Lamb, wool market indicators strongWritten by Jennifer Womack
“We had a positive report in July on our inventory,” says American Sheep Industry Association Executive Director Peter Orwick. “We’re down a percent or so on numbers, which was expected. May in particular was a tough month for lambing. All the moisture we were blessed with, including some snow and rainstorms and cold weather, were taking a toll on lambing percentages.”
Despite the losses, Orwick says it’s nice to see an area long battling drought have ample stock water this year. “There’s great feed in much of sheep country and we’re expecting lambs with good weights.” Orwick says heavier lambs, given current cost of gain prices, are fetching strong prices at the market. “Typically an 80-pound lamb may bring as much as a 100-pound lamb, but we’re seeing positive prices on these heavier feeders, which is probably a function of feed and fuel prices.”
“I think we’re back close to breakeven and above that on some,” says Wyoming Wool Growers Executive Vice President Bryce Reece, given recent increases in the lamb market. “Live lamb prices used to be half of what they are now.” However, the sheep industry, he says, isn’t immune to the cost increases affecting other agricultural sectors.
Mountain States Lamb Cooperative (MSLC) Chairman and Douglas area rancher Frank Moore says lamb prices are high, but are coupled with input prices at historically high levels. Many attribute MSLC with recent improvements in the lamb market.
“Our meat company is doing well,” says Moore, noting new customers and new products that will be promoted later this year following the short supply season. The cooperative harvested just under a quarter million lambs last year, between 40 and 50 percent of which came from Wyoming. After five years in the business, Moore says the cooperative seems to have worked out many of the kinks in the system and “has been a huge success story for Wyoming and the nation’s sheep industry.”
In New Zealand Orwick says total slaughter is down six million lambs, which equates to 20 percent of that country’s slaughter. Australia, given that country’s ongoing drought, is also experiencing a shrink in its flock.
“There’s going to be good competition for our lambs,” says Orwick, noting the current state of the U.S. industry and its position internationally.
Two million in lamb meat purchases by the USDA will also provide a boost to the industry. “Bids will start in September and based on their acceptance we’ll see that $2 million put to work in the meat business September through Easter,” says Orwick.
On the wool side of the equation Orwick says overseas wool supplies have contracted along with the flocks. Of the 2008 clip, Orwick says most of the wool had moved by the first week of June with prices consistent with those received in 2007, a strong year for wool marketers.
“Supplies of wool worldwide are limited and will remain so from the supply side. There are no stock piles,” says Larry Prager of Center of the Nation Wool in Belle Fourche, S.D. “That said, the pipeline is sluggish to the retail counters. Consumer spending has been impacted by energy costs.” Pragers says retail sales are down across the board, not just as they relate to wool. If there’s a good time for sluggishness, Prager says it’s now, after the 2008 clip has been marketed. By the time the 2009 clip begins rolling through the doors at Center of the Nation Prager hopes to see a rebuilding on the demand side.
“The U.S. Army has announced the beginning of a process that will change its uniforms from green to a traditional blue they used until the WWII era. We look at this as an excellent opportunity not only for our continued wool sales, but there should be an increase in those purchases given the change over.”
Always keeping an eye on quality is important says Orwick, noting a program re-instated earlier this year and directed at wool quality. “It will put more focus and attention in our industry on the quality improvement side of the business,” he explains. Timing, he says, is perfect after seeing 2007 and 2008 prices for wool rebound from a low dating back to the mid-1990s.
Prager says as producers head out to the purchase this year’s rams it’s a perfect opportunity to keep wool quality in mind. “Right now is when they should be making those management decisions,” says Prager.
Prager says it’s also important to consider currency values. “I think the most significant change has been the volatile conditions with the currency exchange between U.S. dollars and Australian dollars. Prager says the value of the Australian dollar against the U.S. dollar has dropped ten percent in the last month. “That affects us right off the top before we ever talk about market conditions,” says Prager.