However, they can influence to some extent the price received for a specific sale lot of lambs. This fact sheet briefly discusses price determination and price discovery. Several key factors affecting slaughter lamb prices will be identified, as well as some regional differences in marketing practices. Some pricing issues relate to price determination and some to price discovery, two related but different concepts. In essence, high or low slaughter lamb prices are related to price determination factors, not price discovery factors.
Low prices result from supplies that are large relative to existing demand.
Widely varying prices, both above and below the market price level, result from many factors directly affecting price discovery. Price determination is the interaction of the broad forces of supply and demand, which determine the market price level. Imported lamb and domestically produced lamb, minus exports, combine to form the total supply of lamb available to U.S. consumers. Price discovery is the process of buyers and sellers arriving at a transaction price for a given quality and quantity of a product at a given time and place. Price discovery begins with the market price level.