LAMB producers and trade have reacted quickly to the release of a Coles forward contract offering up 620-630c/kg for 18-25kg lambs delivered to Gundagai and Colac during December and January.
A week after the contract was released to the trade, three weeks of kill space have been filled – the three-day week between Christmas and New Year at both plants, and the last week of January at Colac. The remaining slaughter slots are expected to fill quickly.
Coles is offering 620c/kg for 18-25kg lambs delivered to Gundagai during the week starting from December 25 until the week of January 29. At Colac, producers with similar lambs will be paid 630c/kg for the last week of December and throughout January, dropping to 620c/kg from January 29.
The Coles contract coincided with the Australian Lamb Company releasing a January delivery contract for 20-32kg lambs of 580c/kg.
Stock agents said the contracts have been well-received as an indication of the likely strength of the market later in the year and offer traders an incentive to buy lambs now for sale later in the year. The contracts are also expected to help put a floor in saleyard prices until Christmas.
The Coles contract is for minimum lot sizes of 200 lambs and includes the usual company ‘upside’ clause whereby the price will be increased by 50 percent of the difference to the Coles weekly spot grid price, if it exceeds the contract price at the time of delivery. Lamb wool length must be less than 4.5cm on delivery and seed contamination and outside grid weight discounts also apply.
Elders Bendigo livestock manager Nigel Starick expected the Coles contract to be taken up by producers planning to turn off lambs in January and by traders aiming to buy restocking lambs this year.
Mr Starick said the supply of lambs into the Bendigo had been steady until this week, but good lambs over 22kg cwt from southern areas were not in abundance yet.
“I think we are getting through a lot and blokes are looking to harvest, so they are just working to their general pattern.
“But on Monday there was a bit more dryness coming into the lambs – the good lambs are still good,” he said.
“There are not a lot of opportunities to buy store lambs really, they are still that good.”
Landmark’s Mark Barton expected other lamb processors to also come out with forward contracts in coming weeks.
He said recent rains had helped the condition of lambs coming onto the market.
“I think we are going to see some very good lambs coming onto the market over the next eight weeks.
“Between now and the New Year, there is certainly going to volume of supply.”
Click here to see the current availability in the Coles contract.
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