Sheep Industry News June 2022

Market Report DAVID ANDERSON, PH.D.

Texas A&M AgriLife Extension Service

Lamb Market Falls in Summer Patterns

N ow that we are past the spring holidays for lamb demand, it feels like summer already. Some areas in the broader lamb market are already falling into summer patterns. DROUGHT AND FEED COSTS Drought and rising feed costs are impacting all livestock markets. Omaha corn was $8.16 per bushel in the first week of May, compared to $7.09 last year. While the war in Ukraine has fueled the most recent dollar or so increase, higher prices have been spurred by the expectation of fewer planted acres than last year. High soybean prices and high fertilizer costs have shifted more acres to soybeans. The drought in the Western half of the United States has intensified and spread throughout much of Texas and the Plains. Higher fuel and almost all other pro duction costs will continue to pressure profits. PRODUCTION AND SUPPLIES After lagging well below last year and the five-year average throughout the first quarter of the year, lamb and yearling slaughter hit its spring peak of 39,700 head for the week end ing April 2. That was just slightly less than the “Easter peak”

last year, but well below later weeks in April and May when weekly slaughter peaked at 44,000 head. Slaughter for the year is about 11 percent lower than a year ago, and 3.5 percent below last year during the last four weeks. Lamb and mutton production has dropped dramatically – down 21.4 percent – since the first week of April. Production tends to decline seasonally from April until July or August. The seasonal decline in production is comparable to last year – so far – but it has started earlier. Dressed weights have fall en from 69 to 61 pounds during the last month, contributing to the production decline. Lamb slaughter, dressed weights and production should continue to decline in coming weeks. Lamb imports in March totaled a record 27.4 million pounds. That was 2.2 million pounds more than March 2021. Imports do tend to peak seasonally in March, although that was not the case in 2021 when imports continued to increase – peaking in June – and remained historically large through out the year. High domestic lamb prices and tight supplies have encouraged imports. Lamb imports from Australia and New Zealand were 12 and 2 percent greater than in March of last year, respectively. Tight domestic supplies should support imports through the summer. Lamb and mutton in cold storage was once again below a

year ago in March. The balancing act of reduced domestic production, lower mutton imports, more lamb imports and likely good product movement resulted in reduced cold storage stocks. That is a positive development for lamb prices in coming months. DEMAND Demand is probably where the greatest un certainty lies for the next few months. Demand has been growing throughout the last several years and it received a boost during the pan demic, as well. But even though unemployment is historically low, nominal incomes have been increasing and the economy has been growing, the burst in inflation has caused real incomes to decline. How consumers change spending will go a

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