ALB, ASI Report Assesses Sheep Industry in 2020
The COVID-19 pandemic, major changes in the processing sector and changes in consumer behavior all led to a year of challenges for the American Sheep Industry. But, there were also definite positives. The year of ups and downs is summarized in 2020 Sheep Industry Review, a checkoff-funded report commissioned by the American Lamb Board and compiled by the American Sheep Industry Association.
“COVID-19 made changes to the way U.S. consumers purchased and consumed lamb in the past year,” says ALB Chairman Gwen Kitzan. “Typically, heavily reliant on the foodservice industry, 2020 saw American lamb make its way into the home kitchen as restaurants, especially fine dining, were forced to close temporarily or even permanently. To make matters worse, the pandemic hit in the midst of peak spring holiday demand, and when one of our main processors was forced to declare bankruptcy. But, we came together as an industry and we came through it with renewed vigor.”
Commercial slaughter was down 4 percent from 2019, total sheep and lamb inventory decreased 1 percent to 5.2 million head, and leg, loin and shoulder sales outpaced ribs. Weekly feeder lamb prices started off above 2019 levels, but quickly declined and stayed low throughout the summer, then strengthened in the fourth quarter.
Feeder lamb (60 to 90 lbs.) prices in 2020 were up 6.65 to 9.5 percent across the board with Sioux Falls, S.D., seeing the greatest increase compared to 2019. The report cites increased direct consumer demand, smaller supplies and “real and perceived disruptions in commercial lamb supplies” as the cause. Lightweight lambs did especially well with the increased ethnic and direct-to-consumer markets.
Slaughter lamb prices in 2020 were down 10 percent from 2019, with lower incomes and decreased foodservice demand contributing, both a result of COVID-19. A disruption in USDA-AMS reporting during the second half of the year also produced a statistical effect. Commercial lamb slaughter was down 4 percent to 2.2 million head. Live, negotiated slaughter lamb prices averaged $162.65 per cwt. in 2020, up 9 percent from 2019.
The second quarter especially took a hit from COVID-related processing disruptions, followed by the closure of the nation’s second largest slaughter facility in July. Additional plant capacity eventually alleviated slaughter disruptions, but the plant closure plagued the industry for most of 2020.
The wholesale market for American lamb held its own, with retail demand gaining while foodservice sales slowed. Rib/rack prices were down 2 percent, averaging $858.07 per cwt. Trimmed 4×4 loin prices rose 12 percent to $587.31 per cwt. Trotter-off legs averaged $348.60 per cwt., up 2 percent. Shoulder prices rose 11 percent to 339.37 per cwt.
Looking ahead to 2021, the 2020 Sheep Industry Review report estimates a 3-percent increase in commercial production and a 2-percent increase in commercial slaughter of American lamb for 2021. Imports could decrease 10 percent. Total lamb availability is expected to decrease 7 percent to 444 million lbs.
Steady production, lower imports and the lowest available supply since 2017 could set the stage for solid prices in 2021. The report estimates feeder lamb prices could rise 7 percent, while national slaughter lamb prices (carcass basis) rise 10 percent.
Click Here for the full report.
USDA Announces Additional Pandemic Funding for Producers
Agriculture Secretary Tom Vilsack announced today that USDA is establishing new programs and efforts to bring financial assistance to farmers, ranchers and producers who felt the impact of COVID-19 market disruptions. The new initiative – USDA Pandemic Assistance for Producers – will reach a broader set of producers than in previous COVID-19 aid programs.
USDA is dedicating at least $6 billion toward the new programs. The department will also develop rules for new programs that will put a greater emphasis on outreach to small and socially disadvantaged producers, specialty crop and organic producers, timber harvesters, as well as provide support for the food supply chain and producers of renewable fuel, among others. Existing programs like the Coronavirus Food Assistance Program will fall within the new initiative and, where statutory authority allows, will be refined to better address the needs of producers.
The American Sheep Industry Association is involved in ongoing discussions with USDA about assistance to the industry. Documentation has been shared regarding the 2020 wool clip that is impacted by the pandemic and not covered in prior COVID aid.
USDA Pandemic Assistance for Producers was needed, said Vilsack, after a review of previous COVID-19 assistance programs targeting farmers identified a number of gaps and disparities in how assistance was distributed as well as inadequate outreach to underserved producers and smaller and medium operations.
“The pandemic affected all of agriculture, but many farmers did not benefit from previous rounds of pandemic-related assistance. The Biden-Harris Administration is committed to helping as many producers as possible, as equitably as possible,” said Vilsack. “Our new USDA Pandemic Assistance for Producers initiative will help get financial assistance to a broader set of producers, including to socially disadvantaged communities, small and medium sized producers, and farmers and producers of less traditional crops.”
USDA will reopen sign-up for CFAP 2 for at least 60 days beginning on April 5, 2021. The USDA Farm Service Agency has committed at least $2.5 million to improve outreach for CFAP 2 and will establish partnerships with organizations with strong connections to socially disadvantaged communities to ensure they are informed and aware of the application process.
Click Here to learn more.
ASI SheepCast: CFAP, Industry Report & Issues on the Move
This week’s ASI SheepCast looks at progress being made on additional pandemic related payments to producers, highlights from the American Lamb Board’s 2020 Sheep Industry Review and issues to watch on the legislative front in the coming weeks.
Click Here to listen to the podcast.
LMIC Offers Look at Lamb Market
The Livestock Marketing Information Center offered encouraging news on lamb prices recently in its Current Situation and Analysis Report.
“Easter is fast approaching and earlier than normal – occurring on April 4 – so examining the current situation of the lamb industry is necessary especially leading up to a key demand season,” read the report.
“The sheep and lamb industry has had its turmoil since the onset of the COVID-19 pandemic nearly a year ago. Since the closure of the Mountain States Rosen plant in July 2020 – partially due to fallout from the pandemic – weekly sheep and lamb slaughter has generally trended lower than the prior year. On average since August 2020, weekly slaughter has been about 5 percent lower each week from a year ago. That is equivalent to about 2,000 head per week. Since the start of 2021, weekly slaughter is averaging about 2 percent (around 1,000 head) below the same period last year. Combining lower slaughter levels with dressed weights that are about even with last year has led to lower available lamb supplies, which has elevated prices.
“As sheep and lamb slaughter levels started to trend lower, the lamb cutout value began to increase. In December 2020, the lamb cutout reached $407.34 per cwt., which is a record high for the price series going back 25 years. Since the start of the year, the weekly lamb cutout value has been averaging around $400 per cwt. This strength has carried into feeder and slaughter lamb prices. The three-market (Colo., S.D., and Texas) feeder lamb price has been fluctuating in recent weeks but is generally around $250 per cwt – a level that has not been seen in nearly three years. Slaughter lamb prices (Wooled, 110-130 lbs. Sioux Falls, S.D.) rallied during the fourth quarter of 2020 – a counter seasonal move – and that momentum has continued into the start of 2021. Average weekly slaughter lamb prices have been about $170 per cwt since the start of the year, which is a strong start and levels that have not been seen in nearly four years.
“Elevated lamb prices have created an economic incentive for producers to sell feeder lambs and market fed lambs. Colorado lambs on feed have been following a similar pattern to previous years indicating lambs are moving through the supply chain, but a slower slaughter pace has tightened supplies. Looming factors – such as the 0.6 percent decline in sheep and lamb inventory to 5.17 million head on January 1, lower weekly slaughter levels, rising feed costs and persistent drought in the western U.S. – all point toward lamb supplies likely remaining lower in the near term.”
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ALB Nominations Due to ASI by Today
The American Sheep Industry Association is actively seeking nominations of sheep producers and lamb feeders to serve on the American Lamb Board. ASI is recognized by the U.S. Department of Agriculture as a Certified Nominating Organization to submit nominations for lamb producers and feeders who serve on the board.
ALB will have two producer openings to be appointed later this year and begin serving three-year terms in 2022. One opening is for a producer with between 101 and 500 lambs to fill the position currently held by Tom Colyer of Massachusetts. He is not eligible for reappointment. The second opening is for a producer with more than 500 lambs to fill the position currently held by Gwen Kitzan of South Dakota. She is not eligible for reappointment. To meet regional requirements, one producer must be from Region 1 as recognized by USDA.
There is also an opening for a feeder with 5,000 or more lambs. At least two nominations will be required to fill the slot currently held by Rob Rule of Iowa, who is eligible for reappointment.
ASI is looking to submit two eligible producers and feeders for each position. Anyone interested in applying should first consult with representatives from their state sheep association. Applications are due to ASI by today and can be sent to ASI Executive Director Peter Orwick at firstname.lastname@example.org.
Click Here for more information.
Australian Wool Market Records Upbeat Week
The Australian wool market recorded an overall positive result this series. Originally, there were 46,578 bales slated for sale, but after 13.6 percent of the national offering was withdrawn prior to sale, the overall quantity fell to 38,564 bales.
Although the national offering reduced, bales available at auction for this season continues to track well above the previous season, as wool on hold continues to find its way to market. Compared to the corresponding sale of the previous season, there have been 58,749 more bales offered – a 5-percent increase.
Main buyer interest was in good-style wools (MF5 and better), particularly those with favorable additional measurement results. These wools generally sold at levels 10 to 30 cents above those achieved in the previous series and were the impetus for the gains experienced in the individual Merino Price Guides. The MPGs across the country for 19.5 micron and finer gained between 5 and 42 cents. Lesser-style wools (MF6/7) did not receive the same level of buyer support and were highly irregular but trending lower.
The gains in the Merino fleece MPGs, combined with gains in other sectors helped to push the AWEX Eastern Market Indicator up by 8 cents. The EMI closed the week at 1,285 Australia cents – a modest 0.6-percent rise. Due to large currency movement (the Australian dollar fell by 2.27 U.S. cents compared to last week – a fall of 2.9 percent), when viewed in U.S. dollar terms the EMI fell by 23 cents to close the week at 977 U.S. cents – a 2.3-percent drop.
The skirtings tracked a similar path to the fleece as prices generally rose between 10 and 20 cents. The crossbred sector recorded minimal movements for the series. The crossbred MPGs in the Eastern centers moved between -3 and +8 cents. Next week’s national offering increases as there are currently 48,829 bales on offer in Sydney, Fremantle and Melbourne.
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