Sheep Industry News February 2023

down by the Spring holiday demand. Imports have remained large. The seasonal decline in imports from March to September was muted. Imports in November hit almost 25 million pounds. Imports combined with cold storage stocks will offset any moderation in domestic production. One area of interest for future domestic production is mature sheep slaughter. Throughout 2022, weekly slaughter was about equal to the 2016 to 2020 average. Slaughter in 2021 was elevated and contributed to a smaller ewe flock. Restrained slaughter in 2022 suggests any change in the ewe flock in USDA’s inventory might be small. WOOL AND LAMB TRADE The industry is highly dependent on trade. Rarely would talk about markets not include some discussion of imports and exports or action in the Australian wool market that determine prices worldwide. Often these discussions would mention exchange rates. A stronger U.S. dollar versus Australian and New Zealand curren cies leads to more meat imports. Changing exchange rates lead to changing relative prices in each country. In general, the U.S. dollar has strengthened against most major trading partners' currencies this year. Higher U.S. interest rates have boosted the dollar and differing prospects for economic growth around the world have similarly helped the dollar. Using monthly average exchange rate data, the U.S. dollar versus the Australian dollar was 1.48 in December compared to 1.40 in December 2021 – about a 6-percent appreciation. The U.S. dollar appreciated about 7 percent compared to the New Zealand dollar in December. This rate of appreciation was similar to the Euro. Com pared to the British pound, the dollar was about 9 percent larger in value. While the dollar has gained in value, year-over-year, the appre ciation has moderated in recent months. For example, in October 2022, the U.S. to Australian dollar rate was 1.57 compared to 1.35 in October 2021. That exchange rate had declined to 1.48 in December 2022. But both remain higher than the 1.39 in January. That general increase in value of the dollar through much of 2022 and some moderation in November and December holds for most major currencies. It's likely that the U.S. dollar remains relatively stronger than our trading partners' currencies compared to the prior year in coming months. That will act to keep meat imports large. It will affect rela tive prices in the wool market. We’ll have more on wool prices in future articles as the market heats up following the holidays. SUMMARY There is some reason for optimism for lamb prices in the new year, but a lot depends on demand recovery. We should expect higher seasonal live lamb prices as we move closer to the spring holidays. Imports and stocks will most likely restrain price growth.

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February 2023 • Sheep Industry News • 7

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