but are expected to slow for the remainder of the year.

• Exports have seen a slight yearly decline in the first quarter of 2024 and are expected to remain in decline given our falling domestic production.

Risks

These abnormal risks are likely to impact the sheep flock throughout 2024, and we are aware of an increased number of cases. However, we have assumed a minimal impact on production at the UK level in 2024 as this is difficult to predict and quantify. A more severe impact would make our production forecast look optimistic due to potential issues with ewe and lamb mortality.

• Schmallenberg virus: depending on the timing of infection, it can increase barren rates at scanning, cause abortions, and lamb malformations. This can lead to lambing difficulties, resulting in a decrease in the potential lamb crop for 2024. The impact can particularly affect January/February lambing flocks with ewes synchronised for a tight lambing period due to peak midge levels in August/September.

• Bluetongue virus: depending on the strain of virus, scale of any outbreak, and the timing of a disease incursion. The virus can reduce milk yield, cause sickness, reduce reproductive performance, and impact ewe and lamb mortality. Mortality from bluetongue is variable and may be high for some flocks, so this could have a significant impact if a large-scale outbreak were to occur.

• Other impacts from bluetongue include disruptions due to impact of prolonged animal movement and trade restrictions, administration, and additional costs as a result of restrictions. This includes the need for a licence to move animals out of the zone, which can take up to five days to process. Animals can only exit the zone to move directly to slaughter, and may require farmers to change their usual routes to market. Farmers may incur costs from reduced market access, including export markets. We will continue to monitor the situation closely.

Breeding flock and lamb crop

The size of the female breeding flock in December 2023 totalled 13.8m head, according to Defra statistics. This is a decline of 4.3% (615,000 head) from the same time in 2022 and represents the lowest breeding flock since current records began in 1996. The breeding flock consists of ewes intended for further breeding and slaughter, and ewes intended for first time breeding (ewe lambs).

Using this data, we predict that the number of ewe replacements has fallen for the 2023/24 year (December-December). Industry commentary also suggests a greater proportion of these ewe lambs have been slaughtered in the OSL crop (from January-May 2024), as opposed to kept for breeding. This is due to the record-high lamb prices currently seen in the first five months of 2024.

The predicted size of the lamb crop for the 2024 – 25 season (March - March) sits at 15.9m head. This is a decline of 185,000 head from the previous season, representing a fall of 1.2%. A smaller than expected female breeding flock at 1 December 2023, combined with challenging scanning rates, have contributed to this decline in the lamb crop. However, disease risks such as Schmallenberg and Bluetongue Virus remains a large uncertainty to this forecast as we look across the 2024 season.

H1 2024

The revised estimated carryover for 2024 of old season lambs is now just over 4m head from January - May. This is a decline of 280,000 head (-6.5%) from 2023, despite reports of an increased proportion of ewe lambs coming forward.

The predicted total number of new season lambs to be slaughtered in the first six months of the year is now expected to be 1.42m head, a decline of 235,000 head from the same time in 2023. There may also be some unknown levels of mortality stemming from disease challenges/poor weather that cannot be accounted for.

H2 2024

Clean sheep slaughter in the second half of the year (July – December), assuming a typical slaughter pattern alongside the forecasted lamb crop, is predicted to be 6.4m head. This is growth of just under 1% (48,000 head) from the same period in 2023.

Actual and forecast UK clean sheep slaughter

Source: Defra, AHDB forecasts in hashed bars

We are expecting the adult sheep slaughter to fall by 3% across the full year from 2023. This is following a steep decline in slaughter in the first quarter of the year compared to 2023, with a slight rebound forecast in the second half.

Actual and forecast UK adult sheep slaughter

Source: Defra, AHDB forecasts in hashed bars

Total sheep meat production for 2024 is set to fall by 2.9% across the year from 2023, to 278,000 tonnes. This is driven by a fall in the lamb crop impacting on slaughter levels of new season lambs.

Imports

Imports of fresh and frozen sheep meat (product weight) in the first quarter of 2024 have grown from 2023. 2023 import levels were low at 10,800 tonnes, in comparison to the five-year average (2018-22) which sat at 17,000 tonnes. Imports from New Zealand and Australia remain the key trading nations for sheep meat.

We have seen growth from New Zealand throughout the year so far, totalling 10,500 tonnes, the majority being frozen sheep legs. There has been large year on year growth in imports from New Zealand, as the first quarter of 2023 imports were impacted by factors including Cyclone Gabrielle which limited its production capacity. Australian volumes have seen a boost from 2023, albeit from a low level, to total 3,500 tonnes in the first quarter of 2024.

These volumes imported throughout the first quarter of the year are thought to be some of the highest we will witness throughout 2024. Demand for lamb at Easter combined with lower domestic production meant higher than expected volumes were imported to fulfil orders. Similarly, recent global sheep price disparities have potentially made the UK and EU more attractive markets in the short term.

Moving further into the year, we expect to see a reduction in import volumes over the summer and autumn as our domestic new season lamb crops comes forward. Similarly, a recent downturn in New Zealand production may impact the volumes of imports from a supply perspective, with the traditional slaughter season ending in September. Imports from Australia have remained relatively stable, as product volumes remain focussed on the USA, China, and the Middle East through Q1 2024.

We are predicting a 12% increase in imports for the total of 2024 compared to the previous year. This is due to the previously mentioned higher imports from Jan – March, which has shifted the yearly total. We are expecting imports to remain elevated year on year in the second quarter of 2024. For the final two quarters of 2024, we predict a less drastic rise in imports compared to 2023. This would look like a more stable but relative increase in imports across the rest of the year.

UK fresh and frozen sheep meat imports by supplier (YTD Jan-Mar)

Source: HMRC via Trade Data Monitor LLC

Exports

UK exports of fresh and frozen sheep meat (product weight) in the first quarter of 2024 totalled 20,400 tonnes, a fall of 800 tonnes from 2023. Lower domestic production and increased consumer demand through this period could account for our decline in export capacity. The EU remains our largest market, accounting for 95% of our sheep meat exports in 2024, totalling 19,400 tonnes.

Moving further into 2024, we expect our exports to the EU to be supported by declining EU production, predicted to be down by nearly 5% according to the European Commission.

However, the decline in our domestic production will limit our export potential for the remainder of 2024. We are expecting a fall in the region of 5% in our export volumes for the total of 2024 compared to 2023.

UK fresh and frozen sheep meat exports by destination (YTD Jan-Mar)

Source: HMRC via Trade Data Monitor LLC

2024 updated outlook

In 2023, total lamb volumes declined by 1% year-on-year. While retail performance was down, strong year-on-year foodservice performance, particularly for dining out, mitigated some of these losses (source: AHDB/Kantar, 52 w/e 24 December 2023). For more details on 2023 trends and cut specifics, see our retail and foodservice dashboards.

For the year ahead we expect inflation will continue to fall, and wages will continue to rise. The overall economic outlook will improve, although there are headwinds including world conflicts which have the potential to derail this.

This means that some shoppers will feel genuinely better off, whilst others will continue to struggle and look to make savings when then can. After three years of overcoming challenges and reconsidering how to spend their money we expect any changes in shopping behaviour will be gradual.

Combined retail and foodservice demand for lamb in the first three months of 2024 has exceeded initial expectations, continuing on with the year-on-year increases which started in Q3 2023.

Lamb volumes

Source: AHDB

In retail, our prediction of a strong Easter performance came true, and Valentine’s Day also saw strong demand for lamb products. Promotions have been key in the retail performance lamb has seen so far this year, with retailers continuing to utilise targeted promotional activity to boost sales. The out-of-home market has also seen a year-on-year increase, driven by takeaways.

Despite this positive start to 2024, and Easter being the biggest occasion for lamb, it is not enough to dramatically change the overall estimates for the year.  We expect pressures on consumer budgets to continue, and that retailers will significantly reduce the levels of promotions on lamb for the next two quarters. Therefore, we still estimate overall consumer demand for lamb to decline for the year as a whole, and we now anticipate volumes to be down 1% compared with 2023 and 15% compared with 2019.

Opportunities for the lamb industry to improve demand include:

• Providing inspiration for tasty, easy to cook lamb dishes in a way that gives reassurance to consumers who may be less familiar with how to cook lamb
• Ensuring that lamb is present on menus to capture out of home dining occasions.
• Addressing health concerns by communicating the health benefits of lamb, such as being a good source of B12, iron and protein.
• Encouraging consumers with the right messaging in-store, online, on pack and in foodservice.
• In the longer term, look to maintain and build consumer trust, demonstrating where farming values (animal welfare, environmental stewardship, and expertise) are shared with consumers. See our consumer reputation landscape hub for more information.

AHDB have a range of marketing activities planned for the year, including the new Let’s Eat Balanced campaign. Please visit our marketing pages for more information. For more insight around consumer demand visit our retail and consumer page.

What could the outlook mean for prices?

The lamb prices so far in 2024 have been hugely volatile supported by a smaller carryover compared to 2023, which alongside a delayed NSL crop, has led to fewer supplies available. This has offered supply side drivers to prices, in a period of higher-than-expected demand.

Looking ahead, we could see prices pressured as more new season lambs come forward through June and July, while recognising the moderate delay on numbers entering the market due to wet weather. Meanwhile, consumer demand for the remainder of the year looks to be pressured by budgets and we expect there to be a lack of promotional activity.

Domestic prices may similarly be supported due to a smaller number of imports available throughout the remainder of the year. There are current pressures on New Zealand production and Australian product is currently focussed on other destinations. However, these factors are contingent on Chinese demand which supports large export volumes from both countries, this product could look for a home elsewhere if demand falters. Looking into our exports, the EU market presents an opportunity for growth given their falling domestic production, which could take more product off the market, supporting domestic prices.

Given the above factors, while seasonal production will add supplies to the market, we anticipate prices will remain elevated over previous years as we look across the remainder of 2024.

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