Lamb Numbers, Prices Compete
During '98 In Race For Bottom

By Joe McClure

Nineteen hundred and ninety-eight will go down in history as a banner year for the lamb market — a black banner.

The market began 1998 about $10-15 below 1997 levels and from there it never really recovered. In fact, it got progressively worse.

As reflected by San Angelo figures represented in the accompanying charts, feeder lambs started out $10 below 1997, moved to $50 below in March, recovered to $40 below in April, and in May they were down close to $35. June prices were almost the same as a year earlier, but the market was soon back to $20 off and stayed near that deficit for the rest of the year. Feeder lambs generally moved from the upper $60s to the mid $90s during the year.

Fat lamb prices were anywhere from $10 to $30 below last year except for the summer months, and prices generally moved from the lower $60s to mid $80s during the year.

Normally, fat lambs find their highest prices of the year during the Easter period, but in 1998 the peak price occurred in June and Easter prices were near the year's lowest level.

Lamb carcass prices were at a three-year low by early April and wound up that month at the lowest in five years.

Many factors have been blamed for the low lamb prices, and all of the arguments probably have some merit.

Sheep numbers in the country have been declining for many years; they are currently at their lowest level on record and are still declining. There have been speculations that the numbers will bottom out in a couple of years, somewhere between four million and seven million head. The total sheep and lamb inventory started 1998 with 7.6 million head and ended the year down eight percent at 7.24 million head.

Domestic lamb slaughter continues to decline, as it has for nine consecutive years. Last year it was down three percent at 3.8 million head, 34 percent less than in 1990. For the decline to bottom out, producers must see enough financial incentive to get back into the sheep business, or to expand their current operations.

A complicating factor is the severe drouth which persists in the major lamb producing area of the country. In addition to trimming numbers generally, the years-long drouth has prompted a number of ranchers to leave the sheep business entirely, marking the first time some of their operations have been without sheep in more than 100 years.

Some sheep ranchers have converted their labor-intensive operations to a low-labor deer hunting arrangement with high fences. The deer and cattle combination tends to keep the vegetative mix in harmony, though certainly not in abundance.

Wool prices showed no recovery during the year, and problems in the pelt trade added to the misery. Russian and Asian financial troubles have eliminated traditional pelt outlets, reducing the wool pelt credit to zilch. Some packing plants paid to have their low-quality pelts hauled to landfills just to get rid of them. The few pelt buyers still active have an unlimited supply to glean through with no price turnaround in sight.

As if all those factors weren't enough, lamb imports hit the scene pretty hard in 1998. For several weeks, import supplies totaled more than 50 percent of domestic production.

Importers and foreign exporters defend the influx as essential to supply domestic needs and provide market stability, but stability and predictability were seldom to be found. The lamb carcass market played tricks on producers and feeders during the mid-part of 1998 with wide price swings.

Heavy carcasses on the East Coast were selling at $94 in May, some $45 below lights. Three weeks later, prices jumped anywhere from $59 to $84, depending upon the weight category, and everything was one price at $197. Four weeks after that, prices were off $35-45 again, heavies on the low end. And a couple of weeks later, heavy carcasses were at a premium.

What all of that that has to do with lamb imports, lamb feeding, or lamb production is questionable, but the week when carcasses were at their peak of $197, imports amounted to the equivalent of 67 percent of domestic production.

Finding a bright point in the lamb market is difficult, to say the least, but in the view of the importers, there is still a demand in this country for at least 50 percent more lamb than the domestic market produces.

In addition, carcass lamb is still well above the price of any competing red meat. That is not reflected on the ground, however, where at current live prices, it is questionable whether the net returns from a lamb can pay for its upkeep and the upkeep of a ewe for a year.