Sheep Industry News July 2024

Market Report

CHARLEY MARTINEZ, PH.D. University of Tennessee

Stuck in Predictive Neutral

A s the dog days of summer begin to hit, the lamb supply chain is coming into the annual stall of prices and produc tion. But not all segments of the supply chain are steady to bearish. In fact, some parts are still showing bullish promise. RETAIL & WHOLESALE At the retail level, recent reports show increased activity by stores across the country. The activity index is a measure of the absolute frequency of feature activity equal to the total number of stores for each advertised lamb/veal item – e.g., a retailer with 10 outlets featuring 3 lamb/veal items has an activity index of 30. At the start of June, the activity index was 3,840, which is up from the previous weeks and up from a year ago (3,710). The reports indicate weighted averages for certain cuts that are reportable and being featured. Loin chops were up to $13.14/lb. in early June, which is higher than last year ($8.99/lb.) with rib chops at an eye-popping $26.99/lb. Other products – shoulder blade and bone chops – are holding steady compared to a year ago. This is a positive sign and shows steady to strong demand for lamb products at the retail level. In the wholesale market, the national lamb cutout value is hold ing steady at $472.16 per cwt. in early June. Throughout this year, this price series has been oscillating around the $470 per cwt. mark, which is higher than the previous five-year average that saw prices hovering around $405 to $415 per cwt. Additionally, this year’s trend has been opposite compared to last year, where the market had prices trending downward and bottoming out at $431.45 per cwt. at the tail end of June 2023 before climbing to current levels through the last quarter of last year. Support for this increased value can be found in the shoulder, leg and loin cuts, with all three holding steady throughout this year. The one cut that has been falling in recent weeks is the rack. Toward the end of May, prices were $1,118.44 per cwt. and have trended steadily to $1,058.73 per cwt. Historically, rack prices hold through the rest of the year, so watching this price series will be indicative of what to expect later in the year for the wholesale value and retail prices. SLAUGHTER & PRICES Through this year, lamb and yearling slaughter is more than 723,000 head. That puts the market at 2.15 percent more lambs and yearlings compared to last year. The market is averaging 34,400 head per week. Dressed weights are averaging 62.9 pounds this year,

which is down from 64.5 pounds last year, and the previous five year average of 68.3 pounds. The combination of lighter weights and higher volume com

pared to last year leaves total lamb production relatively unchanged compared to a year ago. Thus, with supply holding steady and with wholesale cut prices remaining steady to higher, this is another indication that demand is steady to higher from the packing side to the consumer in the supply chain. Prices for slaughter lambs have also been positive compared to a year ago. The three-market average (Colo., S.D. and Texas) for 60- to 90-pound slaughter lambs is more than $220.38 per cwt. midway through June. Throughout this year, the three-market average monthly prices are averaging $36.57 per cwt. higher compared to last year. In Texas, 100- to 150-pound slaughter lambs are at $199.24 per cwt. and averaging $75.75 per cwt. higher on a monthly basis compared to last year. In South Dakota, the same weight class is currently at $177.61 per cwt. with a monthly average of $60.19 per cwt. higher compared to last year. In Pennsylvania, the same weight class is at $275 per cwt. and averaging $61.50 per cwt. per month higher compared to last year. Thus, the demand from the retail side is providing support for higher slaughter prices compared to a year ago, and if the historical trend holds true, prices will stabilize around these levels through the rest of the year. Demand will be a key indicator moving forward for these prices. Monthly feeder lamb prices for the three-market average are cur rently at $273 per cwt. Compared to last year, the same story in the slaughter lamb prices holds true with feeder lamb prices averaging

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