What is a Slaughter Lamb?
Dr. Julie Stepanek Shiflett
Easter is a reminder of the strong ethnic demand for lambs. However, the ethnic trade is not just a seasonal market, but also an important market year-round. In fact, it is thought that the ethnic trade is growing and affecting supplies and prices in some areas.
Middle Easterners, Greeks and Hispanics make up an important segment of lamb consumers in the United States. Lamb and goat are important in the observance of many religions, as well as a staple food in many countries.
Feeder lambs that are traditionally fed to slaughter weight at feedlots are being sold directly to slaughter. At the auction barn in New Holland, Pa., 100 percent of the lambs are slaughter lambs although most of the slaughter lambs weigh anywhere from 20 lbs. to 60 lbs. ? not the typical 140-lb. slaughter lambs.
In San Angelo, Texas, slaughter lambs weigh from 80 lbs. to 120 lbs. Reportedly, more than half of the lamb sales at the San Angelo livestock auction are to the ethnic trade. In San Angelo, the ethnic market has put an upward pressure on prices. In general, the ethnic buyers are willing to pay more than the traditional feeder-lamb buyers.
At the livestock auction in Fort Collins, Colo., whether a slaughter lamb is indeed a slaughter lamb is dependent upon the buyer. If an ethnic buyer purchases a lamb, it is a slaughter lamb, but if a feedlot buyer buys the same lamb, it is a feeder lamb.
The volume of the ethnic market is not known. By calculating the estimated ethnic sales from auctions in New Holland, San Angelo and Fort Collins, I figure that the ethnic market could equal 11 percent of the number of lambs slaughtered in 2004. This is a conservative number. It neither includes ethnic sales in other auctions nor the sales directly from farms to consumers.
From a producer?s standpoint, the ethnic market can have its advantages. If feed is expensive, selling to the ethnic market may be a profitable alternative. At the New Holland, Pa., livestock auction, 25-lb. lambs earned up to $2.88/lb. before Easter. ?Fancy? lamb earned up to $3.30/lb. ? for the extra fat. However, to take advantage of Easter sales, producers have to breed ewes to lamb early in the year. Producers will have to do the calculations. Selling lambs as feeders in October may yield the same return. In general, selling lamb direct to the consumer or retailer rather than packer or wholesaler may obtain higher prices regardless of weight.
There are different ways producers can sell to the ethnic market. (1) Producers can sell directly to ethnic consumers who come to their farm. This is an attractive option if transport is expensive. (2) Producers can also form marketing pools whereby producers combine their respective supplies for sale. (3) Some producers act as dealers, buying other producers? supplies. (4) A producer may also be able to enter a contract directly with a local butcher. And (5), producers can take their lamb to livestock auctions. One key characteristic of many ethnic consumers is that they like to select their animal live.
There may be potential to expand the ethnic market for lamb. A survey conducted in La Marquetta Consumier, a Hispanic market in Brooklyn, N.Y., revealed that although 83 percent of respondents liked lamb, only 24 percent ate it once a week and 17 percent ate it once a month (Cornell Cooperative Extension of New York City and Just Food, Inc. 1997-99). The survey results suggest that there may be room to expand lamb into nontraditional marketing outlets. Many of the commercial packers provide the ritual Halal slaughter or kosher items, but the existence of the ethnic trade is proof that the commercial industry hasn?t yet met the demands of many ethnic groups.
Barry & Sons Islamic Slaughterhouse sells to many ethnic groups from Pakistanis to Albanians. Customers buy at Barry & Sons because the lamb is considered cheaper, fresher, more tender and can be custom cut, compared to grocery lamb. Many customers like the smaller-sized lamb for rotisseries. Reportedly, the Yemenese like lamb still warm from slaughter. Barry & Sons sells 20-lb. to 35-lb. Easter lambs, or milk lambs, but throughout the year it typically sells 40-lb. dressed lambs.
Feeder-lamb prices remained strong this Easter ? due in part to tight supplies ? but also in part to the increased demand from the ethnic trade. In the commercial market, there was heavy contracting of feeder lambs from January through March. Contracts for April/May deliveries were $115/cwt. and $105/cwt. for September/October deliveries. The weighted average price of feeder lambs in direct trade in March was $112.06/cwt., up from $105.95/cwt. in February. The average feeder lamb price in March 2004 was $104.40/cwt.
It is possible that corn prices could rise 7 percent to 8 percent this year over levels seen in 2004. This is because a reduced corn acreage and increased export levels are anticipated.
Live slaughter-lamb prices softened slightly between February and March. The live San Angelo price averaged $109.69/cwt. in February and fell to $100.88/cwt. in March. Live slaughter-lamb prices averaged $102.50/cwt. in March 2004.
It is foreseeable that slaughter-lamb prices could soften further following the Easter holiday. Lower prices may follow because of the relatively low slaughter levels leading up to Easter and the consequent weight gain. In the weeks leading up to Easter in 2004, more than 70,000 head per week were slaughtered, but this year the average weekly slaughter was about 60,000 head per week. On the other hand, the market is very short and all indications point to strong demand. Processors are saying both that supplies could be bulged a bit, but we are so short and the product is selling so well, that we just might stay quite strong.
The gross carcass value climbed from $262/cwt. in February to $270/cwt. in March ? 18 percent higher year-to-year. The price strengthening may be due to the year-to-year gain in the rack by 42 percent as well as the 25 percent price gain in the leg. Shoulders gained by 7 percent, but loins fell 4 percent.
It is also possible that the lower import levels put upward pressure on wholesale values by reducing the available supply of lamb. Wholesale import prices averaged about 20 percent to 30 percent lower than for similar domestic cuts.
The average feature-weighted retail price of both imported and domestic lamb jumped from $5.04/lb. in December to $5.28/lb. in January. The price of domestic retail lamb increased from $5.07/lb. to $5.24/lb. over this period and imported lamb increased from $4.97/lb. to $5.37/lb. Lamb legs and loins strengthened between December and January, but the price of chops, roasts, and shoulders fell. Legs rose 16 percent to $4.57/lb., loins were up 10 percent to $8.88/lb., chops were down 2 percent to $6.51/lb., roasts were down 10 percent to $6.51/lb. and shoulder was down 3 percent to $4/lb.
The leg remained high in January, but softened somewhat from its four-year high of $4.52/lb. in October 2004. The stronger loin price in January was a surprise because loins typically weaken between January and May. In general, import levels were lower in January and may have been particularly short on loins, which would help support the price of domestic loins.
Lamb imports slowed in January to half of December?s volume: 6.3 million lbs., down from 12.8 million lbs. Australia?s imports fell from 9.3 million lbs., down to 3.5 million lbs. in January and New Zealand?s imports fell from 3.4 million lbs., down to 2.7 million lbs. Year-to-year imports fell 55 percent from January 2004 levels.
The continued weak U.S. dollar may be putting pressure on importers, resulting in lower import levels. In addition, export supplies out of New Zealand are tight. ?The 2004 New Zealand lamb crop of 4.1 million head was a record low, although the lambing percentage ? at 113 percent ? was the highest in at least a decade,? (3/31/2005 Meat Livestock Australia).
Mutton imports also fell in January: from 2.5 million lbs. in December to 1.7 million lbs. in January. The volume of mutton imports in January was 80 percent of the previous January?s level.
In the first quarter of 2005, 16,996 head of sheep and lambs were exported to Mexico, up 1.2 percent from 13,675 head during the first quarter 2004. The increase is partly explained by the open border to cull ewes this March compared to last March.
Wool Market Softens
In March, world-wide wool prices softened due to reduced demand. Reportedly, both domestic and international demand was low. Chinese imports of all wool were down. Business was also weak in other markets, such as Italy and Poland. The weak U.S. dollar may be helpful this spring, but has not enticed a lot of activity in the U.S. market with what little wool that has been sold. Wool continues to face stiff competition from cotton and man-made fibers.
Twenty-eight micron wool in the Fleece States lost 17 percent since January and 11 percent since February, resulting in an average $1.07/lb. in March. The finer wool also lost value: 19 to 21 micron wool in Texas and New Mexico lost 3 percent to 6 percent of its value between February and March.
The clean, delivered average wool prices in the United States in March were as follows ($/lb.): 19 micron (Grade 80?s) 2.15-2.50, 20 micron (Grade 70?s) 2.15-2.35, 21 micron (Grade 64-70?s) 2.08-2.35, 22 micron (Grade 64?s) 2.00-2.10, 23 micron (Grade 62?s) 1.84-2.00, 24 micron (Grade 60-62?s) 1.66, 25 micron (Grade 58?s) 1.50, 26 micron (Grade 56-58?s) 1.46, 27 micron (Grade 56?s) 1.04, 28 micron (Grade 54?s) 1.01-1.07, 29 micron (Grade 50-54?s) 0.99-1.00, 30-34 micron (Grade 46-50?s) 0.96-1.04, 34+ micron (Grade 40-44?s) 0.94-0.95.
In the last few years, about 70 percent of U.S. wool produced was exported. It is thus important that the United States now reports wool on a clean basis because it is the familiar international way of pricing wool. In addition, U.S. growers can now get a better idea of how their wool compares to wool in other areas of the United States, as well as internationally. The U.S. Department of Agriculture, Market News Service will ensure that confidentiality of individual prices will be maintained by aggregating prices across large regions with similar types of wool. Led by strong retail sales, the outlook for the U.S. economy is bright, so wool exports are likely to rebound.
Although the World Trade Organization required removing all quotas on clothing and textiles, there remains a safeguard measure (i.e., restriction) on wool. However, the level of protection doesn?t equal that under the old quotas and there is pressure from interest groups to reinstate the quotas. Chinese wool textiles and apparel increased 17 percent by volume and 20 percent by value from January 2004 to January 2005 (Woolmark 3/18/05). Overall, apparel exports to the United States were up 147 percent in February (Emerging Textiles 3/29/05).
The increase in Chinese imports wasn?t the flood that was expected in the United States; importers still relied on other low-cost countries for wool apparel. For example, most men?s jackets come from Columbia, men?s trousers from Mexico, women?s jackets from Turkey and a lot of men?s sweaters from India. China was not ranked first for most wool apparel categories.
However, the quota lift had a much bigger effect on the European Union (EU) countries and those who purchase U.S. wool from overseas. The textile industry in the EU is seeing China?s imports increasing in certain categories of up to 600 percent, with price falls in excess of 40 percent, since the quotas were lifted in January.
Editor?s Note: Julie is open to comments and questions and can be reached by e-mail at email@example.com by phone: 303-619-9975.