SHEEP FLOCK DECLINES

Also released on Friday was the July 1 Sheep report, which reported another year-to-year decline in the U.S. sheep flock. According to USDA, the U.S. sheep and lamb flock totaled 6.9 million head, 150 thousand head less than a year ago and five percent below 2008’s mid-year number. The yearly decline in lamb numbers in the January and mid-year reports has been reflected in the modest decline in the number of available feeder and slaughter lambs this year.

The number of breeding ewes one year and older was 3.37 million head versus 3.47 million head a year ago. As expected, USDA reported the number of market lambs down 40 thousand head from last year at 2.65 million head, while the number of market sheep (cull animals) was ten thousand head larger than a year ago. Of note, both the breeding ewe and the market lamb inventories were the smallest July 1 numbers on-record.

According to the report, producers indicated that the number of replacement lambs as of July 1^st was 620 thousand head, 10 thousand head less than last year. As of mid-year, about 88 percent of the 2010 lamb crop was already on the ground with the additional 450 thousand lambs expected to be born yet this calendar year.

Looking ahead, feeder lamb prices are forecast to remain well above a year ago for the balance of 2010, supported by tighter supplies. For 2010, Texas feeder lamb prices are forecast to average 20 to 25 percent above the disappointing prices of 2009. Likewise, slaughter lamb prices will remain rather strong, supported by smaller supplies as well as improved retail and restaurant demand. For 2010, slaughter lamb prices are expected to be record high with an annual average around 15 to 20 percent higher than last year.