FORWARD lamb contracts valuing crossbreds at 620-660c/kg and Merinos at 590-630c/kg for 2018 autumn and winter delivery have been released by South Australian-based processor Thomas Foods International.
As works continue to rebuild or resite TFI’s fire-affected Murray Bridge plant in South Australia, the company has released autumn-winter lamb and mutton contracts for April-July delivery to its plants in Lobethal, SA, and Tamworth in New South Wales.
TFI’s autumn/winter 18.1-32kg mutton contracts at its Tamworth and Lobethal plants price Merino wethers at 420-460c/kg, Merino ewes at 400-440c/kg and crossbred sheep at 380-420c/kg.
The Lobethal autumn/winter lamb contract prices 18.1-32kg 2-5 score crossbred lambs at 620-650c/kg and Merinos at 590-620c/kg. The Tamworth lamb price range is 630-660c/kg for crossbreds and 600-630c/kg for Merinos.
TFI’s national smallstock manager Paul Leonard said the company had decided not to offer the usual 50 percent “upside” in the contracts.
“We tried to just really go out with pretty strong pricing to encourage producers, given that it is pretty dry in New South Wales, it is sort of a doubled-edged sword there.
“You’ve got currently a better supply than you normally would have because it has stayed reasonably dry, but the other side of the sword is that potentially at some point if you don’t incentify producers then you could end up in a position in winter where we haven’t got lambs that are finished,” he said.
TFI hoped the contract prices would encourage producers to continue to supplementary feed lambs.
“That way we’ve got the supply and they’ve got a guarantee of what they could get – I think it will be pretty well received.
“We put the contracts out early because of the season and went out to June-July to give producers a bit of surety, because when it does rain in New South Wales they will either plant oats or supplementary feed them.”
Mr Leonard said the contracts would enable producers to buy store lambs now “and know before they buy them what the return is.”
TFI’s Lobethal and Tamworth plants were near cropping areas where there were more Merino lambs available that were suited to grain supplementation, he said. The company had traditionally been more “pro-Merino” in its lamb purchases than other exporters.
“We’ve always supported the Merinos pretty strongly.”
He said many of the Merino lambs consigned to TFI from SA’s grain-producing areas were of very high quality and well-fed.
“We are in an area of South Australia that capture a lot of very good quality Merinos that are grain-assisted.
“From a New South Wales perspective, it is almost the same, and we draw a lot of Merino lambs from particularly the central and central west areas of New South Wales,” he said.
“Grain-assisted Merino lambs are a very important part of the mix.”
Landmark national livestock director Mark Barton said the forward prices reflected the potential for a shortage of finished lambs over the winter and the lack of restocker trading this season.
“We’ve had a relatively tight season so far and numbers of down.”
He said there were many clients willing to buy store lambs early to trade later, but haven’t had the opportunity.
“I don’t think those numbers have tucked away, so up to a quarter of your winter kill could come from restockers buying lambs to grow out.
“I don’t the season has allowed people to put numbers around,” Mr Barton said.
“The other thing is you didn’t have the grass seed issue in the south so there are probably a lot of those lambs that would get sold into Victoria as stores are actually being held on to be killed.”
Mr Barton said the forward contract prices for Merino lambs represented a huge opportunity for lambs to be shorn and fed on.
“It’s a dual purpose animal now – for wool and meat – I think they’ve become far more acceptable as a meat option.
“If you get a break now and you can take a Merino lamb through and finish it – forget what the market may or may not be – it gives you the opportunity to lock in a margin.”
Click here to read TFI’s Lobethal autumn-winter lamb contract.
Click here to read TFI’s Tamworth autumn-winter lamb contract.
Click here to read TFI’s Lobethal autumn-winter mutton contract.
Click here to read TFI’s Tamworth autumn-winter mutton contract.