Estimated American lamb harvest was 1.89 million head in 2018, up 3 percent year-on-year. Estimated lamb production was 5 percent higher annually at 132.03 million lbs. Dressed weights for lambs and yearlings was 70.4 lbs. through November, 3 percent higher annually.
However, there were signs of supply tightening by early 2019. Lambs on feed in Colorado – the largest feeding state – were down in January and February compared to a year ago. Relatively tight domestic supplies and forecasted lower imports could support domestic prices through the spring.
After a 4-percent annual drop in slaughter in the first quarter, LMIC forecasted that commercial harvest could rise 2 percent higher year-on-year in the second quarter. In the second quarter, LMIC forecasted that national slaughter lambs on a carcass basis could be $266 to $271 per cwt., higher quarterly, but down 3 percent year-on-year. Sixty- to 90-lb. feeders could be $186 to $194 per cwt., down quarterly and down 2 percent year-on-year.
As we progress into 2019, we can’t help but reflect on whether the domestic industry will be able to keep lambs current this year, and avoid backed-up and overweight lambs in feedlots as we often see into the summer. In general, the percent of backfat, as seen in higher percentages of yield grade 4s and 5s in harvest, peaks during the summer then drops as harvest becomes more current later in the year.
This now common trend begs the questions: Is this cyclical phenomenon a victim of strong and unpredictable imports? Are year-to-year wide fluctuations in live lamb markets the new norm? The answer is complicated. In some quarters it appears that domestic live lamb prices are closely tied to imports. In other periods, imported lamb and domestic lamb appear to move in separate markets. Supply fluctuations – but also shifts in consumer demand – might be a factor.
Last year through November, lamb imports were down 0.5 percent to 186.9 million lbs. Imports from Australia were up marginally year-on-year to 136.4 million and New Zealand imports were off by 2 percent to 48.3 million lbs.
Imports held relatively steady year-to-year in 2018, so why did we see sharp fluctuations in live prices? The meat market was down 2 percent in 2018, but the live, slaughter lamb market was down 12 percent. Part of the explanation is that 2018 prices were coming off a very strong year. While imports were strong, domestic supplies were relatively tight in 2017, which put pressure on prices.
Another part of the story might be that while imports in 2018 were relatively steady, the distribution of these shipments through the year was seemingly unpredictable. In the first quarter, imports were down 11 percent compared to the previous year, up 28 percent in the second and third quarters, and then down 20 percent in October and November. Historically, slaughter lamb price strengthened through the fall, but instead, weakened last year due to heavier-than-expected imports in the third quarter. It is possible, however, that shifts in demand and freezer inventories also played a role.
Lamb and mutton exports were up 2 percent year-on-year in 2018 ending November. Lamb exports in this period were down 6 percent to 744,000 lbs. and mutton exports were up 3 percent to 4.7 million lbs. Mexico is the largest destination for American lamb by a wide margin. Last year through November, Mexico was also the largest destination for American mutton followed by the United Arab Emirates.