October 29, 2004

Australian Cattle on Feed at Record High

The number of cattle on feed hit a record high of 758,981 head as at 30 September, up almost 25% compared with the same period last year. The increase was driven by strong demand from export and domestic markets, according to the results from the quarterly Australian Lot Feeders' Association (ALFA)/Meat and Livestock Australia (MLA) survey.

Feedlot capacity also reached a record 979,777 head, nearly 7% higher than the same quarter last year.

The majority (58%) of the cattle on feed were destined for Japan, where demand for Australian beef has shown a significant rise following the BSE-induced ban on US beef imports. The number of fed cattle headed for this market reached a record 442,143 head in the September quarter, 7% above the record set in September 2001. Grainfed beef exports to Japan likewise reached a record 47,400 tons sw, jumping 16% on the record June quarter result.

With a greater share of cattle on feed destined for the Japanese market - growing 6 percentage points from the previous September quarter ¨C the proportion destined for the domestic market correspondingly fell from 40% to 33%. However, the 247,326 head of cattle produced for the domestic market was slightly higher than the June quarter (up 2,238 head). A record of 34,383 head was also destined for the Korean market, representing the third-largest destination for cattle on feed during the September quarter.

Further expansion of the numbers of cattle on feed in the December quarter is possibly limited following the easing in export prices to Japan since September and continued high feeder steer prices. This week's framework for the resumption of trade between the US and Japan has failed to alleviate uncertainty over the timing and conditions of any re-entry of US beef into Japan and Korea.