Despite the global financial crisis, the latest ALFA/ MLA survey has indicated that the feedlot industry remains resilient with a 15% increase in cattle numbers on feed over the December quarter.
Australian Lot Feeders’ Association (ALFA) President Jim Cudmore stated that “the increase in cattle numbers from 622,689 to 719,379 and utilisation of feedlot capacity from 55% to 59% was largely the result of the decline in the Australian dollar, feeder cattle and grain prices”.
“Notably feedlot cattle numbers increased in all states with the majority of the growth (52%) in Queensland (as dry weather increased yarding numbers) followed by WA (20%), NSW (12%), Vic (11%) and SA (5%)”.
“Over the quarter the Australian dollar declined by 24% against the US dollar, 32% against the Japanese yen and 2% against the Korean won”.
“In addition, national saleyard feeder cattle prices averaged 4% lower than the previous quarter while feed grain prices declined by an average of 23% (due mainly to fuel price reductions and increased domestic and international supply)”.
“These factors have provided a much more positive outlook for lot feeders, but this has been tempered somewhat by the global financial crisis and its impact upon the demand for beef”. Meat & Livestock Australia’s Chief Market Analyst, Peter Weeks stated that “current conditions have stagnated beef trading and created worldwide beef demand uncertainty, with consumers ‘trading down’ to both cheaper proteins and beef lines”.
“The return of the US into our major export markets has also impacted upon the industry and, in combination with slower economic conditions, grain fed exports fell in 2008”.
“Grain fed exports into our major market Japan, declined 8% for the quarter and 13% for the 2008 calendar year”.
“Similarly, grain fed exports into Korea were down 10% for the quarter and 24% for the year”.
“In contrast, US beef exports into both Japan and Korea over the quarter lifted to their highest level since 2003”.
“Mr Cudmore continued, “with the Australian dollar and production costs finally more favorable to the industry, it is hoped that beef export demand rises in the not too distant future”.