Sheep inventories remain steady but low due to drought and demand in the U.S.Written by Natasha Wheeler
Rawlins – “Inventory numbers for sheep have been dropping significantly,” noted Dillon Feuz, ag economics specialist at Utah State University, during the Wyoming Agricultural Bankers Conference in Rawlins on May 14.
“Drought, probably more than economics, has reduced the sheep herd over the last few years,” he noted.
Many of the big range flocks of sheep are kept in Texas, California and other areas of the United States that have experienced low precipitation in the last few years. Texas lost of third of its sheep inventory over the past 10 years.
“I don’t think this is going to come back very much,” Feuz commented.
Mature sheep slaughter is near to but slightly below the five-year average.
“This might be an indication that we are trying to build herds back up a little bit,” Feuz said. “We may be increasing numbers a little bit by slaughtering fewer sheep.”
In the last year, sheep inventory in Texas has gone down one percent, and Wyoming’s numbers have gone down three percent.
“The sheep industry has shown it can be profitable at lower inventory levels, and it doesn’t take much of an increase in sheep numbers to quickly wreck those prices,” he explained.
Supply and demand
Demand in the U.S. dropped in the early 1990s, although it appears to have stabilized over the last several years.
“The fact that in 2014 demand is up a little bit is a positive in terms of the lamb market and for what prices might be,” Feuz stated.
Lamb imports are similar to last year’s numbers, and Feuz predicted that they will not have a noticeable affect on the market.
“We had more lamb imported in the second half of last year, putting pressure on the price level,” he noted.
Indications show that 2015 sheep and lamb markets will remain fairly steady in comparison to 2014.
“Sheep and lamb production will likely be up a little in the first quarter, down in the second and then about even to last year,” he continued.
Wholesale lamb carcass prices are slightly higher than a year ago, although Feuz predicted that there will be some deterioration of prices going into 2016.
“Mostly, the price is supply driven, but we can see that supply is favorable for the industry. If we don’t expand the herd too much, we will likely stay about level and possibly a little bit below last year as we get into fall,” he said.
Slaughter lamb and feeder lamb prices are also showing similar trends to wholesale carcass prices.
“My guess is that sheep producers will be in for another pretty decent year this year, but if they expand too much, they could be struggling on the price level going forward,” stated Feuz.
Wool prices will likely be lower than 2011, which was a good price year, but they should still be favorable in 2015.
“In the wool market, because we have reduced the overall sheep inventory, we have also reduced the wool ending stocks,” Feuz stated.
The U.S. is at historically low ending stocks for wool, which should have a positive affect on prices, although prices may be slightly lower than recent years.
“From a historical perspective, wool is still staying at a pretty good price,” he explained. “For the range sheep industry and Wyoming, I think we will still see favorable prices for wool in 2015.”