Feuz: Lamb prices should stay strong through 2012Written by Christy Martinez
Feuz updated producers on the latest market outlook at the 2012 Fremont County Farm and Ranch Days in Riverton in early February.
“One of the reasons for the lamb markets’ strength is changes in the population and demographic dynamics,” said Feuz to the group. “The population is continuing to grow, which also helps beef markets, but the reason it’s really helping lamb prices is because of the changing demographics.”
Feuz said the U.S. Latino population has grown 43 percent since 2000.
“U.S. per capita lamb and mutton consumption has continued to decline, but we’re seeing a new market for lamb,” he commented. “Feeder lamb prices are up around $200 per hundredweight, so they’re strong right now and significantly above the 2006 to 2010 average.”
“That ethnic population growth is really driving the lamb market, and it has really made a nice opportunity for those in the sheep industry,” he said.
Dollar helps lamb exports
The other thing that drives lamb prices are the exchange rates, said Feuz.
“Right now we have favorable exchange rates relative to the Australian market,” he explained. “For several years that Australian dollar was always quite a bit less than U.S. dollar, so in terms of the import/export relationship it gave them a relative advantage over us. Now the dollars are trading at close to par between the two, and that’s really helped our lamb prices in the export market.”
Feuz said that economy uncertainty influences demand for lamb, and even more so than the beef industry.
“The restaurant index is really something to look at for the lamb markets,” he said. “Two markets are driving lamb prices – white tablecloth restaurants and the ethnic market.”
Numbers continue to fall
In terms of supply, Feuz said cattle and sheep numbers look very similar.
“Sheep have been on a longer decline than cattle, but they’re both on a decline,” he stated, adding that sheep have started to stabilize. “Wyoming is the number three state in the U.S., with 365,000 head of ewes and lambs, which represents a 24 percent decline from 2002.”
The commercial lamb production and sheep and lamb inventory reports show just how much the ethnic market has influenced the U.S. sheep market, said Feuz.
“Lamb production should always be above the inventory number, but recent USDA reports show there’s more inventory than lamb production,” noted Feuz. “In the last few years, so much product has been sold to the ethnic markets and it isn’t tracked because they’re direct, on-farm sales.”
Prediction: lamb prices will stay strong
In summary, Feuz said the U.S. ewe inventory continues to decline, in part due to the Texas drought.
“Texas was hit hard in their cattle numbers, and they had a significant sell-off with their ewes, too, although it wasn’t quite as bad as the cattle,” said Feuz.
He projected that lamb prices will be as strong next fall as they have been, and he said they may be even stronger.
“It looks like a solid fall for livestock producers,” said Feuz.