Gayle Smith
Potter, Neb.

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December 5, 2011
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Lamb producers can expect good prices in coming year

Lamb producers can expect to see prices as good or slightly better than 2011 levels, as long as the economy continues to recover and input prices remain at favorable levels, a University of Wyoming livestock marketing specialist said.

Bridger Feuz spoke of price trends and changes affecting the lamb and wool industry during the Northeast Wyoming Sheep Symposium recently. "There has been a lot of uncertainty, mixed messages and volatility in the livestock market that hasn't been there in the past," Feuz said. "In the past, economists talked about how wonderful it was that there was a 35 cent move in corn over a year. Now we see $5 to $7 swings in corn over a year," he explained. The volatility in the livestock market has changed mostly due to price variation in corn, and uncertainty in the economy. It sends a mixed message for the lamb market.

Feuz said lamb producers may continue to see increased demand for their product in the future because of demographic changes and population increases in the United States. There has been a 22 percent increase in the Hispanic and Latino populations, which are groups that typically consume lamb. In addition, those groups also traditionally have larger families, which is good for the lamb and sheep industry, Feuz said.

On the downside, the unemployment rate in the US continues to be high, with many households operating on a restricted income. "Many of these households may not be able to buy our product, but as the population continues to grow, there may be more people out there with the dollars available to spend on our product," he explained.

Feuz said the strong Australian dollar is also helping the US lamb industry. "The exchange rate plays into the overall US economy, because the Australian dollar has become relatively strong and is about par with the US dollar. It strengthens the market for our product because it isn't as enticing to import Australian lamb into the US right now," he explained.

Per capita, Feuz said Americans are consuming less lamb per pound, but they are willing to pay more for what they consume. "As an industry, we need to continue to work on consumer demand," he explained. "We need to advertise to get more people interested in lamb, and we need to work on increasing the per capita consumption. I think it will help that the ethnic population continues to grow," he noted.

"Prices are strong, which has been great news for producers," Feuz continued. Looking at the US lamb and mutton imports, Feuz said the US continues to import less and less lamb. "As prices continue to rise to consumers, the ethnic market has started to substitute some mutton for lamb." As a result, it is projected that imported mutton may increase this year.

On the production side, Feuz said production numbers are also lower than inventory numbers on a national basis. He said this can be attributed to a declining number of lambs saved per ewe, fertility, and number of lambs per ewe.

"Looking at mature sheep slaughter numbers, we are pretty close to the average, which is not good news for growing the flock," Feuz said. "We are probably slaughtering more mature ewes than we are saving, although it looks like we are starting to stabilize in terms of the flock," he said. Ewe inventory levels continue to decline, especially in Texas. Australia is also experiencing a decline in sheep numbers.

Feuz said lamb and mutton production is projected to continue in a slight decline, although total meat production, especially chicken, is projected to increase.

Lamb producers can expect to see prices as good or slightly better than 2011 levels, as long as the economy continues to recover and input prices remain at favorable levels, a University of Wyoming livestock marketing specialist said.

Bridger Feuz spoke of price trends and changes affecting the lamb and wool industry during the Northeast Wyoming Sheep Symposium recently. "There has been a lot of uncertainty, mixed messages and volatility in the livestock market that hasn't been there in the past," Feuz said. "In the past, economists talked about how wonderful it was that there was a 35 cent move in corn over a year. Now we see $5 to $7 swings in corn over a year," he explained. The volatility in the livestock market has changed mostly due to price variation in corn, and uncertainty in the economy. It sends a mixed message for the lamb market.

Feuz said lamb producers may continue to see increased demand for their product in the future because of demographic changes and population increases in the United States. There has been a 22 percent increase in the Hispanic and Latino populations, which are groups that typically consume lamb. In addition, those groups also traditionally have larger families, which is good for the lamb and sheep industry, Feuz said.

On the downside, the unemployment rate in the US continues to be high, with many households operating on a restricted income. "Many of these households may not be able to buy our product, but as the population continues to grow, there may be more people out there with the dollars available to spend on our product," he explained.

Feuz said the strong Australian dollar is also helping the US lamb industry. "The exchange rate plays into the overall US economy, because the Australian dollar has become relatively strong and is about par with the US dollar. It strengthens the market for our product because it isn't as enticing to import Australian lamb into the US right now," he explained.

Per capita, Feuz said Americans are consuming less lamb per pound, but they are willing to pay more for what they consume. "As an industry, we need to continue to work on consumer demand," he explained. "We need to advertise to get more people interested in lamb, and we need to work on increasing the per capita consumption. I think it will help that the ethnic population continues to grow," he noted.

"Prices are strong, which has been great news for producers," Feuz continued. Looking at the US lamb and mutton imports, Feuz said the US continues to import less and less lamb. "As prices continue to rise to consumers, the ethnic market has started to substitute some mutton for lamb." As a result, it is projected that imported mutton may increase this year.

On the production side, Feuz said production numbers are also lower than inventory numbers on a national basis. He said this can be attributed to a declining number of lambs saved per ewe, fertility, and number of lambs per ewe.

"Looking at mature sheep slaughter numbers, we are pretty close to the average, which is not good news for growing the flock," Feuz said. "We are probably slaughtering more mature ewes than we are saving, although it looks like we are starting to stabilize in terms of the flock," he said. Ewe inventory levels continue to decline, especially in Texas. Australia is also experiencing a decline in sheep numbers.

Feuz said lamb and mutton production is projected to continue in a slight decline, although total meat production, especially chicken, is projected to increase.


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The Fence Post Updated Aug 14, 2012 04:59PM Published Dec 5, 2011 11:16PM Copyright 2011 The Fence Post. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.