July 21, 2009

A resilient market and lower prices for inputs have helped increase the number of cattle in Australian feedlots in the second quarter of 2009, overcoming the influence of difficult markets overseas, the Australian Lot Feeders Association reported Tuesday (July 21).

The number of cattle in feedlots rose 10 percent in the second quarter to 743,543 from 677,805 in the first quarter, up 8.1 percent compared with the same period last year, according to a quarterly survey issued by ALFA and marketing concern Meat & Livestock Australia Ltd.

Grainfed cattle production was more competitive as a result of favourable feeder cattle and feed grain prices early in the second quarter and declining grass-fed cattle numbers due to normal winter trends, ALFA President Jim Cudmore said in a statement.

With an appreciating Australian dollar and continued hand-to-mouth buying from overseas limiting export growth, the strength of Australia's domestic beef market is significant, he said.

"Trading conditions are nevertheless still difficult with the global financial crisis continuing to dampen beef demand in export markets," he said.

MLA's chief market analyst, Peter Weeks, said export market results for grain-fed beef reflected softer consumer demand, difficult conditions for importers and traders, along with market disruptions arising from the return of US beef.

Australia is the second-biggest global beef exporter by volume after Brazil, with shipments of around A$4.5 billion (US$3.65 billion) annually. Overseas sales account for about two-thirds of domestic production. Around a quarter of the cattle slaughtered in Australia feed on grain.

Of the beasts on feed in the second quarter, 67 percent were destined for export compared with 73 percent a year earlier. Nearly all of the balance of beasts is destined for domestic consumption.