ISSUED: 6-94
G.L.M. Chappell and A.L. Meyer

Grading and marketing lambs is the culmination of a year-long program. Decisions concerning marketing and the management of lambs still on the farm markedly affect the success of a sheep producing program.
By its prices for different types of lambs, the market sends signals about what should be produced. Managers must look at price trends over time and compare them with production costs. Your income is the true measure of success in any production program. The steps to a good marketing program include analyzing both the market and the product you plan to market.

The Market
There are two steps in marketing. One is to use the market signals as a guide for production. The other is to get the best return from the market at selling time.
After production decisions are made and selling time comes, you must decide where the best market exists. Is it the sale of lambs directly to consumers for home freezers or to a packer several thousand miles away? Some producers find the market will change during the year, with shipments to distant packers providing best profits during peak price periods and direct sales to the freezer trade best during price lulls.

Market Reports
All aspects of marketing depend on accurate and timely information. A producer must gain access to significant market reports via radio, television, newspaper, magazines or special reports. Reports on traditional markets outside the market area may reflect general market trends. but they are not as meaningful as local reports. Sources of information with useful price quotes include the weekly "Kentucky Grain and Livestock Market" report (published by the Kentucky Department of Agriculture at no charge), "Lamb & Wool Market News" (available by subscription from the American Sheep Industry Association) and AGTEXT. To sell to "distant" markets, you must take into account transportation costs and in-transit shrink.
When looking at market reports, you should focus on categories, location and trends over time. The following is a sample lamb price quote in the ASI "Lamb and Wool Market News":
Area Type of
Type of
Head Lbs. Weigh
Kentucky Old Crop Auction 250  100-115 $.30 off
© 115
$5 buck
disc. 65-67

This sample shows that on the sale date, 250 "old crop" lambs were sold at auction in Kentucky. ("Old crop" lambs are 8-11 months old, sometimes called "fed" lambs.) Prices ranged from $65 to $67 per 100 pounds. Lambs weighing over 115 pounds received a price of $.30 per cwt. less for each pound they weighed over 115 pounds. (A 125-pound lamb might be worth $63. This is figured as follows: 125-115 = 10 pounds over base weight, times $.30, representing a $3 discount from a $66 base market price). Buck (ram) lambs were discounted at $5 per cwt. (A glossary of "Lamb Market Terms" is provided at the back of this publication to help you interpret terms used in various reports.)
To make this information most useful, you would also want to know what happened to prices in the previous weeks and in other locations. For example. have prices been increasing? Price variations in a nearby state might indicate that Kentucky prices could move in that direction. Those who are serious about market situations will also watch the wholesale (lamb meat) market. Strong trends will move live lamb prices in the same direction.
Weight, frame size, feed efficiency, finish and market conditions must be combined to determine the most efficient market weights for individual production programs.

Sale Weight
Prices of live lambs usually reflect their carcass value. Lamb carcasses are normally grouped in three classifications:
1) carcasses weighing 45 10 55 lb. (lambs weighing 90-110 lb. or less and dressing 50%). These are often termed "handy weight" carcasses since they can be marketed in a variety of ways.
2) carcasses weighing 55-65 lb. (lambs weighing 110 to 130 lb. and dressing 50%). These are most commonly used in the hotel and restaurant trade. They are usually quoted lower than 45-55 lb. carcasses.
3) carcasses weighing more than 65 lb. These are often more restricted in their use and are normally quoted at a further reduction in price.

Many producers fail to realize the full genetic potential of their flocks by marketing lambs at "light" weights. While efficiency of gain is greater at lighter weights, total pounds sold dramatically affects gross income and net profit of the sheep enterprise (see Table 1). If cost per pound of gain is $.30 and market price is $.60 per pound, then flock profit may rise by $180 to $255 depending on the percentage lamb crop (using Table 1 ).

Table 1. Additional Gross Income Per 100 Ewes From an Additional 5 Pounds Sale Weight Per Lamb.
% of Lamb Crop1
Sale Price/Cwt.
$50 $55 $60 $65 $70 $75
125 300 350 360 390 420 450
150 363 300 435 471 508 544
175 425 468 510 553 595 638
1100 ewes, 5% death loss

The first step toward meeting weight specifications is to weigh several (or all) lambs in the group ready for market. A color coding system may help to keep track of individual lambs as they are weighed. For example:
Date 110 lb.+ >100 <<110 90-100 80-90 <<80
5/2 blue head blue shoulder red back red hip yellow back

(NOTE: There are two choices for marking lambs: markers' ink and carpenters' chalk. Markers' ink is grease-based and should hold up in all types of weather. Carpenters' chalk is a less permanent marker which may not last a week. Whichever marker you choose, use it sparingly to protect the value of the pelt.)

Such a system shows not only which lambs are ready for sale (blue heads), but also which lambs might be used to complete a shipment (blue shoulders). If lambs are weighed two weeks later, the red backs should be weighed first and then the red hips; there is probably little need to weigh the yellow backs for a month or so.
The scales for weighing lambs need not be elaborate, only accurate and well used. They will be a sound investment and pay for themselves quickly.
Lambs should be weighed periodically as they approach market weight. On-farm weights should be adjusted to estimated sale weights by considering shrink. Lambs typically lose 4% to 7% of their farm weight during hauling.

Feed Efficiency
Weight gains permit you to calculate feed efficiency (pounds of feed per pound of gain) when feed intake is accurately measured. Since feed costs are the primary production cost at this time, calculate cost of feed per pound of gain and use it to evaluate the feeding program and break-even prices. Monitoring the growth rate likewise lets you evaluate your entire management program and make needed adjustments. Fast-growing (0.6-1.0 lb./day), large-framed lambs are the best prospect for feeding to heavier weights.
Feeding conditions and market trends combine to dramatically affect profitability of various sale weights of slaughter lambs. When feeding conditions are good to excellent (cool, dry weather) and the demand for lambs is strong, the rule of thumb is to "feed to a strong market" (that is strong when the lambs will be sold). This is generally a good guide since the discount for 55-65 lb. carcasses may be minimal on a strong market. Lambs marketed in the early spring may be heavier than later in the year. On the other hand, lambs will probably be marketed at lighter weights (90-95 lb.) when warm weather reduces gains and the market begins to trend down.

Lamb Quality
The two primary determinants of carcass value are finish and yield. Finish, as measured by the Quality Grades, such as Prime and Choice, indicates the meat's palatability (quality). Yield as measured by yield grade, #1, #2, etc., indicates the quantity of meat and unsaleable waste in a carcass.

Finish (Quality)
As lambs are weighed, they should be "handled" over the back and ribs to estimate the amount of finish (fat) covering these areas on the lamb's body. If you can easily feel the ribs and backbone, the lamb may be considered "bare." If the ribs and backbone are hard to detect, the lamb is considered fat or finished. If you find you need experience to effectively grade lambs for finish, you may want to attend a grading school sponsored by the Cooperative Extension Service or ask an experienced grader to give you some pointers.
Finish affects price because it indicates eating quality and "cooler life." Lambs with an optimal degree of finish will be easier to "pelt" in the slaughtering process. Such lambs also have a longer cooler life since external fat acts as a vapor barrier during storage and will usually produce juicier, more tender meat. Finish is also related to dressing percentage. Lambs with optimal finish dress higher than thin lambs.
You should combine weight, frame size and finish when you select lambs to market. For example, a large framed, 90-lb. lamb carrying a minimum of finish can be profitably fed longer. A lamb weighing 125 lb. should probably be marketed even though his finish may be minimal. A 90-lb. lamb that is fat should not be fed further. The old adage of "Slaughter lambs are like apples -- pick them when they're ready" still applies.
Another consideration for "borderline" lambs is market and feeding conditions. For example, it may be better to market 90-95 lb. lambs in late May when prices are likely to decline and feeding conditions become a problem than to try to feed them to heavier weights.
When dealing with young lambs (6-8 months), keep in mind that more than 90% of the lambs graded for slaughter in the U.S. grade Choice or Prime. Once weight and quality grade are determined on lambs, yield and dressing percentage come into play.

Yield Grades
Yield grades are used to denote the amount of boneless, trimmed retail cuts in a carcass. Although they are not used extensively in the commercial lamb trade, their use is expected to increase in response to consumer demands for lower-calorie meat products and value-based lamb marketing. To determine yield grade, combine:
1) the amount of external fat,
2) the amount of kidney and pelvic fat and
3) conformation grade of the leg.

These factors affect yield grade as follows:
1) For each 0.05 inch change in fat cover, the yield grade changes one-third of a grade.
2) For each one percent change in kidney and pelvic fat, yield grades change one-quarter of a grade.
3) Leg scores range from 15 (high prime) to 4 (low utility). For each change in leg score, yield grade changes one-twentieth of a grade.
4) The percent of carcass boneless, trimmed retail cuts from each yield grade is as follows.'

Percent boneless, trimmed retail cuts
Yield Grade (Leg, Lean Rack and Shoulders)
1 47.3 or more
2 45.4 to 47.2
3 43.7 to 45.3
4 41.9 to 43.6
5 Less than 41.9

Dressing Percentage
Dressing percentage [hot carcass weight divided by live (purchase) weight] is a significant factor in pricing slaughter lambs. As Table 2 shows, one pound of "extra" weight in the live lamb decreases dressing percentage by approximately one-half of one percent and increases gross carcass cost by one cent per pound. Packers are interested in the cost per pound of carcass. Dressing percentage is used to convert between live and carcass weight. The higher the dressing percentage, the more saleable meat and the more a packer can pay. Therefore, factors affecting dressing percentage must be considered in preparing lambs for market. These factors include conditions that affect weight, such as fleece, water retention, tags and sex status.

As the fleece gets longer, dressing percentage is reduced. A rule of thumb is "an inch of fleece equals two pounds of fleece weight." For this reason, long-fleeced lambs are usually discounted.
As the market season advances and fleeces become longer, shorn lambs may be given extra credit in pricing. Lambs with 1/2 to 1 inch of wool are said to have number 1 pelts. Number 2 pelts have 1/4 to 1/5 inch of wool. Freshly shorn lambs will yield only "skins." The pelt market will significantly affect lamb prices, particularly when there is a wide spread in full pelt and skin prices.

Water Retention
Wet lambs are discounted (because of their lower dressing percentage) depending on the amount of water held in the fleece, which may vary from one to four pounds. Even when lambs' backs are dry, their belly wool may be very wet. It is difficult to estimate such water retention because of the physical properties of wool.

A "clean" tail of a 100-lb. lamb will weigh one to two pounds. When covered with feces and urine, the weight may easily double. Such heavy tags even on docked lambs will reduce dressing percentage and lamb value.

Sex Status
The increase in fluid and tissue weight in the reproductive tract of pregnant ewe lambs reduces dressing percentage compared to open ewes. The dressing percentages of ram lambs is less than wethers. The reduction in dressing percentage increases as the rams begin to mature and lowers their value to the packer.
Table 2 shows the effects of added non-carcass weight. Notice that five pounds of "additional" weight lowers the dressing percentage to 47.3. If the packer can pay only $1.20 per lb. of carcass, the market price will drop to $57 for these lambs.

Table 2. The Effect of Additional On-Foot Weight on Dressing Percentage, Gross Carcass Cost and Adjusted On-Foot Price.
Live Price Live Wt. Carcass Wt. Dressing % Gross
60.00 100 50 50.0 1.20 -
60.00 101* 50 49.5 1.21 59.41
60.00 102* 50 49.0 1.22 59.41
60.00 103* 50 48.5 1.24 58.25
60.00 104* 50 48.1 1.25 57.70
60.00 105* 50 47.3 1.26 57.14
* Additional weight from fleece, water, tags, fill or other factors or a combination.
1Based on a constant $60 live price.
2Price is adjusted to maintain a gross carcass cost of $1.20/lb.

Shrink is normally defined as the weight loss associated with handling and transporting livestock. When lambs are sorted and/or transported, they lose weight due to urination, defecation 8and tissue fluid loss. This loss is often termed "drift." Drift due to trucking is most significant in loading and the first 50 to 75 miles of transport. Length of transport increases the amount of drift. Lambs tend to drift more in hot weather than cold weather, although stress in extremely cold weather can be significant. Lambs consuming grass or other high roughage diets will tend to drift more than lambs consuming high-concentrate rations due to loss of gut fill. Young lambs tend to drift more than older lambs. Average shrink for young (5-8 months) slaughter lambs is 5% or more from farm to market weight.
Steps that will result in higher income with minimal effort can be taken to reduce shrink. The effect of reducing shrink by 1% is summarized in Table 3.

Table 3. Additional Income from Reducing Live Lamb Shrink 1%.1
% Lamb Crop
Market Price/Cwt.
$50 $55 $60 $65 $70 $75
125 63 69 76 82 88 95
150 78 86 94 101 109 117
175 93 102 110 120 130 139
11100 ewes, 5% death loss; 105 lb. average market wt.

The following are suggestions for reducing shrink:
1) Facilities. Sorting and working areas should closely confine the animals to reduce movement and increase worker efficiency.
2) Weather conditions. Lambs should be worked in the coolest part of the day.
3) Timing. Lambs should be loaded, transported and unloaded as quickly as possible. Waiting time before weighing can often be reduced by good planning.
4) Handling. Shrink which is "lost" and must be regained on the farm is just as costly as "loss" of scale weight. To reduce shrink, reduce the number of times lambs are handled. Plan to combine as many jobs as possible.
5) Transport. Trucks or trailers should be loaded carefully. They must have adequate ventilation. They should neither be underloaded nor overloaded.
6) Trucker. When securing a trucker, bear in mind that this person is finishing your marketing program. Hauling cost alone may not reflect the value of transporting your product.

Selecting the Type of Market Outlet
Kentucky lamb producers have three major types of market outlets available to them: the auction market, the commingled computer sale and direct sales to consumers.

Auction Sales
Auction Sales are available at many stockyards. However, only a few specialize in lamb sales and have enough volume to receive competitive prices. Compare prices for past sales before you decide which auction market to use. Generally, you will want to sell at the most competitive auction market. However, if you have only a few lambs to send to the sale, the cost of hauling them a great distance may not be justified.

Commingles Computer Sales
Commingled Computer Sales have been used in Kentucky for over ten years. In these sales. lambs from many producers are graded and then consigned and sold in groups. Theoretically, the advantage of this method is that packers will bid more aggressively on large, graded groups of lambs. In fact, the lambs sold through the computer sales have revealed significantly higher prices in most sales. A disadvantage is that producers' selling schedules may not fit with the schedule for the computer sale.

Direct Sales To Consumers
Direct Sales To Consumers offer excellent marketing opportunities for some producers. Those using this method who are willing to follow the axiom that the "customer is always right" can receive higher prices than through auction sales. However, they will have to invest more of their time in marketing and working with buyers. The following are some essential points to keep in mind:
1) You must supply a high quality product to attract repeat customers and expand your market. Experience has generally shown that heavier weight lambs that produce larger lamb chops are in greater demand than smaller lambs.
2) Pricing must take into account the extra expense you incur in selling to individuals. These include handling, transportation, etc.
3) The processor involved in slaughtering and processing your lambs is a part of your "marketing team." The firm should be well informed on processing lambs and following cutting and packaging instructions. Either you or the processor should be able to help the buyer select among cutting and packaging alternatives.
4) You must give careful attention to meeting all state and federal regulations related to slaughtering and processing meat animals.

Basic Guidelines
As spring lambs are sorted and graded, keep some basic principles in mind:
1) More than 90% of the lambs graded for slaughter in the U.S. grade Choice and Prime. The grades Prime and Choice are determined by the finish, while yield grade indicates the leanness of the carcass. A low yield grade number means a higher market price. For this reason, accurate weights are paramount to sound marketing and management decisions.
2) The Kentucky slaughter lamb market strengthens from late-March or April to early to mid-May. After the market peaks, it declines through the summer and shows some improvement in late October and November (see Figure 1 ).
3) Although the rule of thumb "feed to a strong market" is well rounded, Table 4 illustrates that it is difficult to overcome a drop in the market by lamb gain.
4) The standard for slaughter lambs is docked, open ewe and wether lambs that:
are short fleeced, but have a number 1 pelt
are dry and clean
have approximately 0.2 inch of fat cover
have a minimum amount of gut fill
weigh 95-125 lb.

Seasonal Price Patterns
Figure 1 shows how lamb prices typically vary over the year in Kentucky. May prices are typically 15% over the year-average price, while in November, prices averaged 9% under the year-average. This means that if we expect prices to average $60 for the year, we'll expect the May price to be $69 (1.1 5 x $60) and the November price to be $55 (.91 x $60). The figure also shows the high and low extremes. Even in the best nine out of ten years, prices in the fall have been under the year-average, while even in the worst years, April, May and June prices have been better than average.
Prices are not the same as profits. Fall sales can be profitable for producers who have low production costs. Sometimes the costs of concentrates make it expensive to get lambs to market weight for the high spring prices. Still, most Kentucky producers target May for lamb sales.

Table 4. The Weekly Gain of a 100-lb. Lamb Necessary to Offset Various Drops in the Market.*
Market Declines
Present market price 2 cents/lb. 4 cents/lb. 6 cents/lb.
75 2.8 5.6 8.7
65 3.2 6.6 10.2
55 3.9 7.8 12.2
*Does not include cost of gain.

With these points in mind, the following lamb grading and management guide is suggested:

*Key to the Letters A-F Used in Figure 2

A. The only sort on this group of lambs might be for those over 125 lb. These "heavy" lambs might be marketed more profitably via direct channels if there is a discount on them in the traditional market.
B. These lambs should be fed for maximum gains and marketed as they grade Choice.
C. Lambs in this weight range could be fed to minimum grade or weight depending on market conditions. A weakening market would call for a short feeding period.
D. Lambs ln this group can be managed in a variety of ways. Evaluating their frame size, condition and potential for growth is essential.
E. Lambs in this group must be managed for maximum gains if they are to reach market weight and grade before July 1.
F. Lambs in this group should be managed, preferably on pasture, through the summer to gain 0.3 lb./head/day. This will permit them to be finished on pasture and marketed in early November. Internal parasite control is essential to success of such a program.

Lamb Marketing Terms
Types of Sheep
Break Joint A cartilage in the canon bone at the lower extremity just above the
pastern. When this joint breaks cleanly, a sheep carcass is classified
as "lamb." If it doesn't break, the carcass is classified as yearling
mutton or mutton.
Feeders Lambs which must be fed longer to obtain proper weight and/or finish.
Frame Skeletal size in relation to age and muscular development.
Mixed Groups of lambs which include slaughter and feeder lambs.
Old crop lambs Older slaughter lambs marketed at 8-11 months of age; often termed
"fed lambs."
Shorn, Wooled Shorn lamb have been sheared. Wooled lambs are unshorn.
Slaughter ewes Ewes sold for slaughter.
Spring lambs Usually lambs born in the late fall or winter and sold prior to July 1.
"Spring" is dropped after this date. Also called "new crop."
Stock ewes Ewes sold for further production.
Yearlings Sheep which have cut their first pair of permanent incisor teeth. See
break joint also.

Type of Sale
Auction Conventional auction sale of graded and "pooled" lambs or individual
producer pens.
Commingled/Computer Competitive sale conducted through computer interface of the buyers
and marketing firm. The lambs sold may be assembled, weighed and
graded or may still be on the producer's farm or ranch.
Direct A sale negotiated between the sheep owner and the packer which
may or may not involve a commission firm.

Sale and Weighing Conditions
Cold Carcass Weight The weight of the lamb carcass after it has completely cooled out. It
will usually average about 2 percent less than the hot carcass weight.
Double Dressed Weight The carcass weight is multiplied by two to arrive at a live or "pay"
Dressing Percentage The ratio of the carcass weight (designated as hot or cold) to
slaughter weight expressed as a percentage. Sometimes incorrectly
referred to as yield.
Grade and Yield Selling lambs on the basis of a guaranteed dressing percentage
(yield). Adjustments in price are made from lambs exceeding or not
meeting the guaranteed yield.
Hot Carcass Weight The weight of the lamb carcass taken immediately after slaughter.
Overnight Lambs are weighed after being held overnight without feed or water.
Pencil Shrink An agreed-on adjustment in lamb live weights to reflect weight loss in
transit. Varies with weather conditions and buyer and seller
Slaughter Weight The live weight of the lamb before slaughter.
Sliding Scale One method of discounting live lambs when markets are
discriminating against heavy lambs. Essentially the discount is levied
on a hundred-weight basis for each pound the average live weight
exceeds the accepted maximum.
Stop Weight Price The maximum weight for which the packer will pay the producer.
When this weight is exceeded, the lambs are essentially sold on a
per-head basis.