Farmers appear keen to supply prime lambs under contract, rather than sell on the spot market, and new contracts for next year indicate meat prices are expected to remain strong.
Silver Fern Farms reports it has exceeded its 12-month Backbone contract target of 10% of total supply in just two months.
Sales and marketing manager Glenn Tyrrell said Backbone-contracted lamb would contribute 20% of the company's lamb supply from May to July and 35% from the July to September.
"In certain weeks, forward contracts represent more than half our requirements, well ahead of our initial forecasts," he said.
The average weight of lambs supplied under Backbone was also rising, averaging 1kg heavier than those supplied on schedule.
SFF launched Backbone for lamb, beef and venison last October to secure a regular flow of stock, indicate price trends to suppliers and link them with the requirements of specific markets.
Traditionally, farmers have sold lambs on the spot market or to the highest bidder, but meat companies attribute this to problems plaguing the industry such as procurement wars, processing inefficiencies and difficulty supplying markets.
He said lambs were getting heavier and SFF had worked with customers to adapt their specifications to handle heavier lambs.
It cost the same to process a 20kg lamb as it did a 16kg lamb, but there were processing efficiencies the company was able to pass back to farmers, he said.
The collapse of international beef prices over Christmas caused SFF to cancel its Backbone contract.
It later revealed losses would have amounted to the company's total beef rebate.
Mr Tyrrell said the uptake of Backbone contracts for beef and venison was in line with expectations and reflected the longer rearing time for these two species, as well as uncertainty and volatility in the North American beef market.
The forward contract prices were from April through to March 2010, and indicated prices were expected to continue to firm compared with current schedules.
For a 17kg lamb, SFF was offering $5.10-$5.80 a kg under its Backbone contract, as opposed to the present schedule of about $5.
For a 21kg lamb, the Backbone contract price was $5.37-$6.20 a kg compared with $4.80 a kg at present.
The contract price for a 15kg lamb ranged from $4.70 to $5.48kg as opposed to the current schedule of about $5 a kg, while the specialist winter contract price was $5.50-$6.22 a kg.
SFF would pay $3.50-$4.50 a kg for a 320kg beef animal as opposed to the current schedule of $3.30 a kg, and for 320kg bulls, the contract was for $3.41-$4.35 a kg as opposed the current price of $3.40-$3.50.
Venison prices also appeared to be maintaining strength, with the Backbone contract for a 50kg animal ranging from $8.50 to $10 a kg as opposed to $8.30 a kg at present.
