Reflecting marginally improved trading conditions on the domestic market, the numbers of cattle on feed increased by 3% since the December quarter according to the March ALFA/ MLA survey. However there has been no improvement on cattle numbers on feed for the export market with the increase largely driven by the need in Western Australia to finish cattle in feedlots due to normal dry summer conditions.
Australian Lot Feeders’ Association (ALFA) President, Malcolm Foster said “a 23% reduction in sorghum prices along with a 17% reduction in barley prices over the quarter helped offset increases in feeder cattle prices and a resilient Australian dollar”.
“Regardless, trading conditions remain tight and it is not surprising that cattle numbers as a proportion of feedlot capacity remain at 51% - the same as the December quarter. This is down from 77% at the same time last year”.
“The survey indicated that the larger feedlots in Western Australia and New South Wales drove the overall cattle number increases while the majority of feedlots in Queensland, Victoria and South Australia continued to experience reductions”.
Manager for Market Information and Analysis at Meat & Livestock Australia (MLA), Peter Weeks stated that “grain fed exports to Japan, Korea and the US continued to decline with 22%, 27% and 52% reductions compared to the same period in 2007”.
“Nor has there been any improvement in the numbers of cattle on feed for export markets, which remained at 417,000 head at the end of March, down almost 30% on the previous year”.
“Beef demand in Japan and Korea is being constrained by increased competition from the US and higher prices for Australian beef - primarily due to decreased production and high grain costs. The decline in US grain fed exports is due to tight supplies, lacklustre demand and the high Australian dollar”.
“The small improvement in numbers of cattle on feed in the March quarter will benefit predominantly domestic consumers, with cattle on feed for this market up 15% on December, to 184,000 head (though still 30% down on a year earlier).”
Mr Foster continued “lot feeders remain hopeful that increased wheat plantings throughout the world over the next few years will help offset the price impact of global stock shortages and ethanol driven demand”.
“In any event grain and food prices will continue to increase if Governments throughout the world maintain assistance for the grain derived ethanol industry, Mr Foster concluded”.