Sheep producers optimistic as 2012 prices fall, drought intensifies
September 25, 2012
Facing declining lamb prices and an intensifying drought, sheep producers will have to be more optimistic than usual to overcome challenges that will affect even the most financially-secure operators.
Producers selling feeder lambs in the last few weeks have taken a significant hit compared to a year ago. In 2011, lamb producers had a record year garnering prices over $2.30 per hundredweight for their 90- to 95-pound lambs. This year checks are half that amount, with prices ranging from $93-$95 per hundredweight.
A number of factors are driving prices, including an oversupply of lambs, increasing corn costs, and an earlier-than-usual run of lambs due to drought conditions. Another driving force is the stalled U.S. economy, where consumers are unwilling to pay higher prices for lamb.
It takes an estimated 9-10 bushels of corn to finish a 90- to 100-pound lamb to 135-140 pounds. As the cost of corn moves a dime higher, feedlots subtract a dollar off the price they pay for feeder lambs. The considerable upward movement in the price of corn over the last month results in feeders shaving $30 off the price they will pay for feeder lambs.
If adequate grass and water is still available, many producers are holding on to their lambs hoping for a rebound in price in August. In most western range ewe operations, the big runs of 85- to 90-pound lambs move through the salebarns and into the feedlot from mid-August through September.
According to Dave Ollila, extension sheep field specialist with South Dakota State University, some of those animals may come to the sale a week or two sooner if the drought persists.
"In some areas, there has been some 2-3 inch rains that have freshened the water and reduced bogging, so producers have been able to hold on a little longer," he said.
However, Ollila is concerned the drought may impact lamb quality. "Producers need to sell a high-quality product in that lamb," he stated. "It is important they don't let it suffer from the drought to the point it starts losing bloom, condition, or performance. If the lamb starts to go backwards, it will be evident when they go through the salebarn, and that producer can expect $5-$10 less than what the average price is because it will cost the feedlot operator that much more money to get the lamb turned around and moving in a positive direction."
Ollila cautions producers to carefully monitor their lambs. Lambs not maintaining themselves or losing bloom are candidates for weaning and feedlot placement.
Maintaining ewe numbers
"If the lambs are going backwards, chances are good the ewes are not milking as well, and may be losing body condition which could affect their ability to rebreed," Ollila said.
"Rebreeding is affected by nutrition and water quality," he continued. "Since they breed in the fall, there should be less heat so sperm viability should be good unless the nights don't cool down.
"If ewes are lacking in condition on the range, it may be beneficial to flush them with some corn or some other supplement to help them cycle and produce more twins," he said. "If there is still some grass available, the ewes should be getting adequate energy; they may just need some protein."
Protein sources include lick tubs, cake, or dry distillers grain, which can be fed on conveyor belting on the range if bunks aren't available.
Ewes bred for this type of climate and acclimated to hot, dry weather and low-quality forage, the extension specialist said. "If the nutrition is there, and the water quality is there, they should breed."
Overall, sheep can survive a drought easier than cattle because they are used to consuming poorer forage, and can adjust more readily to declining water quality.
"Sheep can withstand less than ideal conditions, and still perform and maintain their body condition," Ollila said. "When water gets to the point it would cause cattle to decline in performance or condition, it wouldn't necessarily affect sheep. They are able to accommodate themselves to greater extremes in feed and water quality than beef, so they can withstand drought conditions longer.
"Sheep can also utilize a wider range of plant material, eat less desirable plants, like weeds, forbes, and woody vegetation, and still maintain their body condition," Ollila explained.
Despite those advantages, some producers will liquidate a portion of their flock to survive until next spring.
"At the Newell sheep yards, I have noticed some producers are starting to sell some of their cull ewes they don't plan to maintain. I have heard from others who are determining whether to sell their older animals or younger animals if drought conditions don't improve," he added. "Most are looking at selling their older ewes because they are optimistic the drought conditions will diminish, the market will come back, and they will have a younger, more viable flock to work with.
"Sheep producers have a challenge ahead of them because the lamb market has slid quite a bit," Ollila continued. "Because of the drought, they will have lighter lambs and a smaller paycheck coming in. With that check, they will have to purchase higher priced feed to get through the winter," he said.
"Some producers are using up their winter pastures now, and others are finding they won't make enough from selling their lambs to pay for winter feed costs for the ewes they plan to keep. Producers who have some equity in their ewes have a better chance of making it through this, but those who are trying to pay off $300-$400 ewes will be more challenged because the returns aren't there, and the input costs are so great," Ollila said. F