SOUTH Australian-based processor Thomas Foods International has released its spring 18-32kg mutton contracts for 2017, offering up to 500c/kg for Merino wethers and to 480c/kg for Merino ewes in August.
The contracts for August delivery to TFI’s Murray Bridge and Tamworth plants is pitched at 450-500c/kg for Merino wethers, 430-480c/kg for Merino ewes and 410-460c/kg for crossbred sheep.
The September delivery prices are 400-440c/kg for Merino wethers, 380-420c/kg for Merino ewes and 360-400c/kg for crossbred sheep.
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TFI’s national small stock manager Paul Leonard said the contracts’ lowest price for Merino sheep is higher than the 2016 spring mutton contracts’ top price.
He said TFI’s spring mutton contracts have been very well supported over the last five years, mainly by South Australian producers, to the point where some weeks’ kill space have been closed within 24 hours. The contracts were released to all agents at 9am today and have traditionally provided about 60 percent of TFI’s sheep kill during that period.
“It gives us and the producers a bit of surety and the opportunity to plan the kill space.”
The contracts would also help producers planning to market early lighter lambs, Mr Leonard said. Stock agents have indicated to him that because it is significantly drier over the catchment areas than in previous years, this combined with the retention of older ewes for another lamb, meant most processors were expecting “a pretty significant run of mutton this spring.”
Mr Leonard said mutton market demand is strong, although it has been harder for processors to get markets to work with the higher sheep prices of the last 12 months than it has been for lamb rates.
“All processors are always selling into an easing mutton market as we come into the spring and summer, and our customers historically would also be looking for price relief as they traditionally do.”
Agents say contracts will meet strong saleyard competition
Agents said the TFI contracts for August and September delivery at TFI’s would provide a floor in the mutton market for the period and was “good money”, but was basically equivalent to the current sheep grid spot prices.
Pinkerton Palm Hamlyn and Steen agent Ray Jaensch said the contracts would would still meet strong competition from saleyard mutton prices and were unlikely to be an incentive for many producers to wean lambs earlier than normal.
“With where the job is at the moment, some of my clients thought it could have been a tad higher,” he said.
Landmark Naracoorte livestock manager Brendan Fitzgerald believed the August saleyard price for mutton would not change much from current rates.
“Until they get full-on into shearing, which is usually well into spring, and then we might see some more mutton come into the system.
“The physical job is not going to adjust much until a month or two later, in September-October, when you get a flush of lambs and a few people are starting to pull wool off.”
Mr Fitzgerald said South Australian producers had retained more older ewes for an extra lamb, and he believed there might be more mutton around in spring and summer than in other years.
“Maybe we might see a few more about.”
However, the TFI contracts would still find it difficult to compete with the expectation of physical market prices during August and September, he said.
Click here to read the TFI spring mutton contracts.