THERE are two types of lamb producers at the moment - those who signed forward contracts and those who didn't.
It's easy to pick those who signed on the dotted line.
They are the ones who are smiling.
While prices plummet in the saleyards, they know their lambs are sold at up to 650c/kg carcass weight.
They knew that a couple of months ago too, so have been able to comfortably sit out the wildly fluctuating saleyard situation during the past few weeks.
There could perhaps be no better public relations exercise for signing a forward contract than the way the contract-versus-saleyard price has played out this year.
Those who opted to agree to prices which, to most of us, looked pretty good at the time, are now probably at least 150c/kg better off than they would have been if they sold in the saleyards.
Yet this is not an anti-saleyard rant. Saleyards are a valuable, efficient clearing house for the huge stock numbers produced annually.
But when a producer takes their stock to the saleyards, they have to be prepared to accept what the market is paying.
At the moment this is at a significant discount to what contracts have paid.
At Bendigo on Monday, seasoned National Livestock Reporting Service reporter Rob Huntington quoted heavy lambs making 450-490c/kg.
At the lower end, that's a 200c/kg difference to the contract price for June. At the upper end, it's still a discount of 160c/kg.
If a producer had 1000 lambs, and they weighed 30kg, then that calculates out to at best a $48,000 discount, and at worst, $60,000 less than what the same lambs could have made if contracted.
It begs the question - why were some producers unwilling to sign? One agent said there were a number of reasons.
Primarily, there is the fear in general about contracts. Some of his clients have been burned by grain contracts in the past, and don't want to have anything to do with them.
Another reason is the concern producers may not be able to supply the contract specifications.
But he was able to persuade many of his clients to go down the contract route this year because the specifications from the two major companies - T and R Pastoral and JBS Australia - were so broad.
Being able to supply lambs at anything from 20-32kg was one of the keys to convincing them they could do well out of the contract.
And then there was the wild card - did the early announcement of such big rates mean the market was going to go even higher?
A year earlier, when T and R Pastoral released its contracts at 500c/kg, producers questioned if the prices on offer were enough to tempt them to lock in a forward contract. That proved right - as lambs went well over the 600c/kg-mark.
So, hope, optimism, greed, call it what you like, may also have played its part in the willingness or not of clients to sign up.
The agent spoke on the condition of anonymity. He didn't want to be seen as a "told you so", and he also wants to do the best by clients who chose not to contract lambs.
But he did say that he has plenty of people who are pretty happy with the agreements they signed.
"I've had reactions like 'Thank goodness you made me sign up' from blokes who are now getting 640c/kg, to 'why didn't you sign it for me' from blokes who didn't sign a contract and are now getting rates less than 500c/kg carcass weight," he said.
"The contract prices were released when the lamb market was red hot and the processors needed lambs but even then, you'd have to say the rates looked good." The agent said producers who bought in store lambs at $120 or more would look at making little profit from the venture if they had opted to sell in the saleyards.
"On my calculations, they could have lost $40-$50 on it (the decision not to sign contracts)."
The one bugbear that raises its head each time with contacts is their lack of correlation with the market place.
It would be great if a forward contact could be drawn up with a baseline figure in it, and some other factor which tied in with what was happening in the saleyards.
In a year like this, granted, it would draw the contracted rate down, but last year, it would have drawn it up.
Whatever way it's done, contracts allow processors to firm up supply, and producers to firm up returns.
What has to be worked out is how this can be fair to both parties. Regardless, this year's experience will certainly have done no harm to lamb contracts.
