Sheep may be considered a “dual crop” livestock source. While that’s usually a good thing for evening-out income, the sheep industry is getting a one-two punch during the pandemic like many in agriculture. Closing restaurants, and turning to sweatpants and remote meetings have changed the entire demand picture for both lamb meat and harvested wool.

For the sheep market, loss of restaurant sales has hurt, but rising retail demand is softening the blow for some. Meanwhile, wool markets have shrunk, yet space remains for 25 micron and finer, white face, and spring-shorn wools.

Read on to get a closer look at how the lamb and wool market is being shaped by the pandemic.

Evolving lamb market

Like many in the livestock market, there are two demand streams. Previously, the lamb market consisted of 50% white-tablecloth sales to restaurants and food service. The pandemic’s closure of restaurants halted the luxury dining sales of the high-end cuts, racks and loins from lambs finished to 165 pounds. “The COVID restrictions on restaurants closed half of the lamb market,” says Brent Roeder, Extension sheep specialist at Montana State University in Bozeman. “This collapsed the lamb price by almost half.”

The pandemic’s ripples bankrupted the Mountain States Lamb Cooperative in Greeley, Colo., that handled a fifth of lamb for the United States. “Mountain States was set up to process lamb for the tablecloth trade,” Roeder says, “not as individual packages needed for the retail trade.”

As people cook more at home during the pandemic, lamb retail sales increased, especially in areas with large ethnic populations.

“When COVID dried up the tablecloth market, it became evident that the ethnic, retail market is viable and strong,” Roeder says. To satisfy that demand in ethnic markets, the animal is harvested at a lighter weight, under 120 pounds. The popular cuts for this lighter market lamb are for kebabs, stew and ground lamb. The retail market emphasizes incorporating lamb meat into a meal, instead of lamb as a major centerpiece as for the white tablecloth market.

Superior Farms’ lamb processing facility in Dixon, Calif., operated one retail packaging line, pre-COVID-19. It added a second packaging line for the pandemic-expanded retail market. “Some projections show that half of the pandemic-closed restaurants won’t reopen,” Roeder says. “So long term, there is potentially a huge market shift” in meat demand.

Before the pandemic, 55% of lamb consumed domestically was imported, primarily from Australia. Because of its severe drought, Australia’s 2019 lamb exports to the U.S. were down 13 million pounds. The pandemic closure of U.S. restaurants further curbed the Australian lamb imports. “Now, with this fall’s increase in lamb prices, I expect that lamb [imports] are already headed our way from Australia,” Roeder says.

As restaurants reopen, the lamb market will watch if the retail sales remain steady — which, if the pre-pandemic level of food service sales return, would benefit the U.S. market.

Wool hit by many factors

Separate from the lamb market is the wool market. Both the U.S.-China Trade War and the pandemic have pummeled the U.S. wool market, of which more than 50% is exported. It began in May 2019 when China increased its 10% tariff on U.S. wool to 25%, in response to President Donald Trump’s 25% tariff on Chinese products.

“The U.S. wool market fell 25% overnight,” recalls Will Griggs, manager of the Utah Wool Marketers Association in Tooele. “About 80% of the exported U.S. wool goes to China. The retaliatory tariff reduced exports to China by 60%.”

In late 2019, the pandemic closed for several months most of the Chinese factories that utilize U.S. wool, which furthered reduced China’s U.S. imports.

NOT HAPPENING: White-tablecloth dinners have been hit hard, hurting the lamb market in many ways. Recovery here is expected to be difficult.

On top of that, 2020 wool apparel sales dropped sharply due to pandemic’s slow economy and socially distanced workforce measures. “Most of the wool clothing contracts were canceled this year,” Roeder says, “because everybody now sits at home in their pajamas on Zoom meetings.”

Sales data, as gathered by Adobe Analytics, shows that pajama online sales surged 143% in April compared to March. Additionally, apparel retailers note that the pandemic accelerates the casualization of clothing, which excludes high-quality wool suits.

The pandemic delayed Utah Wool’s testing at the New Zealand Wool Testing Authority. Deemed a nonessential business, the New Zealand Wool Testing Authority closed for several months. “Without core results and buyers unwilling to travel to inspect our wool,” Griggs says, “our spring sales were delayed. In May 2020, we had 150 samples in New Zealand the day that the Wool Testing Authority opened. The testing results were returned within 48 hours, which was impressive.”

Pockets of demand

At Utah Wool, the finer, white face and spring-shorn wools continue to command the highest prices. Market prices remain more than 50% lower than 2019. Because many of Utah Wool’s members sell their wool on consignment, and may choose to wait for higher prices, the cooperative will face a storage shortage by spring.

And while prices are softer, wool production has not stopped. Utah Wool currently holds 1.5 million pounds of wool, 85% more than normal, from 2019 and 2020. Griggs says Utah Wool’s storage capacity wasn’t filled this year only because some of the sheep producers were able to store their wool on their farms or had dry vans to park next to the Utah Wool warehouse.

“The stockpile of old wool will depress the market for an extended period,” Griggs predicts. “We saw this back in the early 2000s. At that time, Australia had almost five years of stockpile. Every time the market [price] rose, they’d throw a bunch of wool at it, and that would knock it back down. It took us a long time to get through that.”

The wool market rebounds the quickest for the 25-micron, and finer, wool utilized in U.S. military uniforms and “slow” fashion. The U.S. military is the largest American wool consumer, at 20% of U.S.-grown wool, and it only purchases wool that is 25 microns and finer. The 1941 Berry Amendment requires the U.S. Department of Defense to procure domestic products, which includes military cloth woven from U.S. cotton and wool.

Before the COVID-19 pandemic, wool apparel sales had risen due to consumers’ consciousness of environmental sustainability. “Recent research shows that polyester clothing, such as a polar fleece vest, releases thousands of plastic microfibers into the water system when washed,” Roeder explains. “Many apparel companies now want to use a natural fiber, or a natural blend, of wool, hemp and/or cotton. This trend now combines with the COVID-inspired movement toward “slow” fashion: clothing that is high quality, produced in an environmentally sustainable manner, and classily spans eras of fashion.” Though the pandemic shrunk the wool, sales remain for fine wools and within the environmentally conscious fashion markets.

Hemken writes from Lander, Wyo.