ROLLING forward pricing for new season lambs leading into summer this year were released for the first time by South Australian-based meat processor Thomas Foods International last week in an attempt to secure up to half the kill of three plants.
The contracts, or rolling forward price grids, are pitching for 16.1-34kg cwt 2-5 score new season lambs only at 550-600c/kg for crossbreds and 520-570c/kg for Merinos, Dohnes and Samms, from late August to early October.
For October, the rates for the plants are 530-550c/kg for crossbreds and 500-520c/kg for the Merino-bred lambs, and in November, these come back to 500-520c/kg for the second cross lambs and 470-490c/kg for the others.
The rates are for delivery to TFI’s two SA plants at Murray Bridge and Lobethal, and to Tamworth in New South Wales. New season lambs under 16kg dressed will be paid on the grid of the week (GOW) price and carcases over 34.1kg will be discounted 50c/kg. The processor’s normal 50 percent upside terms apply.
Early response to forward pricing ‘very good’
TFI’s national livestock manager Paul Leonard said the contracts close at 10am on Friday, August 7, and the response has already been very good.
“It’s the first spring–summer contract that we have ever released as we are running into the lamb season.
“But we just wanted to secure a percentage of our kill and so we have gone forward with some historically pretty good pricing.”
Mr Leonard said the company would still be operating in saleyards and with direct sales for other lambs.
“We intend to go forward with rolling forward pricing more so than relying on the physical market for the volume of livestock that our business requires as we continue to grow.”
Mr Leonard said TFI was buying more lambs and sheep through forward pricing, giving producers surety and confidence by underpinning their production, and allowing them to potentially buy and finish store lambs for the company.
“Hopefully it is a win-win for everybody.”
He was prepared to take up to 50pc of the plants’ current weekly lamb kill of about 70,000 under the contracts.
“We might take 300-400,000 lambs for the north and the south.”
Mr Leonard said the processor could not rely on the numbers of lambs coming through saleyards.
“Albeit for a few peak weeks of the year, for our business, we can’t rely on saleyards like we used to get the numbers, and more and more people are preferring to sell over the hooks.”
Rolling forward pricing was the next step in maturity for over-the-hook selling to give people some surety, he said.
“If we’ve got a good percentage of our kill bought, well we know that our customers are covered.”
NSW looking good for new season lamb turn-off
Mr Leonard said he had flown over New South Wales recently and he believed most of the state was having the best season it has had in years.
“It as green as far as the eye can see from southern Queensland border right down to the Victorian border.
“There are only a few spots in NSW that you could say are still dry, but the majority of the state is having an outstanding season,” he said.
“I think there will be a lot of lambs, and a lot of prime lambs up there this year, which is good.”
The early response to the forward pricing has been particularly good from producers in SA and the Wimmera/Mallee areas of Victoria for Murray Bridge delivery. There has also been very good support for the early part of the contract for Tamworth delivery, Mr Leonard said.
Click on the locality name to read TFI’s Murray Bridge, Lobethal and Tamworth forward lamb contract grids.
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