Sheep Industry News February 2024

Market Report

DAVID ANDERSON, PH.D. Texas A&M AgriLife Extension Service

Cutout Starts the Year Slightly Higher

T he new year is off and running with some encouraging developments, so far. Severe winter weather can complicate markets from both supplies and demand. Often supplies are disrupted by difficulties in getting lambs to market and products from packers to processors or retailers. Purchases can be disrupted because the storm keeps folks indoors. But these disruptions are usually short lived. PRICES The wholesale lamb market – as represented by the cutout value – started out 2024 slightly ahead of last year. So far, in January, the cutout has averaged $472 per cwt. compared to $467 last January. While the overall cutout is higher, there are some substantial differ ences in the direction of the middle and end meats. The higher cutout has been led by the shoulders and legs. Shoulders were $407 per cwt. in mid-January compared to $358 per cwt. last year. Legs increased dramatically early in 2024, up $28 per cwt. to $525 per cwt. The higher end meats are in contrast to the lower middle meats. Loins have averaged about $700 per cwt. this year compared to about $734 last year. Racks were about $1,000 per cwt. compared to over $1,100 last year. Past seasonal patterns might suggest some increase in leg prices during the next few months. Rising leg prices are part of the lamb trade picture. In the last six months, American lamb leg prices have increased from about $639 to $703 per cwt. (the different leg price here versus the earlier paragraph represents the primal leg cut to a more prepared version). The compa rable Australian leg has declined from $427 to $385 per cwt.

The widening price gap is encouraging imports by indicating a more competitive import product. While imports have been on an upward trend through much of 2023, fewer pounds were imported in 2023 than in 2022 and 2021. On the live lamb side of the market, heavyweight slaughter lambs have tended to increase in price early this year. The national negoti ated live data series indicates lamb prices are up about $11 per cwt. during the first couple of the weeks of the year. In contrast, light weight slaughter lambs (60 to 90 pounds) have declined about $40 per cwt. to $211 to begin the year. The lightweight lamb price data does tend to exhibit larger week-to-week volatility, so price moves of that magnitude are not unusual. LESS PRODUCTION FOR THE YEAR Lamb prices trended higher in most of 2023 even in the face of larger slaughter. Lamb and yearling slaughter in 2023 posted an esti mated 4.3 percent increase compared to 2022. Mature sheep slaughter was also larger in 2023 than in 2022, up 11 percent in the last quarter of the year and up 6.5 percent for the year. Lamb and yearling slaugh ter in the last quarter of 2023 was up about 8.3 percent over the year before. The fact that lamb prices were able to advance given greater slaughter numbers was positive. Lamb meat production was down an estimated 1.7 percent for the year. But production was up about 1.7 percent in the fourth quarter. Larger slaughter was offset by lighter weights, which continue to result from the growth in the lightweight slaughter lamb market. Increased production in the fourth quarter and larger import vol

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