Forward price sales launched for AuctionsPlus lambs

26 Jul, 2016 06:14 AM
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AuctionsPlus' August 5 lamb sale is shaping up to have about 5000 to 7000 old and new season lambs on offer to spot market and forward contract buyers.
AuctionsPlus' August 5 lamb sale is shaping up to have about 5000 to 7000 old and new season lambs on offer to spot market and forward contract buyers.

Internet livestock marketing service AuctionsPlus is pushing its sales horizons further, kicking off forward contract lamb auctions next week.

Flushed by a positive response to trials with forward sales for feeder cattle in the past year, the online auction service is now giving producers and agents the chance to offer store or prime lambs for sale next week for either spot delivery or delivery several weeks or months down the track.

The August 5 sale is shaping up to have about 5000 to 7000 old and new season lambs on offer from their paddocks.

Another three online sales have been scheduled for August 23, September 9 and September 20.

Meanwhile, more forward price contract sales for young cattle in the 380 kilogram to 500kg range are planned to give producers a “market discovery” alternative to saleyards or direct sale negotiations with feedlots or processors.

“We’re pretty excited about the interest we’re getting and I’d expect we’ll also continue with more lamb sales in spring,” said AuctionsPlus business development manager, Ciaran O’Gorman.

“The ability to forward plan and operate counter cyclical to the market should reduce volatility in the spring lamb trade, evening out business cash flows for producers and buyers.”

Buyer inquiry from lamb processors and lot feeders was likely to be similar to buyer interest at this month’s feeder cattle sale.

It attracted 47 bidder registrations from processors and lot feeders for an offering of 1500 young steers and heifers, with sales settled on delivery contracts stretching into October.

An earlier feeder sale had tested the market in June, attracting 500 head.

A further three sales will now be scheduled into September.

“We’ve had good interest from lamb producers wanting a chance to manage the flow of stock into markets before a new season flush hits in spring,” Mr O’Gorman said.

“Given the significant investment in production these days they want more certainty in their budgets, not price fluctuation risks.

“For buyers, forward contracts provide a procurement tool which also helps them to forward plan their kill numbers.

“Typically when stock numbers are short - as they have been of late - it’s a good time to have forward supply contracts locked in.”

Given abattoirs were scaling back operations in response to tighter beef and meat sheep supplies, forward contract options would help meat buyers and lot feeders plan ahead to secure slots with those kill chain services still available.

Mr O’Gorman said AuctionsPlus assessors would undertake usual pre-sale inspections based on the current condition of lambs and vendors’ intentions to prepare set numbers of stock ready for delivery at a future date at predetermined weights and fat scores.

“Buyers will be buying based on the terms the vendors and their agents have decided is possible to fit the seasonal conditions at the time,” he said.

“Importantly, producers are selling to a national audience of buyers and attracting maximum competition.”

As with any agricultural forward marketing tool, producers were urged to make forward contract commitments to buyers in staged increments to avoid exposing themselves to too much price risk or deteriorating seasonal conditions.

“A seller’s commitment to specific weight gains should also be made with enough room to move to accommodate usual variations in seasonal conditions at home,” Mr O’Gorman said.

Landmark’s national livestock director, Mark Barton, believed forward contracts would be particularly valuable to store lamb buyers finishing stock for regular consignments to processors.

“I think the industry desperately needs this sort of open market forward planning option to help with consistency of supply,” he said.

“I see it being a great help in reducing grass seed contamination risk for the store lamb purchaser.

“Getting stock lined up early and into his custody before the grass seed problem hits in October means the bloke finishing lambs won’t have buy from breeders later in the season when the lambs they’re turning off may already be infested with seed.”

Mr O’Gorman said last year’s hot, dry finish to the spring in southern Australia, particularly Victoria, was one motivating factor behind AuctionsPlus pushing its future delivery contracts this year.

When a rush of stock hit the market last spring AuctionsPlus gave vendors extra market exposure outside the traditional saleyard and direct to works options by running several special internet lamb sales.

“Having forward contracts available this year should be even more useful to sellers, locking buyers in early to beat the crowd,” Mr O’Gorman said.

“Nobody likes getting caught in an over-supply situation, particularly if the season turns tough.”

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FarmOnline
Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media
Date: Newest first | Oldest first

READER COMMENTS

John Niven
26/07/2016 8:00:12 AM

Be very careful with delivery specifications. A long story but fat lamb futures were closed down in the early 1980's because of rorts.

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