Cull Ewe Market Weakened
May 24, 2013
Cull ewe prices at auction were down 60 percent in some parts of the country compared to this time last year. By comparison, slaughter lamb prices were down 28 to 33 percent. In South Dakota, in particular, cull ewes dipped below 20 cents per pound. Cull ewe prices are lower this year due to a combination of factors including increased supply, lower quality ewes and possibly lower domestic and export demand for mutton.
At the St. Onge-Newell Livestock Auction, S.D., good slaughter ewes received over 40 cents per pound this time last year, but only about 19 cents per pound this year. At the Sioux Falls Regional Livestock Auction, good slaughter ewes received in the low 20 cents per pound this May compared to over 50 cents per pound a year ago. Utility ewe prices fell even further.
In general, ewes are in poorer condition this year, which affects the quality grade and price. The wide-spread drought has challenged feeding conditions and some ewes enter sale barns with a poor body condition--relatively thin with little muscle tone. In May, utility-graded ewes brought as low as 11 cents per pound.
The cull ewe price at South Dakota's auctions is a derived demand price. This means that consumer demand for mutton in New York City or Mexico City -- factors far away from South Dakota's borders -- are influencing auction ewe prices.
A closer look at U.S. Department of Agriculture data revealed that mutton imports are up, U.S. mutton exports and live sheep exports are down and live sheep slaughter is also down. In January to April, the estimated U.S. adult sheep slaughter was down 33 percent from September through December last year. Compared to the first trimester 2012 to the same period this year, adult sheep slaughter was down 7 percent. In the first quarter, U.S. mutton imports were up 21 percent quarterly to 9 million pounds and up 72 percent year-to-year. Reduced U.S. mutton exports are likely affecting ewe prices in the country also. In the first quarter, total U.S. mutton exports were down 19 percent quarterly to 2.2 million pounds and down 32 percent from this time a year ago.
In the first trimester of 2013, Australian mutton exports to Mexico were 16 times higher than the last four months of 2012, while the year-to-year increase was four times higher, or up 315 percent to 1,338 tons.
The bottom line is that with increased mutton imports both domestically and in one of our major export markets, reduced exports and increased seasonal supplies especially in drought-stricken areas, the prices for cull sheep are lower. Unfortunately, this collision of factors has depressed cull ewe prices, but hopefully, rain will bring greener pastures, lower feed costs and more optimism about breeding stock.
Written by Julie Shiflett, ASI Consultant