April 21, 2010

Australian feeder cattle decline during March quarter

Cattle numbers on feed in Australia have reduced by 8% to 711,198 head as a result of an increase in grain and feeder cattle prices, the strong Australian dollar and increased US competition in major overseas markets, according to reports by Australian Lot Feeders' Association (ALFA).

The slight increases in cattle numbers on feed in southern states were more than offset by the 10% and 12% reductions in Queensland and NSW, said ALFA President Jim Cudmore.

"Sorghum prices increased by 15% on-year due to low summer crop expectations, while good January and February rains in Queensland and NSW encouraged producers to hold onto feeder cattle leading to reduced supplies and buoyant domestic steer prices," Cudmore added.

The increases in cost of production were aggravated by the persistently strong Australian currency (36% higher than the March 2009 quarter) and increased US competition in both the Japan and Korean markets thereby discouraging grain-fed cattle placements for the export market, according to reports.

Meat & Livestock Australia's (MLA) chief economist, Peter Weeks, said the on-year results for grain-fed product in Australia's key markets were mixed, with exports 4% lower into Japan and 53% higher into Korea.

"Unfortunately, the combination of a rise in the Australian dollar and aggressive US marketing campaigns, enabled the US to increase imports into Japan and Korea by 39% and 23% respectively," Weeks added.