Sheep Industry News October 2024

Market Report

CHARLES MARTINEZ, PH.D. University of Tennessee

Mixed Signals

T hroughout the lamb supply chain, there are some positives and atypical signals in the markets. Additionally, there are talks about a plant closing in Denver, if forced to do so by voters. RETAIL At the beginning of September, the U.S. Department of Agriculture changed its weekly retail reports, thus it is not easy to compare weekly trends within the retail space. But feature rates and prices do provide some insights. 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 feature rate was 14 percent in the beginning of Sep tember, which was up from 3.7 percent the previous year. A key feature item has been racks, which had a weighted average price of $9.99 per lb. in early September. As prices of other proteins start to reach high levels, lamb as an alternative could be a possibility. WHOLESALE The lamb cutout has been oscillating around $470 per cwt. and was at $473 per cwt. at the beginning of September. The previous five-year average saw the cutout increase in September-October and holding around $440 per cwt. Thus, this year the cutout is ahead compared to years past, and should hold at current levels through the rest of the year. Of the primal cuts, leg prices have been and continue to be the

bright spot in terms of prices compared to previous years. Current leg prices are at $528 per cwt. and have been around $530 per cwt. since April. Current prices are up from $453 per cwt. a year ago and up from $427 per cwt. for the previous five-year average. The key feature prod uct – racks – are currently at $1,095 per cwt., which is similar to last year, and up from $1,024 per cwt. for the previous five-year average. As we get into the fall and winter, wholesale prices tend to hold through this time frame. Last year, some primal cuts ended up shooting up, such as leg prices. Baring a major demand shift, prices seem to be on par to hold steady at the wholesale level as we start down the home stretch of the year. SLAUGHTER Through the first part of September, total slaughter for the year is at 1.24 million head, which is up 50,000 head compared to a year ago. Thus, the price activity at the wholesale level is occurring with relatively the same amount of total slaughter. From a weight standpoint, lamb dressed weights have averaged 62.5 pounds, which is down from 64 pounds from last year. Total lamb production this year is up 1.7 per cent compared to last year. Thus, total lamb production is up compared to a year ago, in an environment with steady to higher prices, which indicates steady to possibly strong demand from the retail through wholesale level.

As mentioned above, there is a lamb plant in Denver that could potentially close. The citizens of Denver are voting this fall on a referendum to outlaw slaughterhouses within the city limits. If it passes, the plant would have to close by 2026 and no other plant will be allowed in the city and county limits in the future. This makes up about 15 to 20 percent of total national capacity. This plant closure could have major implications on prices and cause structural shifts in the national lamb supply chain in the coming years. As of now, it is something to watch. SLAUGHTER PRICES Nationally, slaughter lamb prices have started to take an upswing, which is atypical to historical

6 • Sheep Industry News • sheepusa.org