"with peak prices reached in 1925. Since then prices have moved irregularly down- 

 ward with a definite decline in 1929, especially for wool. 



Most observers of the sheep industry agree that the high point in the ex- 

 pansion of sheep numbers in the United States has been reached. With lower 

 price levels discouraging the holding back of ewe lambs it is expected that the 

 yearly increase in flocks will soon go to increase the supplies of sheep and lambs 

 for slaughter. Should this turning point come at a time when consumer demand 

 is unfavorable it is hardly likely that the market can absorb the additional supply 

 without a considerable reduction in price. 



On the wool side, the increase in world production which has occurred in 

 recent years is not expected to continue much further and some reduction is now 

 expected by 1931. Present demand conditions are not favorable but are expected 

 to improve in the last half of 1930, and to favorably affect the marketing of the 

 1930 clip. 



The rising prices which encouraged the expansion of the sheep industry 

 from 1921 to 1930, have already given way to lower levels which mean correspond- 

 ing readjustments in breeding plans of sheepmen. Whether these readjustments 

 are made gradually or suddenly will have an important bearing on the course of 

 sheep and lamb prices during the next year or two. 



Prices for wool in 1929 showed early weakness and while prices for lambs 

 during the first half of the year were relatively strong during the last half of 

 1929, feeder lambs had declined on an average of 75 cents per hundred below 

 prices paid in the same period in 1928. 



PROSPECTS FOR 1930 PRICES 



World supply and demand conditions do not indicate much immediate improve- 

 ment in the wool situation but if the expected revival in business conditions after 

 the middle of 1930, takes place the demand for the 1931 wool clip should be af- 

 fected favorably. 



In case of sheep and lambs if the present number of breeding ewes is main- 

 tained and flock increases which have heretofore gone to increasing the numbers 

 of breeding ewes are sold for market, the market will be called upon to absorb 

 about two million head more than were slaughtered in the last marketing year, 

 while any reduction of present stock sheep would increase market supplies still 

 further. Any readjustment on part of sheepmen from a program of expansion 

 of breeding ewes such as has taken place for the past several years, to merely 

 maintaining these numbers would seem to indicate lower market prices for the 

 increased market supplies resulting from such action. If in addition to increased 

 market supplies from this source, there should be liquidation of holdings on 

 part of high cost sheep producers the pressure on prices would be increased 

 further. 



The course of 1930 prices will be governed largely by the rate at which re- 

 adjustments are made by sheepmen. Obviously such readjustments to the new 

 slaughter level should be made as gradually as possible on part of sheep pro- 

 ducers and with the cooperation of the credit agencies who are financing the 

 industry, since curtailment of credit that would force liquidation might result in 

 greater risks than would the policy of permitting an orderly readjustment of 

 production. 



MORE DISTANT OUTLOOK 



In the past, periods of low prices, such as those now prevailing for wool and 

 as seem probable for lambs, have b^en followed by higher prices a few years 

 later. Sheepmen would find it inadvisable to switch at this time from sheep to 

 cattle since cattle prices are already declining and are expected to continue this 

 trend for the next seven or eight years. Meanwhile an upward trend in lamb 

 prices will in all probability be under way again before the next general advance 

 in cattle prices begins. 



