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Market Advisor: U.S. Sheep and Lamb Inventories Decline

Current prices are being impacted by the economic meltdown and less demand for all meat, including lamb.

By Tim Petry, Livestock Marketing Economist

NDSU Extension Service

The USDA’s National Agricultural Statistics Service (NASS) Jan. 1 sheep inventory report released on Jan. 30 showed a decline in the U.S. sheep inventory.

The new report shows that the sheep and lamb inventory in the U.S. totaled 5.75 million head, down 3 percent from 2008.

The NASS also revised downward its previous estimate for Jan 1, 2008, from 6.06 million head to 5.95 million. A revision statement says that data from the 2007 Census of Agriculture were used in the review process for the 2009 and 2008 estimates. Revisions for 2008 will be republished in the “Sheep and Goats, Final Estimates 2004-2008” publication scheduled for release on March 5.

The number of ewes 1 year and older on Jan. 1 were reported at 3.4 million head, compared with 3.54 million last year, a decline of almost 4 percent. Replacement lambs retained for breeding purposes declined from 697,000 head in 2008 to 648,500 this year.

The decline in sheep numbers and replacement animals reflects a similar pattern that is occurring in the other livestock sectors in the U.S. High feed costs in 2007 and the first half of 2008, coupled with the economic meltdown and declining meat demand in the last half of 2008, has caused downsizing in the U.S. livestock sector.

Cattle, hog, sheep and chicken inventories all have declined, so 2009 will be the first year in a long time when beef, pork, lamb and broiler production likely all will decline.

Feeder lamb prices were especially impacted by higher feed costs. Early in 2008, feeder lamb prices were at higher than the previous year’s levels, but prices fell dramatically during the summer through early fall because corn prices were at lofty levels. Corn prices did fall to the previous year’s levels by late fall and feeder lamb prices improved somewhat, but many feeder lambs had been marketed by that time.

The low feeder lamb prices and volatility in the corn market were factors in lamb producers deciding to keep fewer replacements.

The NASS reported the 2008 lamb crop at 3.71 million head, down 185,000 head from last year. The lambing percentage of 105 lambs per 100 ewes was down from 108 in 2008 and the lowest reported since 1996.

Lamb producers in several western states experienced difficult lambing conditions due to late spring storms and dry weather conditions in some regions. Increased predator problems also have been a concern for lamb producers.

As of Jan. 1, there were 1.42 million head of market lambs in the U.S., which is about 17,000 head or 1 percent less than in 2008.

Looking ahead, the supply of lambs will be tighter in 2009, which normally would be supportive to feeder and market lamb prices. However, current prices are being impacted by the economic meltdown and less demand for all meat, including lamb.

Market lamb prices were at near-record levels in midsummer, when many livestock and other commodity prices were high. However, prices fell in the last half of the year as the economic turmoil affected meat prices. Current prices for both market and feeder lambs are near levels of one year ago.

Lamb demand is quite dependent on the white tablecloth restaurant market. The National Restaurant Association’s comprehensive index of restaurant activity is at a record low, with restaurants struggling because business has declined. Also, consumer confidence in the U.S. is at its lowest point since records were started in the early 1970s.

How long this recession lasts is anyone’s guess, but an economic recovery is the key to higher lamb prices. The new administration and Congress are addressing the situation and we hope a recovery can begin this year.

When an economic recovery occurs, and with the lower sheep and other livestock numbers, 2010 could see much better lamb prices.


NDSU Agriculture Communication

Source:Tim Petry, (701) 231-1059, tim.petry@ndsu.edu
Editor:Rich Mattern, (701) 231-6136, richard.mattern@ndsu.edu
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