Sheep Industry News October 2023

Market Report

CHARLES MARTINEZ, PH.D. University of Tennessee

Prices Trending Upward

A cross the lamb supply chain, prices are starting to be steady, and even trending higher depending on where the market is located. For producers, this is a welcome sign after more than a year of depressed and low prices. The accumulation of a shrinking national flock and steady demand has spurred higher slaughter prices and all aspects of the supply chain are seeing positivity. tremely strong in retail stores. Each week, the U.S. Department of Agriculture's Agricultural Marketing Service reports the activity index. The 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 100 outlets featuring three lamb/ veal items has an activity index of 300). Through mid-September, lamb and veal retail activity has been 3,030, which is almost 300 percent higher than a year ago. The main features and activities have centered around chops, which are around $6.99 to $7.99/lb. (shoulder chops) and $8.80/lb. (loin chops). While price per pound is below a year ago for shoulder chops ($9.90/lb.), prices for loin chops are up $0.50/lb. at $8.85/lb and have been featured a heavy RETAIL/WHOLESALE In the most recent retail reports, lamb activity has been ex

amount in store. The retail activity has given support to the national lamb cutout value. The lamb cutout represents the estimated gross value of a lamb carcass based on prices paid for individual items – primal cuts – derived from a lamb carcass. Essentially, as consumers pay for items derived from primal cuts (i.e., chops from the loin and shoulder primals) in conjunction with expected seasonal demand, retailers and foodservice entities purchase primals or boxes of specific cuts that translate into the price and value seen in the lamb cutout value. Figure one displays the 2017 to 2021 average (solid thick red line), 2022 (dotted line), and 2023 (solid thin blue line) national lamb cutout values. Through 2023, the cutout has been above the previous five-year average, and even peaked to $456.92/cwt. in August, which was the highest price since $461.40/cwt. in late January-early February. The cutout has remained below 2022, but the gap between 2022 and 2023 is closing. There are two primals that have actually increased such that prices are above the previous five-year average and 2022 prices. Shoulder prices reached $397.76/cwt. in early September, which are the highest prices since July 2022. Similarly, leg prices reached $452.43/cwt. in late August-early September, which are the highest prices since August 2022. Given the retail activity and

cutout values, it seems that demand is strong for lamb, which is provid ing positivity up through the supply chain. SLAUGHTER Another factor that impacts prices at the wholesale level is sup ply. Through 2023, slaughter (figure 2) has relatively stayed on pace with 2022. The largest difference in total supply of lamb is due to the average slaughter weights being well below last year. Through 2023, average slaughter weight has been approximately 125 pounds, which is 7 pounds lower than the 2022 average. But, through the summer (July –September), the average

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