The feeder market lamb price is above the cost of production for the first time in more than a year, causing a sigh of relief in a sheep industry trying to grow its herd size.
The price increase — from $1.14 a pound that sheep producers were getting on Labor Day for lightweight feeder lambs to $1.44 today — is helping producers pull out of a year-long tail spin that threatened to derail efforts for the lamb industry to grow its domestic supply.
“It’s been a difficult year for our producers,” said Peter Orwick, executive director of the American Sheep Industry Association. “Right now, there is a lot of relief in the industry.”
Orwick said prices fell to a low of 85 cents a pound for feeder lambs in 2012 after rising to as high as $2.50 a pound in 2011.
The high price contributed to a decrease in movement, Orwick said.
“Prices got out of hand,” Orwick said. “It didn’t work for feeders, it didn’t work for packers, and it didn’t work for retailers. It wasn’t sustainable.”
Add in high feed costs and 2012 was the worst year in more than a decade for lamb producers, Orwick said.
“We had a perfect storm in 2010 and 2011 for all the markets going up,” Orwick said. “And with $8 (a bushel) corn and record high hay prices in 2012, we had almost a perfect scenario the other way in 2012.”
Without the recent price increase, Orwick said the U.S. sheep herd surely would have declined.
“People wouldn’t have been able to borrow money for feed if they wouldn’t have been able to cover their cost of production two years in a row,” Orwick said.
The industry in 2011 initiated a Let’s Grow initiative to try to grow the U.S. sheep herd in an effort to keep a steady supply of lamb meat in front of domestic consumers.
Adding to the optimism permeating the lamb industry these days is a reduction in feed costs, with corn and hay prices dropping in recent months.
Prices for wool, which make up about one-fourth to one-third of most sheep producers’ revenue, have declined slightly from near record highs in 2011, but are still strong, Orwick said.