Heavy Lambs are Demanding Top Dollar
September 20, 2013
With adequate moisture and grass, some producers are keeping their lambs a little longer than usual in order to put valuable pounds on them.
Many involved in the sheep industry agree that the market is unusually stable for this time of year, and they expect it to hold steady or get stronger throughout the fall and winter months.
While those involved in the sheep industry agree that feed prices have improved in recent months, the cost of gain on a lamb remains high enough that heavier lambs are a premium product at the moment.
"Usually there is a little bit bigger spread between price of the lighter lambs and the heavier ones but the cost of feed is still so high that there isn't a lot of difference in the dollars per pound right now," commented St. Onge Livestock's sheepyards - located in Newell, S.D. - Manager Barney Barnes.
Lambs weighing 113 pounds brought $1.13 per hundredweight, compared to several runs of approximately 85-pound lambs that fetched between $1.15 and $1.20 per hundredweight, at their last sale, Barnes said.
He expects the feeder lamb market to stay steady "unless the fat-lamb market gets higher." Barnes said some producers are keeping their lambs a little longer than usual in order to add a few more pounds before hauling them to town. "They've got the grass and the water this year so they can just keep them out on pasture a little longer."
Bowman Auction Market owner and manager, Harry Kerr, reported that about 600 head of lambs went through his barn on Monday, Sept. 9, and the market was a little stronger than in previous weeks, which is unusual for September.
"The market is always lower this time of year when some of the big sheep outfits are moving lambs off of their summer allotments. The lambs are moving so fast, they flood the market," Kerr explained. "The buyers are liking the heavier lambs, and you hear people talking that the market will get better after the first of the year," he said.
As usual, a lot of farmer feeders from Colorado, Iowa and South Dakota are buying the lambs that go through the Bowman, N.D., barn, Kerr said.
"When the market gets even stronger, then we'll see the replacement ewe buyers back in town," he said. "The market is a bit depressed right now but I hate to see people get out. We've been through this before, it will come back. If sheep fit your operation, stick with it."
Bob Harlan a sheep producer and feeder from Kaycee, Wyo., is also optimistic.
"It's going to get better. The price of fat lambs is going to get higher than the cost of gain and then the feeder lambs will be worth more," he explained. "Right now we aren't really seeing a profit margin because feed costs are still so high," he said. "Yes, the futures for corn are down but the cash market is still high. When that changes, the feeder-lamb market will change for the better."
While he is in the midst of a drought, Harlan continues to buy 70- to 90-pound feeder lambs to put on feed. He would be adding females to his herd too if his pastures had seen more rain this summer. "I think it's a good time to save replacements. I'm in a drought so I have no extra feed or I would be building my herd right now. I am a buy low, sell high kind of a guy."
Harlan also commented that for those folks outside of the drought areas, who are looking to buy livestock to eat excess feed, perhaps the woolly species is less risky than their larger, "beefier" counterparts. "You are looking at spending just $65 for a ewe compared to $1,500 for a cow," he commented.
Dwight Kitzan, who, along with several family members, operates Kitzan Sheep, near Nisland, S.D., said he believes the sheep market is sitting in a favorable position.
"I think we've got the best fat-lamb market we've ever had. I don't think we've ever had $1.22 per pound fat lambs in the fall - that is phenomenal. We are at a realistic point in the market where feeders can buy lambs and make some money, as long as this slaughter market holds out," Kitzan explained. "The market has been very stable, to me that's kind of a highlight. I think it's held steady for a couple of months, which is very unusual."
In addition to imports, Kitzan believes the lamb market is highly subject to the buying power of the large processing plants. Kitzan is looking forward to the results of the U.S. Grain Inspection, Packers and Stockyards Act investigation regarding the cause of the wild swings the sheep industry has endured the past few years as well as the continued decline in U.S. sheep numbers.
According to Randy Hammerstrom, officer in charge at the Greeley U.S. Department of Agriculture's (USDA) Agricultural Marketing Service's (AMS) Livestock, Poultry and Grain Market News division, there is reason for producers to be optimistic.
"There is a stronger market being supported by a firmer fat-lamb market in an untraditional time of year. This is the first time since 1993 when USDA began tracking feedlot inventories that the level of animals in the Colorado lots has been below 100,000 head at this time of year.
"Cooler inventory is manageable and the $5 million lamb buy that was just announced will help to keep this going in the right direction.
"Finally, the USDA federally inspected lamb numbers are up 7 percent in the first 35 weeks of 2013 compared to the same time frame in 2012. This number is up to 1.415 million head from 1.323 million head in 2012," concluded Hammerstrom.
Reprinted in part from Tri-State Livestock News