Australian cattle on feed grows 16 percent in 4Q

The beneficial effects of lower prices for grain and feeder cattle and a weaker currency were more than enough to overcome the negative impact of the global financial crisis and lift the number of cattle in Australian feedlots in the fourth quarter of 2008, the Australian Lot Feeders Association reported Monday (Jan 19).

 

The number of cattle in feedlots rose 16 percent from the previous quarter to 719,379 in the fourth quarter, and was 23-percent higher than the same quarter a year earlier, according to a quarterly survey issued by ALFA and marketing concern Meat & Livestock Australia Ltd.

 

ALFA President Jim Cudmore said the Australian dollar declined in value in the fourth quarter by 24 percent against the US dollar, 32 percent against the Japanese yen and 2 percent against the Korean won.

 

Feeder cattle prices fell 4 percent on-quarter and feed grain prices fell 23 percent on-quarter, reflecting fuel price reductions and increased domestic and international supply, he said.

 

"These factors have provided a much more positive outlook for lot feeders, but this has been tempered somewhat by the global financial crisis and its impact upon the demand for beef," Cudmore said in a statement.

 

Australia is the second-biggest global beef exporter by volume after Brazil, with exports of around A$4.5 billion (US$3 billion) annually. Exports account for about two-thirds of domestic production. Around one quarter of the cattle slaughtered in Australia are fed on grain.

 

Peter Weeks, MLA's chief analyst, said the global financial crisis has prompted consumers to trade down to cheaper protein sources and cheaper cuts of beef.

 

The return of US products to the major Australian export markets of Japan and South Korea also hurt the industry, with Australian grainfed exports to South Korea in the fourth quarter down 10 percent from the previous quarter and down 24 percent during the full year, while US beef exports to Japan and South Korea in the fourth quarter rose to their highest level since 2003, he said.

 

With a weaker currency and lower production costs, Cudmore said it is hoped that demand for beef exports rises in the not too distant future.

 

The outturn of cattle from feedlots of 2.13 million head in 2008 fell 11 percent from the previous year.

 

Of the cattle on feed in the fourth quarter, 72 percent were destined for export, with the rest likely to be slaughtered for the domestic market.