Lamb markets look good for the futureWritten by Saige
“This is the perfect storm,” says Kaycee sheep producer Bob Harlan about the sheep industry. “It is absolutely amazing that wool, pelts, meat, offal and salvage value are at an all time high at the same time.”
Brad Anderson, lamb supply manager for Mountain State Lamb Cooperative, says that lamb markets are aggressive and prices are high.
“Prices are down from the all-time market high this summer. They have settled down ten to fifteen cents from a month ago and stayed steady,” says Anderson. “We have not seen the seasonal fluctuation like we have in the past.”
“The current live market has been fairly steady for the last few weeks and really isn’t looking to change as we look forward to the near future,” adds Anderson. “We have enough lambs as we go into the next few weeks, so its not like we’re rushing out to compete on the open market.”
For Wyoming, the lamb market is as strong or stronger than in the rest of the U.S.
“The closing of Iowa Lamb takes away a marketing point for Midwest producers, and now those producers have to figure in freight,” adds Anderson.
Harlan agrees and says, “The sheep packing industry has shrunk. There are only four major packers.”
A new insurance program, LRP insurance, allows producers to lock in a profit.
“Looking at feeders, it is a fairly aggressive market because of the insurance for profit,” says Anderson. “They are competing heavily for feeder lambs in Idaho, Colorado, Wyoming and Utah upward of 2.20 to 2.45 for feeders ranging from 80 to 100 pounds.”
The world market and the value of the dollar also impact lamb markets.
“Australia is offering cuts that are cheaper,” says Anderson. “For instance, loins are seven dollars a pound cheaper than domestic loins, but we just are not sure what the supply will be for imports. If we have a weak dollar, it is not as feasible for them to ship to us.”
Harlan estimates the Australian supply is only 50 percent of what it was 10 years ago.
“Australia has been in an extended drought and in a shrinking supply. Replacements are being slaughtered,” says Harlan. “New Zealand is also trading sheep acres to dairy acres, limiting supply.”
The limited supply will continue to help prices rise, if demand remains steady.
According to Harlan, domestic slaughter numbers are down 14 percent.
“There is no volume of lambs in the United States,” he says. “When we keep replacements, that makes our slaughter numbers go down.”
“In the world, there is no great supply of lambs,” adds Harlan. “World supply of meat is down, and there is no meat in the freezer, which puts us back in true supply and demand scenario.”
Harlan describes that because of the weak dollar, importers don’t want to send their lamb to the U.S., so domestic producers aren’t competing as heavily with foreign supply.
“Gross carcass value for January to June of 2011 is up 36 percent from January to June 2010,” says Harlan. “We thought times would never get better than 2010, but they did.”
Anderson looks to this winter and spring, saying, “I think it’ll be a great winter and spring for producers. If you are raising lambs and selling them yourself, it looks great.”
“I think we’ll start to see more expansion in Wyoming and Idaho because producers have large incomes this year and are looking at having some tax liability,” says Anderson. “They are going to want to buy more ewes and increase a little bit.”
“The lamb feeder’s problem is amazing,” agrees Harlan. “When lamb feeders make money, they go out and buy more lambs.”
The week of Sept. 2, feeder lambs sold in Billings, Mont. between 213 and 243.50. According to the USDA Agriculture Marketing Service, lamb carcasses sold higher across the board.
Harlan also sees that the salvage value of ewes is high, meaning the sheep industry is doing well.
“The salvage value of a ewe is 70 to 100 dollars. Salvage value of ewes has got to be one of the most important things,” says Harlan. “When you can sell your old ewe for good money, that means the sheep industry is fairly strong.”
Harlan also estimates that salvage value will only continue to increase.
“The salvage value is going to be incredibly for two or three years because there are no sheep,” explains Harlan.
“There are opportunities out there,” says Harlan. “Wyoming was made with sheep on the range with no supplemental feed. You take a sheep out, and if you have good management skills, there is good opportunity right there.”