November 9, 2011

 

Australia's feedlot numbers fall 10%

 

 

Cattle feedlot numbers reduced by 10% or nearly 79,000 head during the three months to September 30 in Australia, according to the quarterly feedlot industry survey.

 

While some industry stakeholders were puzzled by the result, they said it might be explained by June figures that stayed higher than anticipated as cattle were still being washed out of the system. Similarly, the late September timing of the survey may have come too soon to catch the recent improvement in feedlot profitability. 

 

The survey showed there were 713,728 head on feed on September 30, down 7% on this time last year.

 

In Queensland (QLD), cattle numbers on feed were down 7% to just below 408,000, while New South Wales (NSW) was down 6.8% to about 234,000. Victorian feedlots were down more than 25% to 45,600 head, and South Australia (SA) feedlots dropped 10% to 23,300 head.

 

Lot feeding in Western Australia (WA) also reached historically low levels, declining to just 3151 head, from 15,400 head in June and 22,200 head this time last year. That decline in numbers drove capacity utilisation rates in WA down to just 3% of capacity, while nationally, the utilisation figure sits at 57%.

 

Equally concerning was the decline in feedlot capacity evident in the survey, down more than 50,000 head nationwide by the end of September, and experienced in all states bar Victoria, where there was a scant rise of a few hundred head.

 

The national capacity to feed cattle fell from 1.305million head in June to just over 1.25million at the end of September.

 

QLD was the worst hit, falling 30,000 head to 614,800 head. The declines were seen in all size categories in the State, with feedlots less that 500 head declining about 3000 head in capacity; lots 500 to 1000 head down 3000; lots 1000 to 10,000 head losing 4000 capacity; and lots above 10,000 head in size losing 20,000 head in capacity.

 

In southern states, NSW feedlot capacity (across all sizes) fell 9000 head to 409,400; while in SA, capacity was down about 2000 to 30,800.

 

In percentage terms, WA was the worst affected, where capacity was reduced by 12%, or 12,000 head during the past three months to September to 94,140 head.

 

AusMeat's Craig Firrell, officer in charge of the National Feedlot Accreditation Scheme, confirmed that there had been a 'significant number' of voluntary suspensions and cancellations of accreditations over the past six months, particularly among smaller lot feeders.

 

The closures coincided with a period of poor feedlot profitability, as seen in Beef Central's fortnightly breakeven calculations.

 

Australian Lot Feeders Association president, Jim Cudmore, said the survey outcome was the result of the confluence of the high Australian dollar, strong feeder cattle and grain prices along with continued global economic uncertainty.

 

"The Australian dollar for the quarter was up 16% against the US$ on-year, feeder cattle up 6% while feed grain prices were at similar levels," he said.

 

"Feeder cattle prices reflected the ongoing good seasonal conditions (and hence re-stocker demand for young cattle) while grain prices over the quarter remained strong due to mainly tight world corn stocks," Mr Cudmore said.

 

Meat and Livestock Australia's market information and analysis manager, Tim McRae, said grain-fed exports to Australia's major markets for the quarter were mixed, with a 19% on-year decline to Japan and a 15% rise in Korea.

 

"Total grain-fed beef exports were 54,524 tonnes for the quarter, a fall of 8% on-year, although 2% higher than the previous quarter," he said.

 

Total chilled grain-fed shipments declined 9%, to 33,476t, while frozen grain-fed exports fell 5%, to 21,048t.

 

With the fundamentals underlying the current economic uncertainty and dollar pressures unlikely to subside, lot feeders and exporters will be hopeful of further price improvements in the last quarter, Mr McRae said.