The new forward pricing contracts are for up to 530c/kg for sub-16kg to 34kg score 2-5 crossbred lambs and up to 500c/kg for Merinos, delivered to the company’s Murray Bridge and Lobethal plants in South Australia from mid-January 2016 up to the end of March.
TFI is also offering a mutton forward contract for early December 2015 to late February 2016 delivery to its Murray Bridge plant. This contract is paying 320-340c/kg for 20.1-30.1+kg score 1-5 Merino wethers, 260-320c/kg for Merino ewes and 200-260c/kg for crossbreds.
For mid-November 2015 to late January 2016 delivery at its Tamworth and Wallangarra plants in New South Wales, TFI is offering 520-540c/kg for crossbred new season lambs and 490-510c/kg for Merinos and other lambs in the same weight range and condition score.
A mutton contract for 20.1-30kg+ sheep delivered to TFI’s Wallangarra plant from mid-November 2015 up to late January 2016 is also paying 320-340c/kg for 20.1-30.1+kg score 1-5 Merino wethers, 260-320c/kg for Merino ewes and 200-260c/kg for crossbreds.
The northern and southern plant lamb contracts all include the usual 50 percent upside clauses and a 50c/kg penalty for lambs over 34.1kg. All contracts close at 10am Monday, October 26.
TFI’s national livestock manager Paul Leonard said the new southern summer-autumn lamb contracts follow on its earlier November-early January contracts of up to 530c/kg, released before the physical market got as low as 460c/kg recently.
“Effectively the forward lamb price is 530c/kg all the way through, which is pretty good considering the hooks rate now is 460-480c/kg.”
The rates should give producers some incentive to buy store lambs now for $85-$90 and grow them out to 26-27kg cwt, and with the skin value, they could be looking at a $150-$155 return, he said.
“So it puts a margin in them, rather than sacrificing them at this stage.”
Mr Leonard said the contracts should give an incentive to producers who were “on the edge” as whether to sell lambs at 450-470c/kg or shear and value-add.
“I think 530c/kg is at a level where they can justify value-adding them because there is enough margin there, or it will underpin the store market a bit and encourage feeders for those who aren’t in a position to feed them on themselves,” he said.
Intent is to contract up to half lamb and mutton kill
Mr Leonard said it was TFI’s aim to take up to half its lamb and mutton kill for the respective plants for the contract periods.
He said it was a dry season in South Australia and Victoria, but NSW was enjoying a very good season, despite some grass seed issues.
“People are inclined to be shearing their lambs now, not because they don’t have feed, but the lambs are running to wool and seed a bit, forcing a shearing.
“So if we can secure our lambs up there (in NSW) – I think the lambs are up there like they haven’t in previous years, Mr Leonard said.
“It is just a matter of incentivising people to have enough money to lock them up and it might save us indirectly having to come into the south for that late November to early January period.”
Mr Leonard said the company’s rolling forward pricing was working well and had been well-received.
Click here for the Murray Bridge and Lobethal lamb contract.
Click here for the Murray Bridge mutton contract.
Click here for the Tamworth and Wallangarra lamb contract.
Click here for the Wallangarra mutton contract
Source: Thomas Foods International