EXPORT sheep, lamb and beef processor JBS Australia has issued a revised forward lamb contract for delivery to its Victorian and South Australian plants.
The latest contract issued on 4 May for delivery of 20-30kg 2-5 score crossbred lambs is offering 840c/kg for limited kill space in June and July at its Brooklyn plant and for July/August delivery to its Bordertown facility.
The original autumn contract was opened at the start of April and suspended after two weeks, offering 800-880c/kg for May/June and 880-900c/kg for July/August for 20-32kg lambs.
JBS Australia southern livestock manager Steve Chapman said JBS is the only exporter to still have contracts available for producers.
“Although the revised contracts are at lower prices, JBS felt that it was important to have a price out that key suppliers could work to.
“This is a tough decision to make in a tough global market,” he said.
“The lamb market is volatile at the best of times, but the impact of the COVID-19 pandemic is something that the industry has never faced before.”
Mr Chapman said the major impact on returns for heavy lambs has been the food service business and to white table cloth restaurants around the world coming to a standstill.
“The inability for other markets such as domestic or global supermarkets to handle product from heavy lambs only exaggerates the problem even further.”
JBS Australia’s southern chief operations officer Sam McConnell said the international retail demand for lamb is “OK”, but the food service sector demand is very weak.
“You have to revalue the carcase for lamb, same as we have for beef, because middle meat is becoming very hard to sell.”
Skin market hit hard by China shutdown
Mr Chapman said with China in lockdown, the skin market has also been hit hard, with skins that have no commercial value (NCV) being dumped with a penalty of $2/skin.
“This is out of the hands of JBS & to dump thousands of skins per day comes at a very large cost.
“Above all, JBS remains committed to its suppliers & customers of premium quality lamb and will do everything that they can to provide the best result for both parties,” he said.
Chief executive officer of JBS’ skin division, Adrian Knox at Knox International, said the global shutdown is now having a significant impact on the Australian sheep and lamb skin market, with Chinese buyers finding their sales orders cancelled or deferred due to shutdowns in Europe and the United States.
“Trade continues and most of the better skins are still moving, but prices on cheaper types evaporated, causing some processors to dump skins and pass costs back to vendors.
“Good quality high density shorn lamb skins are in limited supply and prices have held steady, but at much lower levels than historical averages,” he said.
“Merino types softened through April with the wool market, but found a base in late April and have remained steady since then.”
Click here to read the latest JBS forward lamb contract.