TFI releases first summer forward lamb price contract

Terry Sim, September 24, 2015

TFI_Portrait - CopyLAMB feeders and restockers received a summer price confidence boost this week with the release of Thomas Foods International’s first forward contract up to January 2016.

The contract for 16-34kg cwt fat score 2-5 lambs for delivery to TFI’s Murray Bridge and Lobethal plants from November 2 2015 to January 29 2016 opened on September 23 and will close at 10am Monday, September 28.

TFI is offering 520c/kg for crossbred lambs, and 490c/kg cwt for Merinos, delivered from November 2 to December 11. For delivery from December 14-28, the price is 530c/kg for crossbreds and 500c/kg for Merinos, then 545c/kg for crossbreds and 515c/kg for Merinos up to January 15, 2016. The crossbred price then drops to 535c/kg and 530c/kg for the next two weeks, and to 505c/kg and 500c/kg for Merinos.

A penalty of 50c/kg applies to lambs over 34kg cwt, all lambs of fat score 1 will be discounted 30c/kg and stock containing seed will be discounted $1/kg.

Contract is consistent with TFI rolling forward pricing policy

TFI’s national livestock manager Paul Leonard said it was the first time the company had offered a contract for lambs into summer, but it was consistent with its policy of continuing to offer rolling forward pricing “all the way through.”

“This should give restockers some confidence in this current easing market to buy with surety for January,” he said.

“The industry can decide whether it is competitive or not, but it at least it should take away the uncertainty, and underpin the feeder market and confidence in the lamb market.”

Good south-east SA reaction to summer contract

Mr Leonard said the contract had been well-received so far, with a very good response from feeders and producers in south-east South Australia and Kangaroo Island.

“It will definitely close at 10am Monday morning.

“I think it is around the expectations of where people expected it (price) to be and it is giving them the surety,” he said.

“It is currently 40-80 cents a kilogram above our grid price as we speak today.”

Mr Leonard said he is hoping to get half the lamb kill of both plants during the contract period.

“I’m very confident that I will achieve that; in fact, some individual weeks are already full.”

There has been a limited response out of Victoria, apart from some lambs out of the Mallee, where producers are more inclined to take the risk of selling in the saleyards, he said.

“I think the heat needs to come out of the feeder market a little bit.”

Mr Leonard said he had a good reaction to feeders and restockers to the contract, though he expected many of the contracted lambs would be new season drafts later in the year.

“It still allows for a January lamb that been shorn and put out to come back in at 24kg and be worth $140 with skin.

“So if you can buy feeder lambs for $90, instead of $100, there is still a good margin.”

Click here for full details of the TFI contract.


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