Tight inventories drive up prices for U.S. producers
By CAROL RYAN DUMAS
Growing domestic demand and tight supplies worldwide have taken the U.S. lamb industry to record-high prices.
Lamb slaughter prices are running an average of $140 per hundredweight, and replacement prices are the highest the industry has seen since the early 2000s, said Julie Stepanek Shiflett, an independent consultant for the American Sheep Industry Association.
"Inventories are very tight, not only domestically," she said.
Imports, which account for about half the lamb meat sold in the country, are down. That's due to tight supplies and high prices in Australia and New Zealand and the weak U.S. dollar, she said. A weak dollar tends to drive up the price of imported meat.
"Production has slowly contracted over the last three years. It's off 2 percent to 5 percent month-to-month," she said.
Wholesale prices, in general, are also at record highs, she said. Racks are going for $7 a pound; legs are $3.25 a pound; loin is $5.15 a pound; and shoulders are $2.60 a pound.
Shiflett said she expects the tight supply and high prices to continue for the next two to three years, "unless there's a major correction and the dollar does something crazy," she said.
But the price of corn, forecast at $6 a bushel, could hurt slaughter lamb and feeder prices and margins.
Nick Forrest, an Oxford, Ohio, producer and American Lamb Board vice chairman, said he expects good markets to continue.
"Lamb prices are very, very good," he said. "Demand is up and lambs are down. We could use a lot more lambs."
Slaughter lambs are going for as much as $1.40 a pound on the East Coast, and he recently saw his best price in years at $1.20 a pound.
The reason is the growing demand in non-traditional markets. Muslim and Hispanic populations, which favor lamb for religious and cultural reasons, are growing in the U.S.
"We don't have to push lamb on them," he said. "They know what it is, and they like it."
He expects those populations to continue to grow. The Hispanic population is on a path to become the second-largest minority in the country in 10 years, he said.
"Feeder prices are reaching their highest in decades," he said.
That's also in response to ethnic markets. Those consumers want the 40- to 80-pound lambs, so they're going directly to market, he said.
The American Sheep Industry Association pegs average feeder prices at $156 a hundredweight.
In response to the growing market, ASI and the Lamb Board are trying to get producers to build their flocks and get more producers to raise lambs.
"Demand is there, price is there; it's a golden opportunity to increase numbers," Forrest said. "Packers would be thrilled, too. They don't have enough lambs to keep their lines going."
Lamb Prices week ending Oct. 8
Feeders -- $146- 166 cwt. (40lb.-80lb.)
Slaughter, live and shorn -- $120-$160 cwt. (150lb.-160lb.)
Cutout value/net carcass, 125 lbs. -- $305.40 cwt.
SOURCE: American Sheep Industry Association
Replacement prices, per head
ewe lambs yearling ewes
Fists half 2009 $128.13 117.19
First half 2010 $143.10 162.50
Change 10% 28%