AG-ECO NEWS
Vol. 22, Issue 24, August 1, 2006
Jose G. Peña
Extension Economist-Management
U.S. Mid-Year Sheep Inventory Down Slightly After Two Years of Herd Rebuilding
USDA’s mid-year Sheep report, released on July 21, 2006, indicated that the U.S. sheep and lamb herd totaled 7.77 million head on July 1, 2006, down 0.4 percent from an inventory of 7.8 million head on July 1, 2005. Prior to this, the size of the herd had increased for two years after eleven years of a steady decline. It appears that the continuing severe drought, the termination of ewe lamb retention program, an increase in predatation control problems, high energy costs and the softening of lamb markets this spring/summer combined to influence individual decisions to thin their herds. The size of the U.S. herd is now just slightly lower than in 2003. (See Figure 1). For example, based on recent industry estimates of transportation costs, it now cost about $16/cwt to deliver lamb carcasses to the East Coast and an average additional $3.75/cwt to deliver lambs to slaughter plants, compared to an average of about $10/cwt during most of 2005. These additional costs are usually discounted back to lamb prices.
Using the January 1 inventory to review long-term inventory trends, the size of the herd declined in 2004 to the lowest inventory since 1961. The current inventory is less than one-fifth the size of 32.7 million head herd in 1961.
Goat Inventory Up
While the size U.S. sheep and lamb herd declined slightly, the U.S. inventory of meat goats increased 4.4 percent. (See Table 1).
| Table 1. Goats: Number by Class, United States, July 1 2005-2006 |
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| 2005 | 2006 | % Change | |
| Total Number | |||
| Angora | 290,000 | 285,000 | -1.7% |
| Milk | 320,000 | 320,000 | 0.0% |
| Meat | 2,740,000 | 2,860,000 | 4.4% |
| All | 3,350,000 | 3,465,000 | 3.4% |
Lamb Market
The lamb market had been showing improvement since mid-2002 with prices reaching record highs in 2005 as the total U.S. sheep and lamb inventory continued to decline.
Choice Slaughter lamb prices at San Angelo remained fairly strong throughout 2005, averaging $97.76 per hundredweight (cwt) but the market weakened this spring despite the typical increased seasonal spring demand. Spring slaughter lamb prices were softer than expected. First-quarter Choice Slaughter lamb prices at San Angelo averaged $77.03 per cwt. While slaughter lamb prices have shown a significant recovery after this past spring’s weakness (see figure 2), price bids for feeder have remained below 2005’s highs (see figure 3). It appears that the price recovery in the slaughter lamb market is associated with the amount of finish now, compared to last spring. The market is expected to improve as feeder lamb supplies are tight.
Lamb Crop Down
The 2006 lamb crop is expected to total 4.1 million head down slightly from a lamb crop of 4.12 million head in 2005, with 88.2 percent of the lambs born prior to July 1, 2006. An additional 480,900 lambs are expected to be born during July through December 2006. While the continuing severe drought will influence ewe lamb retention rates, tight supplies of lambs, appears to indicate that the market will remain relatively strong, despite the recent weakness. Keep in mind that while feeder lamb prices have declined from 2005’s record highs, prices remain significantly above the 2000-04 average.
Breeding Herd Down
The breeding sheep inventory on July 1, 2006 at 4.635 million head was down 0.4 percent from July 1, 2005. The inventory of market sheep and lambs (including newborn lambs) at 3.135 million head, was down 0.3 percent. The breeding herd consisted of 3.78 million ewes one year old and older, 185,000 rams one year old and older, and 670,000 replacement lambs (including newborn lambs). The inventory of market lambs at 3.055 million head remained the same as last year consisting of 1.795 million lambs under 65 pounds, 630,000 lambs 65-84 pounds, 370,000 lambs 85-105 pounds and 260,000 lambs over 105 pounds. The market sheep inventory was 80,000. (See Table 2).
| Table 2. U.S. Sheep, Lamb, Breeding Sheep and Lamb Inventories – July 1, 2005-2006 | ||||||||||||
| All Sheep and Lamb Inventory (1,000 head) |
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| All Sheep & Lambs | Breeding Sheep & Lambs | Market Sheep & Lambs | Market La mbs | |||||||||
| 2005 | 2006 | ’06 as % of ’05 |
2005 | 2006 | ’06 as % of ’05 |
2005 | 2006 | ’06 as % of ’05 |
2005 | 2006 | ’06 as % of ’05 |
|
| 7,800 | 7,770 | -0.40% | 4,655 | 4,635 | -0.40% | 3,145 | 3,135 | -0.30% | 3,055 | 3,055 | 0.00% | |
| Breeding Sheep 1 Yr old & older | ||||||||||||
| Ewes | Rams | Replacement Lambs | ||||||||||
| 2005 | 2006 | ’06 as % of ’05 |
2005 | 2006 | ’06 as % of ’05 |
2005 | 2006 | ’06 as % of ’05 |
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| 3,790 | 3,780 | -0.30% | 185 | 185 | 0.00% | 680 | 670 | -1.50% | ||||
| Total Breeding Sheep & Lambs 1995-2006 | ||||||||||||
| 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | ’06 as % of ’05 |
| 6,450 | 6,170 | 5,775 | 5,575 | 5,350 | 5,030 | 4,900 | 4,780 | 4,610 | 4,545 | 4,655 | 4,635 | -0.40% |