Coles offers record $10 a kg for lambs in a bid to secure supplies

Coles strikes to secure lamb supplies with forward contracts of $10/kg

Sheep
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The great lamb supply squeeze is worsening with Coles offering record forward contracts of $10 a kg in August for new-season suckers.

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LAMB SCRAMBLE: Red hot demand and limited supply is pushing lamb prices into unchartered waters.

LAMB SCRAMBLE: Red hot demand and limited supply is pushing lamb prices into unchartered waters.

Supermarket giant, Coles, has taken the radical step of offering new-season lamb forward contracts for August of $10/kg dressed in a bid to secure supplies.

Record prices and ongoing drought are continuing to squeeze lamb turn-off with the scarcity likely to reach its peak in August.

The benchmark eastern trade lamb indicator (ESTLI) reached a record 919c/kg dressed on Monday, a rise of 26c in a week and 206c in the past 12 months.

Analysts are not sure how high lamb prices can go before buyers are forced to raise the white flag.

Domestic lamb buyers and retailers are having to compete against red hot export markets, headed by China and the US.

Coles is offering a minimum $10/kg for the five weeks from July 29 until August 26 for new-season lambs weighing 18-26kg carcase weight delivered to Colac, Victoria.

SECURING DELIVERY: Supermarket giant, Coles, is offering forward lamb contracts of $10 a kg in a bid to maintain supplies during August.

SECURING DELIVERY: Supermarket giant, Coles, is offering forward lamb contracts of $10 a kg in a bid to maintain supplies during August.

The supermarket is offering a minimum $9.80/kg for the same lambs delivered to Gundagai, NSW, for the four weeks from August 5 to August 26. However, two of those weeks, August 12 and August 26, are already closed.

Coles will only purchase lambs in minimum lot sizes of 200 with a maximum wool length of less than two inches (5.08cms) and must be sired by a terminal sire.

The supermarket giant is also offering attractive forward contracts for shorn lambs for late July and August delivered Colac, Vic, and Gundagai, NSW, with prices ranging between ($9 and $9.50/kg).

All the key eastern states daily sheep price indicators are continuing to climb with the heavy lamb indicator at 963c, up six cents in a week, and the Merino lamb at 856c, up three cents over the past week.

Lamb and sheep slaughter for the week ending July 5 were well below rates on the same week last year although 48,608 sheep were sent to abattoirs in drought-hit NSW, 46pc up on year-ago levels.

Rabobank senior analyst (animal protein), Angus Gidley-Baird, said prices were now in rarefied air but could push even higher before the flow of new-season spring lambs increased supply.

He said with low scanning and low lambing rates in drought-hit areas, reduced new-season lamb numbers this year were inevitable.

Mr Gidley-Baird said many processors would respond to the reduced availability of sheep and lambs this month to do regular maintenance which may also help take some heat out of the market.

NAB Agribusiness was unsure if lamb prices could continue rising beyond current record levels but said a good southern winter could potentially disrupt the spring lamb flush as producers looked to rebuild flock numbers.

The story Coles offers record $10 a kg for lambs in a bid to secure supplies first appeared on Farm Online.

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