Demand for lamb, wool and pelts is tanking in response to the coronavirus pandemic, industry representatives say, and prices are following suit.
It’s having a tremendous impact on the industry, said John Noh, president of Idaho Wool Growers Association and a board member of the American Sheep Industry Association.
Wool has become unsaleable because the agency in New Zealand that does commercial testing of U.S. wool has closed due to coronavirus. Trade to major wool buyers in Italy and China has shut down, as has the pelt trade to primary markets in Turkey, China and Russia. Some trade was shut down to a degree before coronavirus, but it’s even worse now, he said.
A large portion of the lamb market is restaurants and cruise ships, and they aren’t operating. The timing is particularly difficult, as Easter is a main event for lamb sales. Grocery trade is up, but that’s for the lesser cuts of shoulder and ground meat. Sales of the more expensive middle meats are at a standstill, he said.
On top of that, the second-largest U.S. lamb packer, Mountain States Rosen, filed for bankruptcy, and its kill rate is way down.
In addition, Pendleton Woolen Mills has temporarily shut down its operations, he said.
“It’s about as rough as I’ve seen it in my 30 years,” he said.
Mountain States Rosen filed for Chapter 11 bankruptcy protection on March 19 with the U.S. Bankruptcy Court for the District of Wyoming, citing lost sales due to the COVID-19 pandemic, according to court documents. Chapter 11 of the Bankruptcy Code protects a company from the threat of creditors’ lawsuits while it reorganizes its finances.
A spokesman for Pendleton Woolen Mills said the company closed its mills in Washougal, Wash., and Pendleton, Ore., after an employee at the Washougal mill tested positive for COVID-19. The mills are scheduled to reopen April 3.
Prices paid to producers are rapidly falling. Fat lambs, which were selling for $1.45 to $1.50 a pound, are now as low as $1.25 — “if you can find somebody who will buy them,” Noh said.
Processing for the Easter holiday will end Friday, and he expects to see a sharp drop-off in both numbers and prices, he said.
Thirty days ago, the industry was short 30,000 head in the lamb feedlot inventory. It was looking like slaughter would stay current with good demand, he said.
But now things are shaping up for a glut ahead and no markets, he said.
The coronavirus outbreak is more than a disruption, he said, it’s wreaking havoc on all industries but even more on small industries such as the sheep business.
“It’s such a small specialty market, we have a hard time moving our product as it is,” he said.
Noh’s flock just finished lambing, and he’s apprehensive about the road ahead when it’s time to sell his lambs for finishing in August.
“We’re looking at very poor prices this fall,” he said.
Right now, California sheep producers are bearing the brunt of the weak market. Lambs are ready for market, but they’re having a hard time getting anyone to buy, he said.
Dave Johnson, vice president of marketing for Equity Cooperative Livestock Marketing Association, can attest to that.
“Finding a home for sheep in this climate is pretty tough,” he said.
He’s been trying to auction a load of 375 lambs that have been grazing on alfalfa pasture in the Imperial Valley. They were born last May in the Mountain West and put on pasture in California in December. They’re now ready for the feedlot, he said.
Up to 100,000 lambs are grazed in the Imperial Valley each winter and are ready for feedlots in February and March, sometimes the first part of April, he said.
He’s tried to auction the one load of lambs the last couple of weeks, but there are no bidders and it’s hard to get price discovery. Fortunately, it’s an online sale and the lambs weren’t trucked to an auction yard; they’re still on pasture, he said.
“It’s a unique problem. I’ve seen it before, and I’ll probably see it again. We’ll find a home for them eventually,” he said.
But he has no idea when — coronavirus is uncharted waters. The lamb market is a niche market and might not come back as fast as other markets, he said.
Most lamb typically goes to the restaurant trade. Now it has to pivot to retail sales, and packers have to package it differently, he said.