The COVID-19 pandemic, major changes in the processing sector, and changes in consumer behavior all led to a year of challenges for the US 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 (ALB) and compiled by the American Sheep Industry Association (ASI).
“COVID-19 made changes to the way US 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% from 2019, total sheep and lamb inventory decreased 1% 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 4th Quarter.
Feeder lamb (60-90 lbs.) prices in 2020 were up 6.6% to 9.5% across the board with Sioux Falls, South Dakota, seeing the greatest increase over 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% 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% to 2.2 million head. Live, negotiated slaughter lamb prices averaged $162.65 per cwt. in 2020, up 9% 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%, averaging $858.07 per cwt. Trimmed 4×4 loin prices rose 12% to $587.31 per cwt. Trotter-off legs averaged $348.60 per cwt., up 2%. Shoulder prices rose 11% to 339.37 per cwt.
Total sheep and lamb inventory was down 1% in 2020 over 2019, at 5.2 million head. Breeding sheep inventory clocked in at 3.81 million head, down slightly from January 1, 2019. Texas remains the leader at 445,000 ewes. Colorado saw the greatest ewe increase at 8.3%.
Prices for replacement stock were stronger overall in 2020, with aged ewes leading the way, while the value of yearling ewes dropped.
Imports and exports
The US continues to import a large portion of lamb consumed. Imports accounted for about 61% of total lamb supply in 2020.
The year of 2020 saw a 63% increase in mutton imports volume, mostly from Australia. Lamb imports volume was down 2% on the year. Total volume increased 10.7%. Overall, the value of lamb and mutton imports decreased 11% to $802.9 million in 2020.
Exports to Mexico increased 38% in volume and 25% in value in 2020, led by muscle cuts. Japan and Hong Kong also saw increases, while the Caribbean, Middle East, Central America and ASEAN saw decreases of 40% to 75%. Canada imported 2% less lamb and mutton, but showed a major change in live lamb and sheep crossing the border, from 109 head in 2019 to 34,112 head in 2020, while worldwide live lamb and sheep exports from the US doubled overall.
Looking ahead to 2021, the 2020 Sheep Industry Review report estimates a 3% increase in commercial production and a 2% increase in commercial slaughter of American Lamb for 2021. Imports could decrease 10%. Total lamb availability is expected to decrease 7% 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%, while national slaughter lamb prices (carcass basis) rise 10%.