Contract lambs for June/July delivery tip the $8/kg mark underpinning the entire sheep job

Lambs contracted for delivery in June/July top the $8/kg mark. Photo / Bevan Conley

The sheep market continues to be the golden goose for farmers with contract prices for supply in June/July tipping $8/kg.

The announcement in late March of contracts in the $7.90/k-$8/kg range has underpinned the store lamb market, pushing value up to allow hill country farmers to also benefit from the lucrative contracts.

Surprisingly, there are still farmers out there who continue placing all their eggs in the one basket, gambling on the spot market to pull them through.

Independent Whanganui farmer, stock market commentator, livestock trading company owner, rural real estate agent and Horizons regional councillor David Cotton suggests there are alternatives.

David Cotton

"I'm always a little surprised by how many farmers, when offered a contract price at any level, say 'but the spot market may go higher'.

"And yes, it might but I'm a strong believer in locking in a guaranteed margin on a percentage of your killing livestock, and hey, I hope the market does go higher then I will kill our uncontracted livestock at that price which will give me a very good average sale price," Cotton said.

"But the best part of a contract for me is the certainty of locking in a profit, I know the banks like it.

"I see I can't lose if the market goes down, the contract still has the effect of lifting my average sale price, win-win.

"The contract lamb schedule over March was $7.05/k-$7.10/k, that beat the hell out of the spot market at $6.50/k/6.75/kg."

The good news continues with mutton at $5.40/kg with talk of a $6/kg mutton price over the winter.

"I love the knowledge you pick up down at the sale yards, there is always someone that knows the market is going to go down (often buyers) and others that have heard the markets are on the way up (often vendors) and then there's the group that just don't know (livestock agents)," Cotton said.

"With a strong lamb schedule and the mutton price at these levels it will put a rocket under the in-lamb ewe price this winter, watch this space.

"Meanwhile, the rain gods delivered 145mm at Kai Iwi for March, 100mm of that in the last week. With good ground temperatures the grass has bolted, the only concern is whether this week we get hot days to enable the spores to grow and the dreaded eczema will raise its ugly head."

The cattle schedules have gained a few more cents over the past two weeks with lifts in pricing across the board - ox, bull, cow, and local trade.

"Once over the three out of four short kill weeks in April (Easter-Anzac) I would expect another lift which I hope will give the store cattle a bit more horsepower," Cotton said.

"The only certainty I know of in life is death and your Horizons rates which are set to rise 30 per cent over the next three years and 51 per cent over the next 10 years. The council debt was forecast to be nil by 2028 in the Long-Term Plan of 2018.

"But watch out, the new LTP plan released last week has debit going to $100 million.

"If you want to change this please make the time to read the consultation document that hit your mailbox last week, make your views known and pray the livestock prices will double over the next few years so you can pay your rate bill."