Sheep Industry News January 2025

Market Report

CHARLES MARTINEZ, PH.D. University of Tennessee

Start of a New Year

T he start of the year sets the table for an important month of anticipation for Jan. 1 inventory reports that will come in February. At the time of this writing, there are some sideway movements in key prices, which could be seen as positive or negative, depending on one’s perspective. RETAIL Coming off the heels of Thanksgiving, retail activity and feature rates are down. The activity index in the National Retail Report measures the frequency of feature activity equal to the total number of stores for each advertised item – i.e. a retailer with 100 outlets featuring five items has an activity index of 500. Of the 24,443 outlets, the activity index was 2,317, which was down from 8,298 from the previous week. The decrease is expected given that Thanksgiving week is a time when the activity index is historically one of the highest weeks during the year. The U.S. Department of Agriculture report breaks the nation into eight markets: Northeast, Southeast, Midwest, South Central, South west, Northwest, Alaska and Hawaii. Following the Thanksgiving holiday, the Northeast region had the highest activity index (1,065). Nationally, the feature rate decreased from 27 percent down to 6.6 percent. The feature rate is the amount of sampled stores advertising any reported item during the current week, expressed as a percentage of the total sample. The same Thanksgiving week logic applies to the feature rate. Thanksgiving week sees increased featuring, followed by lower featuring weeks until Christmas time each year. In the second week of December, the Hawaii market lead all markets with the highest feature rate (22.4 percent). While retail activity and feature rates are down across all markets, fresh loin chops are increasing in prices at the retail level, increasing from $9.08/lb. up to $10.69/lb. Fresh bone-in leg cuts and fresh Halal rib racks have also increased in value. WHOLESALE Last year, the fourth quarter is when the lamb cutout value rose and set the stage for 2024. Cutout values peaked at $480.11 per cwt. (April) and bottomed out at $460.79 per cwt. (November) this year. The bot toming out occurred election week, and since then has trended upward to $268.87 per cwt. through the first two weeks of December. Compared to last year, the fourth quarter cutout has not increased at the same rate as the markets saw last year. But throughout the year, 2024 prices ($471.05 per cwt.) averaged higher compared to a year ago ($450.71 per cwt.). Compared to the previous five-year average

($421.54 per cwt.), 2024 cutout values have also averaged higher, and are currently $31.78 per cwt. higher than the previous five-year average for the same week in December. Thus – from a sky view – prices have maintained sideways movement throughout the year with no real pop upward, but no real slide down. This is somewhat positive news given that inflation started the year high, and relatively, proteins are still expensive for the consumer. From a demand perspective, the stabiliza tion in prices indicates stable demand. From the supply side, slaughter headcounts and weights have helped with stable wholesale prices. SLAUGHTER Through the first 47 weeks of 2024, weekly lamb and yearly slaughter averaged 33.81 thousand head per week, which is up from a weekly av erage of 32.73 thousand per week for 2023. Compared to the previous five-year average for the same period (47 weeks), weekly slaughter is down from a weekly average of 34.47 thousand. Through 2024, weekly dressing weights for lamb and yearlings were at 61.9 pounds, which is down from 62.38 pounds for the same period in 2023. Taking total slaughter and dressing weights, total production is up 2.5 percent compared to the previous year. Thus, with supply slightly up, and stable cutout values, demand must be holding steady to higher. Compared to the previous five-year averages, current dressed weights are nearly 5 pounds lower and total production is lower by ap proximately 8.5 percent. PRICES Depending on weight, slaughter lamb prices have been on a roller coaster in the last couple of months. For heavyweight (100 to 150 pounds) lambs in San Angelo, Texas, prices have trended down from $208.40 per cwt. in mid-summer and bottomed out at $136.08 per cwt. in October. Prices rallied back up to $190 per cwt. in November but declined back to $150 per cwt. in the first couple of weeks in December. Given the dressed weight averages, the volatility in the heavyweight slaughter lambs is expected. In lighterweight slaughter lamb (60 to 90 pounds) markets, the three-market average (Colorado, South Dakota and Texas) saw prices go from $263.96 per cwt. in April, all the way down to $143.81 per cwt. in October. Since then, prices have trended back up, with prices sitting at $200.98 per cwt. in the second week of December. As of this writing, both heavyweight and lightweight slaughter lamb types are below last year’s and the previous five-year’s price ranges. Looking back at last year’s price movements and seasonality, both

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