Sheep Industry News January 2022

Market Report

JULIE STEPANEK SHIFLETT, PH.D. Juniper Economic Consulting

What Will 2022 Bring In the American Sheep Industry?

T he million-dollar question facing this industry in 2022 is whether the current hot market is sustainable. Last year, slaughter lamb prices climbed 48 percent, and the whole sale market climbed 50 percent to record-breaking levels. The last couple of years revealed an undeniable increase in lamb demand in the United States. COVID-prompted demand coupled with relatively tight domestic supplies supported prices at new highs and attracted imports. Even if the domestic supply situation eases into 2022, it is possible that strong demand will continue to prop up prices well into 2022. Higher live and meat prices can encourage flock expansion, continued investments in sheep infrastructure including packing houses, markets, and research and development. However, higher lamb prices are only one-half of the flock expansion equation. There are continued constraints to expansion including higher labor and feed costs and ongoing predator losses that muddle forecasting efforts. With the West embroiled in a record drought, pasture and forage costs will continue to rise, and most feed con centrate prices are higher (soybeans might be the exception). FORECASTS The Livestock Marketing Information Center forecasted in early December that production could stabilize in 2022, however, the combination of lower beginning stocks and a projected 4 percent decline in imports in 2022 could mean a 3 percent drop in both

lamb availability and per capita consumption. In early December, LMIC forecasted that in 2022 national direct slaughter lambs could see $213 to $228 per cwt., up 0.5 percent an nually. The three-market average for 60 to 90 lb. feeders could see $256 to $271 per cwt, down about 1 percent from 2021. A December report by the U.S. Department of Agriculture's Economic Research Service arrived at a similar conclusion. It suggests that meat prices could stay high in 2022, but tempered. Meat prices overall were expected to increase 5 to 6 percent in 2021 year-on-year and are projected to rise another 2 to 3 percent in 2022. Prices in the “Other Meat” category (notably lamb) are forecasted to see a 1 to 2 percent increase in 2022. The price spread between wholesale lamb prices and slaughter lamb prices received by lamb producers has increased through the pandemic. The widening share might be explained by increased processing costs, including labor shortages and supply chain disruptions. The widening spread might also be explained by an increasing share of value-added lamb products at retail, such as pre-seasoned roasts. FEEDER AND SLAUGHTER LAMB PRICES STRONGER Sixty to 90 lb. feeder lamb prices at auction averaged $292.40 per cwt. in November, up 11 percent monthly and up 37 percent year-on-year. Prices at San Angelo, Texas, and Fort Collins, Colo., averaged $293.00 per cwt. and $273.67 per cwt., respectively, while prices topped $3 per lb. in Sioux Falls, S.D., at $310.53 per cwt. In November, the slaughter lamb market

remained well above $2 per lb. At auction, Choice and Prime 1 to 2, 100 to 150 lb. lambs averaged $272.00 per cwt., up 10 percent monthly and up 28 percent from 2020. Prices at Fort Collins and Sioux Falls both saw $227 per cwt. in November, about 43 percent higher than last year. Hair lamb prices at the New Holland, Penn., auction saw a high of $303.46 per cwt. for 50 to 60 lb. lambs, which was up 15 percent monthly and 19 percent higher year-on-year (Good and Choice 1 2). Prices per cwt. fell for heavier weight classes with the 90 to 100 lbs. class averaging $217.42 per cwt., up 23 percent monthly and up

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