Fat Lamb Prices

[Bill Fosher]

Hi Fred,

Your point about people eating lower on the hog during an economic downturn is pretty much on point. I recently attended the Howard Wyman Sheep Industry Leadership School, and we met with two different breakers who sell case-ready and boxed lamb into the Eastern US supermarket and foodservice industries. Both said that demand for all (animal, I assumed) proteins are off, but minor products like lamb and veal have taken a harder hit than the big three: chicken, beef, and pork.

Both breakers have started to import lamb from Australia in order to retain customers. American lamb middle meat cuts have become too expensive, they say. The retail price of a cap-off Frenched American rack is over $20/lb now, while the Australian cut would be in the low teens. While some still prefer the higher prices for the perceived better quality of American lamb (generally a larger loin eye and more marbling), they needed to be able to offer the lower price point of the Australian lamb.

Tony Catelli, president of Catelli Bros., told us that he thinks the sustainable price for a lamb carcass, FOB the plant in the western US, is around $2.65/lb. I'm not sure quite how to figure that back to a liveweight price at the sale barn, but my best estimate is that it's around $1.20; maybe a little less depending on freight, pelt value, etc. This would be for a 65 to 70 pound carcass.

"The Bottom" is probably well below that point, given the way that markets tend to work -- swinging wide on either side of their target.

[Sugar Creek]

Thanks Bill,
I hesitate a little to reply for I am far from as knowledgable about the sheep industry as some on this board. Still, $1.20 for fat lambs and $0.50 for ewes is not really that bad. It should favor the forage based, less intensive producer. I think there is a place on my farm for sheep if these prices could be maintained. Even though I enjoy them there is just too much work involved not to have a decent hope of some profit.
I am thankful the rains have returned, about three inches in ten days, and the forecast is for more to come. Looks like less reliance on purchased grain and more work moving fences may be in line.
Fred

[Justin-PA]

The bottom has not completely fallen out, and supply & demand still work at New Holland where prices were up the week ahead of Ramadan. The real test in my eyes will be at Eid in October, which is when we usually see a large premium for good lambs.



New Holland Sales Stables - New Holland, PA
Sheep and Goat Weighted Average for Monday, July 16, 2012

Sheep/Lamb Receipts: 2036 Last week: 2215 Year Ago: 1788
Goat Receipts: 2461 Last week: 1614 Year Ago: 2410

***Report format change: Traditional markets refer to lambs that are
subjected to USDA carcass grading, and marketed through mainstream
outlets. Non-Traditional markets refer to lambs destined for slaughter
outside of what would be termed as traditional markets. ***

Sheep and Lambs: When compared to last Monday, slaughter lambs sold 10.00-20.00 higher.
While slaughter ewes were mostly steady. Demand was good throughout the sale due to the
upcoming Ramadan ethnic holiday. Slaughter supply consisted of 82 percent lambs, 10
percent slaughter ewes, and 8 percent miscellaneous stock. All sheep and lambs are
destined for non-traditional markets. All sheep and lambs are sold by the hundred weight,
on actual weights.

NON-TRADITIONAL:

Slaughter Lambs Wooled & Shorn Choice and Prime 2-3
Head Wt Range Avg Wt Price Range Avg Price
20 50-60 52 168.00-188.00 176.91
30 60-70 66 160.00-176.00 169.34
16 60-70 65 196.00 196.00 Fancy
91 70-80 73 156.00-170.00 165.45
117 80-90 82 143.00-162.00 153.21
145 90-110 103 130.00-148.00 139.34
12 90-110 94 152.00-164.00 154.05 Fancy
67 110-130 116 130.00-142.00 138.09
17 110-130 118 154.00-160.00 156.72 Fancy
5 150-200 158 140.00 140.00 Fancy

Slaughter Lambs Wooled & Shorn Choice 2-3
Head Wt Range Avg Wt Price Range Avg Price
15 40-50 47 150.00-158.00 157.55
20 50-60 53 150.00-158.00 155.06
14 60-70 69 146.00-158.00 154.05
42 70-80 72 144.00-158.00 152.41
56 80-90 86 126.00-136.00 129.15
32 90-110 99 122.00-130.00 126.44

Slaughter Ewes Good 2-3: Medium Fleshed
Head Wt Range Avg Wt Price Range Avg Price
105 120-160 135 80.00-90.00 84.64
23 160-200 165 82.00-100.00 90.47
23 200-300 220 78.00 78.00

Slaughter Ewes Utility 1-2: Thin Fleshed
Head Wt Range Avg Wt Price Range Avg Price
92 120-160 121 70.00-82.00 77.34
5 160-200 160 70.00 70.00

[Tom Nichols]

As I was recently told, you just have to forget about last year. When things were going great he packers and many members of the Lamb board said, " the price has to come down or we will lose markets." They were right of course, but I have to wonder if it wasn't a self fulfilling prophecy.
If you bought feeders last week and insured them this week I think you will make good money if you have a grass program.
Tom

[Bill Fosher]

Again with the insurance. WIll someone try one more time to explain to me how this doesn't pervert the market?

Fred, $1.20 might not be bad, but it's about 80 cents below my cost of production.

[lambchop]

The end price for the 13 week contract, ending 10/15/12 is $137. Can you tell me what the national average for lamb will be on that date? If so, I will know for sure whether to buy insurance or not. Obviously this perverts the market since you think it will be well below that price. If you are so sure, you ought to insure your lambs and make big bucks.

[Sugar Creek]

Bill,
$1.20 will buy my feed and wormer with a little left over.
I figure my savings from not needing a "Health Club" membership, psychiatrist, or long fancy vacations; plus the benefits of good home cooked food from the farm are what really put my sheep operation in the black.
Fred

[Bill Fosher]

Paul,

I will point out, yet again, that I can't insure my lambs because of where I live.

I do suspect, although I do not know, that lamb prices will be lower than the point you say the insurance will yield. So how does this insurance program sustain itself? With taxpayer dollars, including mine. It is a flat out subsidy offered to some producers and not others.

But as always, my main objection is that by removing all downside risk, the insurance program removes what little market feedback the feeders get. Superior can't even train them to produce better lambs by discounting the ugly ones, because if they do the insurance pays the difference.

[Bill Fosher]

So, Fred,

$1.20 is fine for you as long as you don't need to replace a fence or water line, put a new roof on the barn, have a vet bill, buy farm insurance, put gas in the pickup, etc., etc.

[Sugar Creek]

Bill,

I did not say it was fine - just that it was not so bad as to make me want to exit the sheep business at this time.
I realize that a look at the totality of expenses would suggest a price of somewhere over $2.00 would be needed to make a real longterm profit for most operators.

My point was a little tongue-in-cheek that most smaller scale farmers probably obtain more satisfaction from the lifestyle than they do from sustained farm income. I purchased my farm in 1972 for $300 an acre. Until recently its increase each year in value as real estate was probably greater than the profit it made on livestock operations. For years tobacco was a real profit maker but it is out of the picture now for smaller operators. With a daughter in her senior year in college and one entering her senior year in high school, we could not make it on farm income alone. My wife works in town and I have some income from a retirement plan from when I worked at the local water plant.

As a part of a varied operation with income from cattle and garden produce, for the last few years I felt I needed to obtain a clear $100 per head for each lamb leaving the farm for it to be worthwhile. So far this year I have been able to do that and if prices stay around $1.20 should be able to continue to do so.

So, it is not fine - just in line with my expectations after 40 years of trying to make a living on a small farm. I wish I knew the answers to making it better.

Fred

[Duane]

Two fat lamb bids today, $105 for 115#-150#(nothing under115#!) and $101 was the the other one, these are from South central MN and NW IA Buyers.

[Shltz4]

Lamb price today was 1.05 a pound..40 cent culls

[Duane]

Sold fats today bid was $98 and was told culls $30

[Duane]

Forgot to mention buyer thought it would be 6 more weeks to clean up old crop lambs in Co. Plus the backlog of new croppers on top of those still to come.

[Bob Corio]

When is the bottom going to arrive?
From sioux falls auction this morning.

SHEEP & GOATS
WEDNESDAY, SEPTEMBER 12th
LAMBS
31 lambs 150#..................88.00
45 lambs 160#..................88.00
17 lambs 146#..................88.00
44 lambs 131#..................87.25
35 lambs 149#..................86.75
90 lambs 128#..................86.50
36 lambs 89#....................86.00
16 lambs 134#..................85.00
36 lambs 123#..................82.00
13 lambs 84#....................82.00
13 lambs 110#..................81.50
21 lambs 120#..................80.00
67 lambs 116#..................77.00
6 lambs 93#......................76.00
17 lambs 103#..................73.50
25 lambs 122#..................73.00
3 lambs 117#....................72.50