Continuing unfavourable market conditions has led to a further 14% reduction in cattle numbers on feed since the previous quarter results according to the December ALFA/ MLA quarterly survey.
Australian Lot Feeders’ Association (ALFA) President, Malcolm Foster said "the collective impacts of high grain prices, strong feeder cattle prices and a persistently high Australian dollar were continuing to ensure lot feeder margins were low or non-existent".
"Feed wheat, sorghum and barley prices were on average 28% higher in the December quarter while year on year the Australian dollar averaged 16% higher against the US dollar and 11% higher against the Japanese yen."
"However on a positive note, feeder cattle prices declined by 12% compared to the September quarter, grain prices weakened from record levels in October and feedlot capacity levels continue to increase despite the current market conditions".
"Regardless lot feeders over the December quarter were forced to further reduce cattle numbers on feed with utilisation of feedlot capacity decreasing from 59% to 51% over the survey period. This is down from 83% from the same time last year with cattle numbers on feed now similar to those experienced in 2000".
"The survey also indicated that while the reduction in numbers was felt across all feedlot sizes, the larger feedlots (over 10,000 head) in Queensland and NSW experienced the highest percentage decline over the survey period (20% and 19% respectively)".
Manager for Market Information and Analysis at Meat & Livestock Australia, Peter Weeks stated that unsurprisingly "grain fed beef exports to Japan and Korea declined 18% and 10% in the December quarter compared to the same quarter in 2006, while exports to the US declined by 45% during the December quarter alone".
Mr Foster continued stating "while current conditions are still unfavourable, there are more positive signs emerging and feedlots have the ability to react quickly to changing market conditions".
"We are also hopeful that Australia’s sorghum crop and winter grain harvest address current domestic grain stock shortages and that current export reductions in Japan and Korea will lead to price increases given Australia’s current market presence there".
"We also hope that world grain and food prices are not further artificially inflated by US Government support for grain derived ethanol production and that the Australian Federal Government does not repeat the same mistakes here".
"To this end we call on NSW Government to rescind its legislation mandating ethanol content; current grain stock shortages clearly indicate that there is insufficient grain in eastern Australia, Mr Foster concluded".