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March 10, 2005 Market Advisor: U.S. Sheep Flock Increases, Prices to Remain Strong
For the first time since 1990, sheep and lamb numbers in the United States have increased. The most recent USDA-NASS annual sheep and goats report showed 6.14 million head of sheep and lambs as of Jan. l, 2005, which is up slightly from the record low in 2004, but still 3 percent below 2003. Sheep numbers generally have been declining since 1942, when numbers peaked at 56.2 million head. The decline of the last several years was caused largely by drought conditions in many Western sheep producing states. However, improved moisture conditions in several sheep producing states in 2004 helped stop the declining pattern. Ewes a year and older, at 3.57 million head, still were down 1 percent from the year before, which shows the lingering effect of the drought. However, ewe lambs kept for replacement increased by almost 10 percent to 770,500 head. Record high lamb prices, along with the USDA ewe lamb retention program, also helped fuel interest in keeping replacement ewe lambs. Slaughter lamb prices in 2004 averaged about 5 percent higher than 2003, and feeder lamb prices averaged about 10 percent higher. Higher slaughter lamb prices were due to strong domestic demand and lower supplies. Commercial lamb production fell 3 percent in 2004. Feeder lamb prices were fueled by strong slaughter lamb prices, relatively low corn prices and a short supply of feeder lambs due to the record low 2004 lamb crop and increased ewe lamb retention. Declining U.S. sheep numbers and lamb meat production has led to increased imports of lamb for U.S. consumption. Imports amounted to less than 20 percent of consumption in 1995, but increased to more than 45 percent in 2004. Due to strong U.S. lamb prices in 2004, lamb meat imports increased 7.7 percent from 2003. Imports likely will increase again in 2005, but the rate of increase should moderate because of the declining value of the dollar relative to currencies in lamb exporting countries. Australia accounts for about 67 percent of U.S. lamb and mutton imports, with New Zealand providing 32 percent and Canada and several other countries sending the remaining 1 percent. The United States receives virtually all live sheep and lamb imports from Canada, but those numbers will be low or could be nonexistent in 2005. No live sheep or lambs have been allowed in from Canada since May 2003. That’s when the discovery of BSE in a Canadian cow closed the border for imports. The USDA issued a rule that would have allowed only lambs under a year old into the United States beginning March 7, 2005. However, on March 2, a federal judge in Billings, Mont., granted a preliminary injunction against the rule. Therefore, the border will remain closed until a court trial is held. A date for the trial has not been scheduled, but it could be weeks or even months from now. The number of market lambs was down nearly 1 percent on Jan. 1, which should mean lower slaughter in early 2005. Production from the increased number of retained ewe lambs should not impact the market until fall. Declining production and moderating imports during the first half of 2005 will bolster prices. So far, both slaughter and feeder lamb prices have been averaging about $10 per hundredweight higher than last year. Lamb prices should follow normal seasonal price patterns and average near last year’s levels during the second half of 2005. If moisture conditions continue to improve, interest in ewe lamb retention will continue. Fall feeder lamb prices will be influenced by the potential size of the fall corn crop and resulting corn prices. Bred replacement ewe prices in early March also have been strong at northern Plains livestock auction markets. Several auction markets have reported prices for young ewes for April to May lambing ranging from $165 to $195 per head, middle-aged ewes selling at $125 to $165 and short-term ewes bringing $100 to $125. ### Source: Tim
Petry, (701) 231-7469, tpetry@ndsuext.nodak.edu |
Market Advisor: |
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North Dakota State University |
