Lamb/Sheep Market Update

Ontario Sheep Convention

October 27, 2017

Jason WoodProvincial Livestock Market Analyst

Alberta Agriculture and Forestry

Outline for Today• Global Market • Inventory and production

• Trade

• Consumption

• Prices

• Canada• Inventory and production

• Price & seasonality

• Supply & Demand

• Consumers

• Market comments 2

Global Market Overview

3

World Sheep Flock

Up 15% since 2002Asia and Africa

Wool prices dropSwitch to cattle

4

Top Five Sheepmeat Producers

• Annual average 1.2% over 54 years• Production + 82% • Beef +148%• Pork +457%• Chicken +3700%

5

Top 10 Global Exporters (2013)

6

Top 10 Global Importers (2013)

7

Per Capita Consumption kg (2016)

3.06

1.41.03

8.55

8

Global Meat Indices

Source: agri-benchmark; FAO

2014-16Pork and sheepmeat -28%Poultry -23%Beef -18%

9

Global Sheep Prices

10

Canada

11

Flock Size Declines:US 27 million (1961)NZ 43 million (1982)AU 109 million (1970)Canada 180 thousand (2004)

12

Change in Provincial Inventories

• 2011 versus 2016 Census of Agriculture 13

Slaughter

14

Lamb Supply & Demand

15

Consumption & Market Price

16

Montreal Wholesale Price

• A1 Fresh Choice Lambs 15-25 kg Hide Off

2017 wholesale price up Quebec +7.2%West +13.7%

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Strong Domestic Demand

2011 to 2016Price index increased 9%Demand index decreased 2.8%

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Lamb incidence has risen 17% on Canadian restaurant menus since 2015

Lamb Incidence across Canadian Commercial Operators

1,012

266

1,180

270

Item Incidence Operators Menuing

2015 2016

Traditional CDR, 27.5%

Fast Casual, 23.6%

Upscale CDR, 19.7%

Fine Dining, 12.9%

Midscale, 5.8%

Contemporary CDR, 5.3%

Quick Service, 4.4%

Food Trucks, 0.8%

Lamb Item Distribution

CDR= Casual Dining RestaurantsCDR Segments into Upscale CDR, Traditional CDR and Contemporary CDR

MDR: Midscale Dining Restaurants

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Lamb is often featured centre-of-the-plate on Canadian foodservice menus; Asian-themed lamb entrees are trending

670

107

34

28

22

21

21

17

16

15

14

14

586

98

34

25

20

12

24

3

17

14

5

5

Lamb Entree

Curry Bowl

Lamb Sandwich

Asian Noodles

Satay/Kabob

Mixed Grill

Stir Fry

Asian Combo Meal

Specialty Burgers

Non-Breaded Protein App

Choice of Protein AsianBowl

Gyro

2016 2015

Leading Lamb Formats on Top Canadian Foodservice Menus

FASTEST-GROWING LAMB FORMATS % GROWTH

Asian Combo Meal 466.7%

Choice of Protein Asian Bowl 180.0%

Gyro 180.0%

Protein Side 100.0%

Soup/Salad & Sandwich 100.0%

Mixed Grill 75.0%

Lamb Wrap 20.0%

Lamb Entree 14.3%

Asian Noodles 12.0%

Biryani 10.0%

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The Lamb Consumer

Gender

59%Of Men

40%

59%

Female

Male

46%

49%

44%

53%

52%

Matures

Boomers

Gen X

Millennials

Gen Z

53%Of Millennials

53%Of Ontarians

49%

53%

38%

48%

49%

Quebec

Ontario

AtlanticCanada

BritishColumbia

The Prairies

49%

58%

51%

50%

50%

46%

48%

$150K +

$100K - $150K

$75K - $99.9K

$50K - $74.9K

$35K - $49.9K

$25K - $34.9K

Under $25K

Generation Region HH Income

58%Of $100K-$150K

The lamb consumer skews male, Millennial/Gen Z, slightly higher Ontarian and higher-income

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Consumers would consider ordering lamb over any other alternative protein

49%

39%

30%

29%

26%

24%

21%

14%

12%

12%

11%

10%

9%

6%

6%

5%

Lamb

Bison

Rabbit

Venison

Elk

Goat

Wild Boar

Guinea fowl

Ostrich

Crocodile

Emu

Musk Ox

Horse

Seal

Rattlesnake

Camel

Interest in Alternative Proteins% of consumers who would consider ordering the following

22

Market Factors/Comments

23

Market Influences

• Estimated Alberta Price – 120 lb. Slaughter Lamb

BSE

Economic meltdown

High Feed Costs (RFS)

PEDv

Avian flu

US drought

Increasing imports from AU

Australian drought

Increasing global meat supplies

Beef, pork and poultry prod’n up

Low beef numbers

Strong domestic demand/limited prod’n

By-product values flat

Flat growth in major exporting countries

CDN over supply

24

Lamb vs. Steer vs. Hog

• Slaughter lamb prices have held up better than cattle and hogs• Cattle fell 31%, hogs fell 42% and lambs fell 6%• Since the low in 2016 lamb price have rebounded and found stability while

cattle have remained more volatile

25

Comparison of Lamb Prices

Ontario lamb prices average: 29% higher than Alberta37% higher than Quebec

26

Ontario Market Lamb Price

27

Ontario Lamb Price Seasonality

• Seasonal price index for average Ontario market lamb (95-109 lbs.)

28

Eastern Canada Slaughter Seasonality

29

Dollar Support Weakening

30

Market Factors• Volatility in commodity markets

• Co-product (drop credit) values improving

• Flat consumption (CAN/US)

• Increased production of beef/pork/poultry

• Domestic production declining

• Domestic demand is changing (ethnic/foodservice/healthy lifestyle)

• Stronger dollar

• Trade agreements 31

Trends• Globally:

• Consumption increases – developing countries

• Trade increase 15% by 2025

• Supply increasing

• Changing demographics

• Changing diets

• Environmental concerns

32

Trends• Canada:

• Decreasing flock

• Increased reliance on imports

• Protein: Plant vs. Animal

• Stable consumption at rising prices

• Increased foodservice offerings

33

Market Comments

• Price support remains

• Domestic demand

• Imports may tighten

• Australian processing capacity

• Reduced mutton supply (AU & NZ)

34

Questions

Jason Wood

jason.wood@gov.ab.ca

780-422-3122

35