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February 23, 2006 Market Advisor: U.S. Sheep Flock Expands
For the second straight year, sheep and lamb numbers in the U.S. have increased. The most recent USDA-National Agricultural Statistics Service annual sheep and goats report showed 6.23 million head of sheep and lambs on Jan. 1, which is up 1.5 percent from 2005 and up 2 percent from the record low that was recorded in 2004. A 10-year decline in numbers of almost 2.9 million head from 1995 to 2004 was largely caused by drought conditions in many Western lamb-producing states. Improved moisture conditions in several sheep-producing states in 2004, and continued improvement in many Western states in 2005 finally allowed producers to rebuild flocks. Record high lamb prices also helped fuel interest in keeping replacement ewe lambs. The number of replacement lambs increased 2 percent from last year, although moderating from the robust increase of just less than 10 percent that occurred in 2004. Annual slaughter lamb prices in the northern Plains increased about 5 percent in both 2004 and 2005. Feeder lamb prices increased about 10 percent each year. Higher slaughter lamb prices were due to good domestic demand, declining production and moderating imports. U.S. lamb and mutton production was down 2 percent in 2004 and almost 4 percent in 2005. Feeder lamb prices were fueled by the strong slaughter lamb prices, relatively low corn prices and a short supply of feeder lambs due to historically small lamb crops and increased ewe lamb retention. After starting 2005 at lofty levels, prices for slaughter lambs declined seasonally after June and came under significant price pressure by the end of the year. Several factors, which by themselves may seem rather minor, when added together, all contributed to the decline. Excellent grazing conditions in several states and ideal feeding conditions caused lambs to reach slaughter weight earlier than in previous dry years. During several weeks last fall, some packers were operating at capacity and lambs were backlogged. Lambs held longer than normal caused increased slaughter weights. Dressed weights were 2 pounds heavier than last year in October and 3 pounds heavier in November, and ended the year in December at a record 73 pounds per carcass average. The abundance of heavyweight lambs is evident in the market, with sharp discounts for lambs weighing more than 140 pounds. Recent national lamb carcass price market reports have shown a $15 to $25 per hundredweight (cwt) discount for 65- to 75-pound carcasses, compared with the 60- to 65-pound category. Furthermore, prices that packers receive for lamb pelts declined from about $10 per pelt in January to $5 in December. Lamb imports, which were below year-earlier levels in the first half of the year, increased to historically high levels by the end of the year. 2006 prices for slaughter lambs in the northern Plains have been averaging about $25/cwt lower than last year’s record prices. Feeder lamb prices have been about $10/cwt lower. Although heavyweight lambs are still a concern, slaughter lamb prices should increase seasonally as demand for the spring religious holidays ramps up. The supply of market lambs on Jan. 1 was down 1 percent from last year due to lambs reaching slaughter weight earlier and ewe lamb retention. Lamb imports from Australia, the leading supplier of U.S. lamb imports, were down 15 percent in January. Exporters in Australia have indicated that they may not be able to export as much lamb as last year. Prices will not reach 2005 levels, but likely will follow normal seasonal patterns at near 2004 price levels. Fall 2006 feeder lamb prices will be influenced by slaughter lamb prices and corn prices. Prices also should average near 2004 price levels, unless corn prices increase substantially over last year’s levels. Despite lower market lamb prices, there seems to be continued interest in rebuilding breeding flocks. Replacement-quality ewe lambs weighing 80 to 100 pounds at northern Plains auction markets are bringing $10 to $15 per cwt higher prices than similar weight wether lambs. ### Source:
Tim Petry, (701) 231-7469, tpetry@ndsuext.nodak.edu |
Market Advisor: |
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North Dakota State University |
