***MAJOR UPDATE*** 10/31/23
Lake City Ammo Plant has confirmed that they are NOT canceling commercial contracts, and they are not changing their commercial distribution policies. You can read their official statement here.
I’ll leave the rest of this article up for posterity’s sake, but the majority should be disregarded.
According to multiple news sources, the Lake City ammo plant has cancelled all of its commercial contracts.
This means that stores will no longer be able to purchase ammo from Lake City, which currently supplies 30% of the civilian market for 5.56 ammunition.
The Lake City ammo plant is owned by the US Government, but operated by Olin Winchester. Winchester produces ammo and sells it to the government.
When the facility is able to produce more ammo than the government requires, they sell it either to consumers or distributors.
If it’s true that they’ve cancelled their commercial contracts, this means the US Government is requiring more ammunition, enough that they can’t produce enough to sell the excess.
I haven’t been able to confirm this with Lake City or Winchester themselves, but I’ve reached out to hear what they have to say. I will update this article as soon as I have something.
Stores May No Longer Be Receiving Ammo From Lake City
Winchester 5.56 is, or was, one of the most abundant brands of 5.56 in the country.
Lake City is not only the largest supplier for the US Government and Military, but is the largest small arms ammunition factory in the world.
Winchester has three facilities for making ammo, but as far as I can tell only makes 5.56 at Lake City.
This all means that as Lake City cancels contracts, you’ll stop seeing Winchester 5.56 on the shelf at your local gun store.
Distributors won’t be able to purchase new shipments, so as they run out of their current stock, the shelves will slowly, or quickly, dry up.
Prices Are Only Going Up
I’m no economist, but if 30% of a goods’ supply disappears overnight, the price of said goods are sure to rise.
We’re also heading into an election year, which almost always provides positive pressure for guns/ammo prices.
The same week that Winchester started cancelling contracts, a Hornady ammo facility had an explosion that caused one fatality. It’s not certain how this will affect the market, but it definitely won’t cause prices to lower.
Why Cancel the Contracts?
As I mentioned earlier, ammo plants that are government owned but contractor run are only able to sell ammo commercially when they produce an excess over what the government requires.
This means that they’re either having production problems or the government is requiring, or anticipating to require, more ammo.
This is announced the same week as the conflict with Israel and Palestine. Is the government anticipating US involvement? Is the government supplying Israel, or someone else, with millions of rounds of 5.56?
Either way, I’m not able to say the real cause, but something is happening to cause the US Government and Military to require millions of more rounds than they required last week.