The U.S. sheep industry entered 2026 with tight inventories, according to the latest Sheep and Goats report from the USDA National Agricultural Statistics Service (NASS). As of Jan. 1, all sheep and lambs totaled 4.99 million head. Compared with a year earlier, inventories declined 0.7%, or roughly 35,000 head.
The most significant pressure remains in the breeding flock. NASS reported breeding sheep inventories at just over 3.6 million head, down 1.4% from 2024. Ewes one year old and older declined to 2.85 million head, while replacement lambs under 1 year old fell 2.4% to 600,000 head.
Tyler Cozzens, director at the Livestock Marketing Information Center, told WLJ the bottom line is clear: “The report signals continued tight domestic lamb supplies.”
Market sheep and lambs were one of the few brighter spots in the report. Market inventories increased 1.1% to 1.38 million head, the highest level in three years, with market lambs accounting for roughly 94% of the total. The 2025 lamb crop was estimated at 3.03 million head, down just 0.3% from 2024. The lambing rate slipped 1% to 105 lambs per 100 ewes 1 year old and older.
Ben Lehfeldt, president of the American Sheep Industry Association (ASI), told WLJ the NASS data largely reflect longer-term structural pressures facing producers. He described the report as further confirmation of a gradual contraction, driven less by short-term price signals and more by elevated costs and regional challenges.
Production costs, labor availability and persistent drought in parts of the West continue to weigh heavily on flock decisions, according to Lehfeldt. While sheep numbers saw a modest uptick in some areas last year, he said those gains were not enough to offset broader pressures across the industry.
Geographically, the report shows that much of the decline is concentrated in western states traditionally associated with large-scale sheep operations. Inventories declined year over year in California (-1%), Idaho (-6.4%), Oregon (-1.4%), Utah (-1.8%), Montana (-1.6%) and Wyoming (-5.1%). Lehfeldt said these declines closely track areas still struggling with drought and higher input costs.
In states such as Utah, he noted that lingering dry conditions have limited producers’ ability to restock or expand breeding numbers. Cozzens concurred, saying that declines track with areas that have been grappling with drought for months, where forage limitations and increased supplemental feed requirements can pressure flock sizes.
At the same time, the western picture is far from uniform. NASS data indicate inventory increases in several states, including Colorado (+1.2%), Kansas (+2.5%), South Dakota (+2.4%) and Texas (+4.5%). Lehfeldt described the regional split as a “mixed bag,” driven by differences in forage recovery, production systems and market orientation.
Texas, in particular, stands out as increasingly distinct from much of the West. Lehfeldt explained that Texas has shifted more heavily toward hair sheep and production systems serving ethnic and non-traditional markets, which has supported inventory growth even as other regions contracted.
Those market dynamics are also influencing lamb flows nationwide. Lehfeldt said strong lamb prices over the past year encouraged marketing decisions that reduced the number of lambs retained for breeding. Demand for yearling ewes was strong in the fall, but availability was limited, making it difficult for producers to add breeding stock even when conditions improved. In some cases, lambs moved into harvest channels when they might otherwise have been retained, a dynamic Lehfeldt attributed to high prices combined with rising labor and operating costs.
NASS data on wool production further reflects the shrinking flock. U.S. shorn wool production totaled 20.5 million pounds in 2025, down 5% from the previous year, while sheep and lambs shorn declined 3% to 3 million head. The average price paid for wool slipped to $1.40/lb., contributing to a 7% decline in total wool value. As of Jan. 1, 28% of all sheep and lambs were hair sheep or wool-hair crosses.
The report also showed changes in losses during 2025. Sheep death loss totaled 185,000 head, down 3% from 2024, while lamb death loss decreased 3% to 360,000 head.
Looking ahead, Lehfeldt expects growth to continue primarily in the Midwest and eastern states, where solar grazing and proximity to ethnic markets provide additional opportunities. Expansion in the West, he said, will depend largely on moisture conditions and whether producers can gain relief from high input and labor costs.
Lehfeldt sees cautious optimism but little chance of rapid rebuilding. He noted that meaningful expansion will require greater predictability, including improved risk management tools and policies that support domestic producers. — Charles Wallace, WLJ contributing editor
