US sheep meat supplies set to decline in 2016

US import volumes of sheep meat in 2016 are forecast to fall while domestic production is expected to rise.

Despite sheep meat consumption per capita in the US normally being below half a kilo per year, it is the fourth most important market for sheep meat exports globally, behind China, the UK and France. Supplies of sheep meat in the US tend to be split, with approximately 55 per cent of supply coming from imports and 45 per cent coming from domestic production. Domestic production in 2015 fell by four per cent on levels seen the year before to 68,000 tonnes due to some rebuilding of the US flock which had been declining for eight years due to drought conditions.

The flock continued to grow through to January 2016, with the total number of sheep and lambs in the country rising by 40,000 head to 5.32 million. Gains were seen in Texas, the largest producing state, as well as increases in Montana and Colorado. Gains were seen across both the breeding flock and the US lamb flock. While states that remained in drought such as California, Nevada and Oklahoma experienced declines in their flocks.

As the flock size grew in the past year this has led to expectation of higher levels of production in 2016. Production in 2016 is forecast to grow one per cent to 68,900 tonnes, with growth seen in the first quarter of the year due to earlier Easter and Passover celebrations, and in the final quarter of the year.

US lamb supplies

In 2015, while domestic production in the US declined, imports to the country rose by 10 per cent to reach 96,600 tonnes. This was due to the strength of the US dollar against both the New Zealand and Australian dollars which made products from those two countries cheap on the US market. In 2016, however, imports of sheep meat are forecast to decline due to expected lower supplies in both Australia and New Zealand in the coming year. Shipments are expected to fall by eight per cent to 92,100 tonnes.

This means that overall supplies of sheep meat in the US in 2015 grew by three per cent in 2015. This higher level of supply combined with low prices in the major exporters and the strength of the dollar led to prices in the US falling in 2015. However despite all these factors prices remained above the level seen in 2014, suggesting some increase in demand was adding some stability to the market.

In 2016 total supplies of sheep meat in the US are forecast to tighten by two per cent, driven by lower imports. Despite this decline in supplies, higher levels of domestic production and continuing low prices in the major exporters are expected to lead to prices continuing to decline in 2016.

The UK does not currently have access to the US market, although it remains important to the industry in the UK. This is because import volumes going into the US tend to be of higher value cuts such as legs and loins. If the US was not importing these products they could be competing with sheep meat produced in the UK both on the UK domestic market and in some of the most important markets for UK exports.