Sheep Industry News October 2023

slaughter weight has dropped to an average of 119 pounds, and hit a low of 114 pounds/ head in August. The combination of relatively similar slaughter numbers compared to a year ago and smaller slaughter weights has yielded tighter supplies of total product. The smaller total supply also influences the lamb cutout value, and provides support for the increased prices seen in the cutout. As mentioned in previous market articles, slaughter lamb prices were starting to trend upward. Through the summer, the trend held, and slaughter lamb prices reached $202.08/cwt., which is the highest slaughter lamb prices and first time above the $200/

so much and there hasn’t been an uptick, imports probably won’t pick up this year. But continued monitoring on the exchange rate is war ranted not only for lamb products but also wool. WOOL Through week 10 of the marketing year, the world wool market has had mixed signals throughout. In the early parts of the summer, the Eastern Market Indicator went from $3.39 U.S. per pound and increased week over week for three weeks to $3.60 U.S. per pound, to only then decrease back down to $3.29 U.S. per pound mid-way through August, and has been steady through week 10. Similarly, fine wool (17 to 19 micron) increased from June through mid-July, but since then, all have steadily decreased. For example, 17-micron wool went from $5.6348 U.S. per pound on June 30, up to $5.7388 U.S. per pound on July 14, then decreased down to $5.0015 U.S. per pound through Sept. 8. In the crossbred wools, the story has been opposite. For example, 28-micron wool was $0.93108 U.S. per pound on June 30 and increased steadily up to $1.0116 U.S. per pound on Sept. 8. The contrasting trends between fine wool and crossbred wools leave the wool market with mixed signals. The reason for these con trasting trends could be due to the uncertainty of China’s economy. If there was to be a true financial crisis in the coming months, one could expect for the wool market – along with other markets – to trend down and become extremely bearish. If China doesn’t have a financial crisis – like its government has suggested – then questions about where will demand come from (Europe) becomes the key driver. SUMMARY For American producers, the continuation of higher prices throughout the lamb supply chain is a welcome sign. The inputs have been high for extended periods of time throughout the last year due to drought and other factors. With low import numbers and tighter supplies, prices seem to really have some longevity on the positive side for producers, which hopefully turns into increased profit mar gins for producers, as well.

cwt. threshold since June 2022. Given the market signals from the retail and cutout values, there seems to be real reason to be bullish on slaughter lamb prices as 2023 comes to a close. Additionally, with expected tighter supply of feeder lambs, slaughter lamb prices could really ramp up moving forward. FEEDER PRICES Throughout this article, the summer of 2022 keeps popping up because of prices being the highest since then. The story is a little dif ferent in feeder lamb prices. Through the summer, feeder lamb prices in the three-market (Colorado, South Dakota and Texas) average for 60 to 90 lbs. feeders have trended upward and have reached levels of more than $200/cwt. in September, which is higher than a year ago ($152.79 to $153.38/cwt.) and above the previous five-year average ($180 to $182/cwt.). Prices tend to pick up through the last quarter of a given year for feeders, thus with 2023 being above both the previous five-year aver age and last year, there is reason to also be bullish in the three-market average. TRADE While there is positivity through the supply chain, imports are a common next question from producers. Through 2023, total lamb imports (130.3 million lbs.) have remained below the previous five year average (133.5 million lbs.) and through the same 2022 time period (163.9 million lbs.). Given that the Australian flock is expected to increase, while the New Zealand flock is expected to decrease, the question becomes when will we see an increase in imports (if any at all)? There are two macroeconomic factors that impact this: 1. ship ping costs and 2. exchange rates. Through 2023, the global container freight rate index has trended down from $2,046.51 (January) to $1,494.46 (June). During the same time frame in 2022, the index went from $9,420 (January) to $2,119.96 (December). Thus, shipping costs have drastically decreased. Whereas, the U.S. dollar has strengthened against the Australian dollar. Given that freight costs have decreased

October 2023 • Sheep Industry News • 7