Ramadan Boosts Sale of Lightweight Lambs

JULIE STEPANEK SHIFLETT, PH.D.
Juniper Economic Consulting

More than 25,000 head of sheep and goats were traded in May at Producers Livestock Auction in San Angelo, Texas. This surge in supply was prompted in part by lamb demand during the Muslim celebration of Ramadan and a good growing season. Ramadan began on June 6 and ends July 7 with Eid-al-Fitr – the Festival of Breaking Fast.

Lambs sold at the San Angelo market were primarily hair sheep, weighing anywhere from 40 to 100 lbs. The mix of hair sheep at auctions such as San Angelo and the nontraditional market at New Holland, Penn., has changed dramatically. Reportedly, ethnic markets were relatively slow to accept hair breeds, but now accept or even prefer them at some markets. Reportedly, buyers like to select their lambs live, prefer fresh product and prefer lightweight lambs.

Fifty- to 70-lb. lambs averaged $183 to $222 per cwt. in San Angelo during May (choice and prime yield grade 1). Slaughter lamb prices moved higher in early June.

Feeders Mixed

The supply of feeder lambs has been tight – not as tight as the first-half of last year – but tight. Limited fall and winter new crop lambs out of California could strain summer supplies, but this all depends on slaughter rates and how heavy older lambs get before harvest. The number of lambs in commercial feedlots in Colorado was 93,285 head in June, down 21 percent from a year ago and 18 percent lower than its five-year average.

Feeder lamb prices in direct trade averaged $157.83 per cwt., up 1 percent monthly and up 6 percent year-on-year. In May, 5,600 head of feeders traded out of California for an average 116 lbs. at $155 per cwt.

At auctions in San Angelo and Sioux Falls (S.D.), 60-90 lb. feeders averaged $189.75 per cwt., down 7 percent monthly and up 1 percent year-on-year. Sioux Falls saw the high among markets at $197.24 per cwt.

Slaughter Lamb Prices Higher

Slaughter lamb prices at auction averaged $147.94 per cwt., 7 percent higher monthly and 4 percent lower for the year. San Angelo averaged $133.50 per cwt., South Dakota averaged $155.75 per cwt., Fort Collins (Colo.) averaged $154.25 per cwt. and Kalona, Iowa, averaged $148.92 per cwt.

Live, negotiated slaughter lamb prices averaged $137.14 per cwt. in May, 5 percent higher monthly and 1 percent higher year-on-year.

Although prices for formula/grid prices are not reported due to confidentiality rules, the numbers of head traded continues to be reported. In the year through May, formula trades were an estimated 28 percent of total federally-inspected lambs harvested, packer-owned was another 19 percent for a total of 47 percent of the market. We thus don’t have price reporting for nearly half the commercial market.

Harvest Weights Rise

There are several indicators that harvest weights were increasing in May, which increases processing costs and narrows margins. If the fatter lambs end up on dinner plates, it can jeopardize American’s taste for lamb and erode lamb demand.

In the first trimester of 2016, the percent of total harvest that was yield grade 4s and 5s – with increased back fat – was 28 percent. This is a three-year high, and the second-highest trimester in five years when we saw 4s and 5s hit 40 percent in mid-2012.

Forty-six percent of formula slaughter lamb trades in May were 85 lbs. and heavier, more than 170 lbs. live weight. The number of carcasses traded that were 85-lbs. and heavier rose in May, reinforcing the concern that weights are rising.

Wholesale Lamb Weakened Marginally

The net carcass value (after processing and packaging) averaged $308.89 per cwt., down 0.13 percent monthly and 5 percent lower than a year ago. Among middle meats, the rack is at a three-year low, but the loin has held strong. The only primal that saw lower prices in May was the leg. The leg, trotter-off, weakened by 1 percent in May to $343.70 per cwt. and then fell 0.4 percent year-on-year.

The rack, 8-rib, medium averaged $681.46 per cwt., up 1 percent for the month and 9 percent lower year-on-year. The loin, trimmed 4×4, averaged $519.50 per cwt., up 0.14 percent monthly and up 1 percent year-on-year. The shoulder, square-cut, averaged $275.13 per cwt. in May, up 1 percent monthly and down 4 percent in a year.

Ground lamb averaged $512.52 per cwt. down 6 percent monthly and 9 percent lower year-on-year.

Lamb carcasses were mostly lower in spotty reporting due to the U.S. Department of Agriculture’s rules to protect packer confidentiality. Fifty-five to 65-lb. carcasses averaged $345.18 per cwt. in May, up 0.3 percent monthly and 5 percent lower than a year ago. Seventy-five to 85-lb. carcasses averaged $303.21 per cwt., 0.3 percent higher monthly and 9 percent lower year-on-year.

Pelt Market Saw some Lift

Pelt credits returned to producers saw some lift in May for some classes. Unshorn Supreme pelts averaged $8.84 per piece, 2 percent higher monthly. Premium pelts averaged $2.94 per piece, 2 percent higher. Standard pelts were -$2.50 per pelt, steady with April.

Processing defects are minimal and staple length is the same across these classes at 1 to 3 inches. Prices vary mostly based upon square footage with the Supreme pelts averaging more than 9 square feet and Standard with less than 8 square feet. The presence of discolored fiber and manure and seed contaminates differentiate these pelts as seen in price differences.

Forecasts

The beef complex is seeing lower prices, and this is expected as supplies expand. The lamb industry is seeing lower prices, but not because of expanded supplies. In fact, supplies are down. This suggests demand is faltering – not good news. However, there is another possible explanation: packers could be deliberately letting lower-valued frozen stock onto the market, thus reducing demand for higher-valued fresh product. In early June, cold storage stocks were 39.7 million lbs., down 2 percent monthly and 3 percent higher year-on-year.

Between the second and third quarters, the Livestock Marketing Information Center forecasted that slaughter lamb prices on a carcass-basis could slip about 3 percent and feeder lamb prices could soften by about 6 percent (4/22/16). National, direct carcass prices are forecasted at $264-$269 per cwt., down 3 percent quarterly and 10 percent lower year-on-year. Sixty- to 90-lb. feeders are forecasted at $164-$170 per cwt., 6 percent lower quarterly and also down 10 percent year-on-year.

Stronger pelt values might help support slaughter lamb prices offered in the third quarter, as could tighter supplies. LMIC forecasted that lamb imports could drop sharply in the third quarter compared to a year ago, contracting total available supplies (6/6/16).

Wool Quality Very Good

This is a very good year for wool quality – plenty of grass in many parts of the country coupled with an open winter for many meant the wool stayed white, strong, clean and high yielding. Wool bellies were the best ever seen by one wool buyer.

In some western regions, wool was shorter than expected, however. Reportedly, wools shorter than staple length (3 inches) received about a 60-cent per lb. clean discount. The reasoning for the shorter wool is thought to be reduced nutrition as some flocks fed on sage, without access to snow-covered grass.

Wool prices this season are not record high, but still very good. U.S. wool prices saw some monthly softening in May except for mid- and broader microns in the Territory States, which gained.

The U.S. wool market was busy in May with 670,179 lbs. of wool traded on a clean basis and more than 400,000 lbs. sold greasy. The USDA Agricultural Marketing Service reported that a lot of the wool traded brought 80 to 85 percent of Australian wool and paint-free wool brought up to a 5 percent premium per lb. (5/6/16). USDA/AMS continued: Wools that contained high vegetable matter contaminants and shorter wools averaged 70 to 75 percent of Australian wool. Overall, wools traded were high yielding, a testament to a favorable winter for wool.

In the Fleece States (mostly Californian wools), wool prices averaged 1 to 6 percent lower monthly in May yet 4 to 14 percent higher year-on-year. Overall, wool yields in California were about 5 percent higher than last year due to improved pasture conditions. Twenty micron averaged $4.04 per lb. clean, 22 micron averaged $3.69 per lb. and 24 micron brought $3.22 per lb.

In the Territory States, wools saw mostly higher prices and up to 11 percent higher year-on-year. Nineteen micron averaged $4.42 per lb. clean, 21 micron averaged $4.00, 23 micron brought $3.87 per lb. and 25 micron brought $3.26 per lb. In Texas and New Mexico, wools saw some marginal monthly weakening with no comparison year-on-year due to lack of trades. Nineteen micron averaged $4.09 per lb. and 20 micron brought $4.06 per lb.

Looking ahead, the WTiN Wool Market Report stated that the market could hold at current strong rates due to the strong wool demand and because it is believed that the Aussie dollar won’t strengthen significantly against the U.S. dollar in June (6/6/16).

Skip to content