February 16, 2011

 

Australia's grain-fed cattle figures further decrease

 

 

Australia's lot feeders met with difficult trading conditions during the December quarter, with a recording of a further 28,000 head decrease in cattle figures on feed.

 

This was according to a survey by the Australian Lot Feeders Association/Meat and Livestock Association.

 

Australian Lot Feeders' Association (ALFA) President Jim Cudmore commented that "the reduction in cattle numbers on feed was experienced in all states (except WA) as declines in lot feeder margins and international competitiveness discouraged grain fed cattle placements".

 

He further stated that increases in the price of feeder cattle, a strong and less competitive Australian dollar against the US and grain prices significantly higher year on year (despite widespread rain induced downgrading of the winter crop) have all combined to negatively impact upon trading conditions.

 

With widespread rain and flush pastures experienced throughout the eastern seaboard, the market for suitable feeder cattle strengthened over the quarter due to restocker demand, the ability to finish grass fed stock at higher live weights and interrupted supply to feedlots and processors.

 

In contrast, the higher cattle on feed numbers in WA reflected the inability of grass fed producers to finish cattle with the normal summer dry spell extending their drought period.

 

For the December quarter, indicative feeder cattle prices averaged 14-17% above the corresponding period in 2009 with domestic steers peaking at the highest level since February 2006.

 

Whilst heavy rain downgraded areas of the eastern seaboard winter crop (thereby increasing feed grain supplies), feed grain prices across the Darling Downs and Riverina nonetheless averaged 8-15% and 9-26% above the same period last year.

 

"Increased US competition in our major markets, assisted by a weak dollar compared to Australia, resulted in their beef imports increasing markedly".

 

Tim McRae stated that "Japanese and Korean imports of US beef for the quarter surged 43% and 37%, respectively on-year - with US trade to Japan the highest since the BSE induced trade ban in late 2003".

 

It was also stated that Australian grain-fed beef exports to Japan during the quarter contracted 2% year on year, whilst increasing 15% in Korea over the same period.

 

"The overall decline of 2% into Japan for the quarter was due to a 13% decline in chilled grain-fed beef exports for the period, while the increase into Korea was due to strong consumer demand, especially for imported beef, and domestic slaughter levels tracking at historically low levels," he added.