Sheep Industry News April 2024

Market Report

CHARLES MARTINEZ, PH.D. University of Tennessee

So Far, So Good

W hen I wrote the January article, the lamb supply chain was flickering with some positivity in certain segments, while other segments were under whelming. Given a smaller na tional flock, lower imports and steady retail demand, I was still hopeful that 2024 would be positive for the lamb industry. RETAIL SECTOR In the retail reports, prices offered for shoulder and loin cuts on the meat shelves have been fluctuating. Shoulder cuts – bone in and bone less – have been steadily between $7 and $8 per pound. Loin chops have been fluctuating between $9.30 and $10.50 per pound. A key part of the retail report is that it compares recent weeks to a year ago. Keeping that in mind, loin chops have been $4 to $5 per pound lower than compared to a year ago and the featuring rate is up to 6.3 percent compared to about 4 percent last year. The feature rate is the number of stores advertising any reported lamb item during the cur rent week, expressed as a percentage of the total stores that get sampled. In Tennessee stores, I have started to see more total lamb products and variations of lamb products in the meat case. As we get closer to Easter, traditionally, demand picks up for lamb products. Moving forward, if the feature rate continues to be steady to higher, that’s an indication of steady to increasing demand. WHOLESALE-SLAUGHTER SECTORS The lamb cutout value has been the strongest it has been in a long time and is going extremely counter to what the market was indicating a year ago. The latest report has the cutout trading at $475.66 per cwt. (solid blue line in the chart). This makes the current cutout values up from $450.56 per cwt. a year ago (dotted line) and up from the previous five-year average price of $406.72 per cwt. (solid red line). The trend is gaining upward steam, as well, which is expected if comparing to the previous five-year average. A key reason for the upward swing in the cutout values is due to wholesale leg, loin and shoulder prices have been trending upward. Prices are at $404.52 per cwt. for shoulders, $527.08 per cwt. for legs and $712.43 per cwt. for loins. All three are well above last year’s prices. I believe the upward trend of the cutout will continue with lower supply of slaughter lambs and steady to stronger retail demand. Reports for slaughter lamb production come out in the monthly USDA reports, but the numbers have a monthly lag. At the time of writing this article, the most recent report (February) indicates a daily average of 34,400 head of lamb and sheep were processed in January,

which is on par with last year’s volume, but below the previous five year average for January (37,000 head). Additionally, dressed weights averaged 63 pounds, which is below the previous year (64 pounds) and below the five-year average (70 pounds). Thus, the supply chain is harvesting fewer head and harvesting at lighter weights, which provides support for wholesale and cutout values. Prices for slaughter lambs have been holding steady through the first quarter of the year. Prices have been oscillating around $190 per cwt., and through mid-March prices are currently trading $191.24 per cwt. That puts prices up from last year – $135.12 per cwt. – and the previous five-year average – $165.22 per cwt. Depending on market location and slaughter lamb size, prices could be higher. For example, in the three-market (Texas, Colorado, South Dakota) report, 60 to 90-pound slaughter lamb prices have boosted up to $243.74 per cwt. in mid March, which is up from $198.36 per cwt. in early February.

FEEDER LAMB PRICES The feeder lamb market prices is a section of the supply chain that has been trending downward. In the three-market report, feeders are trading at $269.35, which is still higher than last year – $178.75 per cwt. – and the previous five-year average – $235.62 per cwt. The trend is due largely to demand for slaughter lambs at the same weights. As tighter supplies of feeders continue, due to the smaller national flock. The questions for the feeder segment are, “how low will prices go, and how soon will prices reach that point?” TRADE Similar to slaughter data reporting, trade data is reported monthly but lagged a month. At the time of this writing, the latest report indi cates that lamb imports were 23.2 million pounds, which is up from

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