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Australia: Cattle On Feed Slip From Recent Trends

Published on 13 August, 2007, Last updated at 13:28 GMT
 
ALFA
13/08/2007

The number of cattle on feed nationally has fallen by 70,072 or 7.5% year on year to 870,025 head for the June 2007 quarter, compared with 940,097 12 months ago.

Compared with the prior quarter, the total number of cattle on feed dropped by under 1%. However year on year, cattle numbers on feed fell across all the major east coast states. Most notable was a drop of 78,713 or 16% for Queensland to 427,933 head compared with June 2006.

ALFA President Malcolm Foster said, “The result goes against the usual trend of an increase in cattle on feed between the March and June quarters. Since 1999 there has been an average rise of 7% for that three month period. The June result sees a halt to that trend.”

Mr Foster said that the slow down in growth of cattle numbers on feed related directly to the widespread lack of profitability that the industry is experiencing. “The local drought and impact of international biofuels demand have combined to keep grain prices high. Also, the escalation in the dollar this year has really started to bite on beef prices internationally.”


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For the June quarter the $A value against the yen was up 18% compared with a year ago. Grainfed beef exports to the major north Asian markets have fallen. The June quarter saw shipped tonnages to Korea down by 41% compared with the March quarter, with ongoing uncertainty around the USA’s re-entry and the high A$ the main causes. The strong $A has also impacted prices in Japan and grain fed tonnages fell by 16% for the month of June. One brighter spot was a lift in grainfed beef shipped to the USA.

Turnoff for the quarter, at 643,887 head, was down 2.2% compared with the prior quarter and this was also lower than 12 months ago. However, the fiscal year 06/07 turnoff was an all time record, at 2.67 million.

National feedlot capacity remains virtually unchanged at 1.124 million head. The survey found that 68% of cattle on feed at the end of June were destined for the export market and 31% for the domestic market, with 1% unspecified.

Mr Foster pointed out that, “Due to drought and tight cattle supplies, feeder cattle prices to date have not adjusted as might have been expected, given the other pressures in the market. However, once more cattle come forward in spring, feeder cattle prices would be expected to ease.” This would restore more confidence to the feedlot sector which has been weathering a rough trading period throughout 2007. “Under current conditions, if cattle prices do not adjust however, numbers on feed would be expected to come back further.”

MLA’s Peter Weeks said that feeder cattle prices for the June quarter came back just 2% on the prior quarter, at 176c/kg liveweight, and 8% year-on-year.

“Strong demand for feeder cattle was underpinned by improved seasonal conditions in the south and tighter numbers,” he noted.

Whilst in the first half of 2007 feed grain prices retreated about 5%-7%, average feed wheat prices for the June quarter still tracked 45% higher than the same period in 2006. Sorghum and barley prices averaged 52% and 75% higher.

“The upcoming winter crop harvest result will also be an important factor for the industry,” Mr Foster concluded.


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