The latest ALFA/ MLA survey has revealed a 10% decrease in cattle numbers on feed over the March quarter as the global financial crisis continued to dampen beef demand, particularly in export markets.
Australian Lot Feeders’ Association (ALFA) President Jim Cudmore stated that “the decline in total cattle numbers on feed from 719,379 to 650,026, and capacity utilisation from 59% to 52%, was not a surprising outcome given the prevailing market conditions”.
“The global financial crisis in particular continued to create uncertainty in the export market place, with buyers unwilling to commit to forward purchases and grain fed beef export prices falling”.“Cattle numbers on feed decreased mainly in New South Wales and Queensland, with the smaller lot feeding states of Victoria and Western Australia showing increases in line with normal seasonal patterns”.
“The results reinforced widespread industry sentiment that the December quarter results were an aberration that mainly reflected the turnoff of drought affected cattle from northern regions of Australia, and the opportunity feeding of new season grain to cattle in late 2008”.
“These northern cattle have now exited the feedlot system and have not been replaced”.
“Notably, there were positive influences for the sector over the last quarter with national saleyard feeder cattle and feed grain prices averaging 4% and 5% lower than the December quarter respectively, while the Australian dollar was lower against most trading partner currencies”.
Meat & Livestock Australia’s Chief Market Analyst, Peter Weeks stated that “financial and currency market volatility, a run-down in stocks and an increasing US presence continued to stagnate Japanese and Korean beef export demand, with grain fed beef exports to Korea, in particular, declining 25% in the March quarter”.
“However, there are grounds for optimism. Stocks of Australian beef in these markets are now depleted and along with reductions in the Australian dollar, and resultant low import and wholesale prices, the potential to compete strongly in these markets is improving”.
“The domestic market also remains one of the best markets for grain fed product, with the number of cattle destined for domestic consumption rising 18% since the last survey”.
Mr Cudmore concluded, “with costs of production more favorable compared to 2008, and with significantly underutilized capacity in the industry, the lot feeding sector is in a good position to rapidly respond when grain fed beef demand improves, both overseas and domestically”.