Volatile markets: Continued monitoring of sheep markets is critical
In a recent installment of American Sheep Industry Association’s (ASI) Lets Grow webinar series, Livestock Marketing Information Center Senior Agriculture Economist Jim Robb made clear producers should continue to monitor the volatile lamb market situation created by the COVID-19 pandemic and drought across the U.S. and other sheep producing regions.
“First of all, I want to stress the importance of sharing accurate data with USDA. This is where I retrieve most of the data for my presentations,” Robb stressed. “I know a lot of producers don’t want USDA to know their exact lamb crop, but research funds are allotted based on this data, and we could be missing out on a lot of potential research for the industry if we aren’t honest about numbers.”
He continued, “People in D.C. don’t know our industry and will make decisions based on the data on hand at USDA.”
Monitoring the environment
Robb noted volatility is inherent in the sheep market.
“This is a hand and mouth market,” he explained. “From the consumers and restaurants to the packers, people don’t buy ahead and prices run up or down on a short-term basis fairly quickly.”
“The commercial slaughter dynamics have changed a lot, there is a looming dark cloud over the industry right now as the Mountain States Rosen plant filed for bankruptcy,” he said. “This plant represents 20 to 25 percent of the total U.S. lamb slaughter capacity. This is making the dynamics in the lamb industry pretty precarious.”
He noted the plant is expected to be for sale in August.
Another issue in need of close monitoring is drought across the U.S. and other lamb producing regions, namely Australia and New Zealand.
“As drought continues to plague the West, especially in Wyoming, it is more important now than ever to evaluate on-farm production,” he said. “In an environment like this where we may be holding animals for longer than normal, we need to be more aware than ever of what the markets are doing.”
He noted it is important for producers to be aware of what is going on in the national and world markets. Certain conditions can cause animals to flood the markets and prices will be affected very quickly.
“Producers really need to focus on their cash flow because it is directly tied to their marketing plan,” he said. “We need to be planning to make adaptions as time unfolds and new things are thrown at us. Communicate these plans regularly with business partners so everyone is on the same page.”
He continued, “With drought planning, it is a sequential event decision process, not just a single decision.”
“The market dynamics are changing, but the opportunity is there,” he said. “Consumer sentiment has picked up and that is a hopeful sign despite all the elements working against us.”
Callie Hanson is the editor for the Wyoming Livestock Roundup. Send comments on this article to firstname.lastname@example.org.