Feedlot industry posts a record number on feed

Feedlot-cattle

Grainfed cattle turnoff peaked in the 2018-19 fiscal year, at 3.14 million head accounting for 39% of adult cattle slaughter.

2018-19 was a bumper year for the number of cattle on feed, with the latest ALFA/MLA feedlot survey results for the June quarter posting yet another record, at 1,147,400 head.

Cattle on feed were sustained over 1.1 million head for the entire year, which largely reflects the drought-induced outflow of cattle and declining restocker interest.

The lot feeding sector continues to support national beef production and has been a critical link in the supply chain during the prolonged dry period but is also increasingly underpinning valuable relationships with key export markets.

The June quarter results represented an overall increase of 1,830 head, or 0.2%, from the previous quarter with increases recorded in Victoria and WA.

Queensland and NSW experienced very modest decreases in numbers on feed, down 0.1% and 0.7% from the December quarter respectively; while SA experienced a 4.8% decline in numbers on feed.

Unsurprisingly, grainfed cattle turnoff peaked in the 2018-19 fiscal year, at 3.14 million head accounting for 39% of adult cattle slaughter.

Despite record levels of cattle entering feedlots, grainfed cattle turnoff as a percentage of total slaughter remained steady on the year prior and just shy of the 40% mark achieved during 2016-17 when rebuild efforts meant the availability of adult cattle for slaughter was extremely tight.  With record numbers of cattle on feed, grainfed cattle turnoff through Autumn and Summer will continue to push new levels, as has been the case through the winter months, with robust first quarter numbers on feed evident in grainfed slaughter and subsequent grainfed exports in recent months.

Grainfed exports for the 2018-19 fiscal year totalled 311,986 tonnes shipped weight (swt), easily surpassing the record established in the 2017-18 fiscal year.

Exports to Japan and Korea were stable on the year prior, while China was the driving force behind grainfed export growth, up 80% year-on-year.

China has become a major market for Australian grainfed exports, with Australian product becoming increasingly positioned towards the premium segment of the market, as South American suppliers increase volumes of lower-quality beef into the market.

Underlying growth from an expanding middle-class and the impact of African Swine Fever has driven demand for protein in China.

Feeder buyers continue to be the driving force in the cattle market while limited restocker interest continues.

Until widespread rainfall occurs, in NSW and Queensland in particular, the premium feedlot buyers have been paying over restockers will likely remain.

Despite rising feeder cattle prices and historically high grain prices, finished cattle prices continued to provide confidence to the sector.

As at 12 August, the Queensland 100-day grainfed steer over-the-hook indicator was reported at 592¢/kg carcase weight (cwt), up 13% year-on-year and a record high for the indicator. Domestic prices have continued to find support, largely underpinned by robust demand from export markets despite the ongoing drought.

With the expectation for a tighter pool of cattle towards the end of the year, there could be challenges sourcing feeder cattle and with any widespread rainfall the pool of available feeder cattle, as restocker buyers resurface, would shrink.

https://www.mla.com.au/prices-markets/market-news/cattle-on-feed-numbers-push-new-boundaries/

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