The American Lamb Board (ALB) and the American Sheep Industry Association (ASI) have released the April market summary report aimed at delivering timely and useful information for American Lamb producers. The report summarizes lamb supplies, prices, trade, retail trends and more for the first quarter of 2023.
Inflationary Environment Lingers
Consumers are still coping with an inflationary environment as retail food prices were 20 – 25% higher in the first quarter than in 2020. However, food inflation seems to moderate each month and wholesale and retail lamb prices are declining relative to last year. While consumers are still buying lamb, they are getting less for their dollar due to elevated prices, which is limiting their willingness to pay higher prices and increase their purchase volumes.
Lamb Supply in Better Position
Compared to last year, the industry is in a better position on the supply side of the market. Lamb and yearling slaughter in the first quarter was 11% higher than a year ago, but slaughter levels were smaller in 2022 due to increasing numbers of lambs on-feed. Lighter weights have offset the larger numbers, with production only 7% higher in the first quarter. Based on weekly data for April, lamb and yearling slaughter is down about 2% with a greater decline in production due to lighter dressed weights. Data shows May 1st with the smallest on-feed numbers since August as those seasonally decline and the smallest May on-feed number since 2010.
Imports Lower in First Quarter
In the first quarter, lamb imports were 9% lower than in 2022. Import volumes from both Australia and New Zealand were also below a year ago for the first quarter, down 7% and 13%, respectively. According to Meat Livestock Australia (MLA), lamb exports to the U.S. saw declines in April.
Retail Features Lamb for Spring Holidays
Consumers continue to adapt to higher meat prices and inflationary pressures by opting for more value-based channels, trading down to lower priced products and brands, and taking advantage of sales. Spending for food at home remains higher than pre-pandemic levels as many people continue to work from home, a change that looks to remain in the post-pandemic environment.
As expected, the number of retail store circulars that featured lamb in April increased relative to prior months for the spring holidays. According to the USDA Agricultural Marketing Service (AMS) retail featuring report, about 14% of retail store circulars featured lamb in April with 20% featuring the week leading to Easer. The average price of all lamb cuts published in the retail featuring report continues to decline, with the April average at just over $8.00 per lb. versus nearly $10.00 per lb. a year ago.
Consumer trends and economic indicators are still hinting at an impending recession this year. The severity of the economic slowdown will determine how much consumer demand for lamb could be affected as evidenced in past recessions. The Livestock Marketing Information Center (LMIC) expects feeder and slaughter lamb prices to improve through the remainder of 2023, with annual prices on average about 20 – 25% lower than in 2022. “Overall price inflation, labor challenges and economic downturn creates more pressure for the US Lamb industry,” said Peter Camino, ALB Chairman. “Increasing the value of American Lamb for all segments contributing to the American Lamb Checkoff remains our mission.”