Shedding Light on the Market
This month I’ll write about the market for sheep and goats. Specifically, I’ll focus on the factors affecting the prices received for lambs and goats at the auction. Fortunately, we live at a time when technology provides us lots of data.
To begin, I must state that sheep and goats are no different from any commodity that supply and demand set the market price. Simple right? No, not really. Mainly because we have an ever-changing supply and demand of a highly variable product.
At the auction, we have a supply of sheep and goats that weigh from 25 to 250 lbs. There is a wide range of breed types and grades (body condition). A wide range of management backgrounds; some animals are tail-docked, dehorned, tagged, tattooed, and/or castrated; others are sold at auction unmarked. Luckily, we have a market for all of them.
A recent study conducted by Texas A&M AgriLife reported on the factors affecting the price of small ruminants at Producers Livestock in San Angelo from 2010 – 2016. It can be found at: http://sanangelo.tamu.edu/extension/west-central-agricultural-economics/small-ruminant-mpa-project/. The figures below have been created from this dataset. Thanks to Producers Livestock Auction for sharing the data!
Figure 1 clearly shows the market for sheep and goats has improved from 2010 to 2016. Not surprising, meat goats have improved the most. Meat goats and hair lambs sold at auction in Texas will likely end up in an ethnic market. Wool lambs either go to an ethnic market or a lamb feeder.
Often the most important factor that affects auction price of lambs and kids within a given sale day is live weight. Figure 2 shows the price received for lambs and goats from 2010 to 2016 in varying weight groups. Similar to all livestock, younger animals tend to bring higher prices per pound because lighter animals can be fed to heavier weights at a profit. Unlike the cattle industry, sheep and goats have two differing markets. The ethnic market demands lighter weight carcasses (25 – 45 lb) and the traditional market demands heavier carcasses (65 – 85 lb). On average carcass weight is half the animal’s live weight.
Often, ranchers try to get the best price per pound for their animals; however, we must make sure we look at total price received and not just price per pound. In both lamb and goats, the 40 to 60 pound live weight range attract the highest price per pound. In Figure 3, you will see total value of the animal continues to increase. For net profit, ranchers must determine or estimate their cost of gain. Typically, if they are gaining weight on pasture with minimal supplementation, then net profit will continue to rise with increase weight gain. If lambs or goats are being fed in a drylot, it may or may not be more profitable to take them to heavier weights. Profitability depends on weight of animal, cost of gain, and season.
Another major factor that influences price received for lambs and goats is seasonal supply. Figure 4 shows the seasonal fluctuation of the sheep and goat market. Seasonal prices are inversely correlated with seasonal supply. The lowest supply is from November through February, which results in the highest prices. Fall lambing/kidding is the best option to be able to market animals at the peak of the market, though again, producers will need to determine or estimate their costs for an alternative production system.
It is common knowledge that ethnic holidays have an influence on the market; however, the influence of these dates was not a significant factor on the price of young lambs and goats. Had the data set included older animals, the data may have been different.
Quality is an important factor that influences the market price of lambs and goats. USDA-AMS produces a report of the San Angelo sale each week. https://www.ams.usda.gov/mnreports/sa_ls350.txt In this report, slaughter kids are sorted into groups by quality (Selection 1 & 2). Selection 1 goats will bring a premium over selection 2 goats. Selection 1 goats are typically the ideal goats for slaughter. They are heavy muscled, in good body condition and yield a heavy carcass. Selection 2 goats are typically lighter in condition, lighter muscled, and yield a lighter carcass. Lambs are sorted into quality grades (Prime, Choice, and Good) and selection grades (1, 2, & 3). The higher the quality and selection grade category the better the carcass and the better the market price.
To summarize, the market for lambs and goats is as good as it has ever been. However, there are numerous things sheep and goat producers can do to increase their chances of marketing their animals at a premium. If you have further questions regarding sheep and goat markets contact a local Texas A&M AgriLife Extension office near you.
To provide feedback on this article or request topics for future articles, contact me at reid.redden@ag.tamu.edu or 325-653-4576.