Cattle on feed hits a new high
10 December 2018
Cattle on feed at the end of the September 2018 quarter surpassed the previous record set in the June quarter, rising to 1.13 million head, an increase of 6,000 head (or 1%).
Licensed capacity also climbed to a new record of 1.3 million head, with global demand for high quality grainfed beef supporting investment in the sector.
The nation’s feedlots continue to play a crucial role in smoothing fluctuations in supply. In a year marked by prolonged dry conditions in eastern Australia, consistently high numbers on feed have mitigated the risk of production variability.
Over the past year, lot feeders faced significant profitability headwinds, primarily in the form of rising grain costs. During the September quarter, wheat ex-Darling Downs averaged $433/tonne, while barley averaged $424/tonne, an increase of 36% and 37% year-on-year, respectively. While prices have eased slightly over the past two months, prices for some grains remain close to 10-year highs.
Grainfed beef exports benefited from growing global consumption as well as a depreciating A$. Grainfed shipments to Korea and China set new records during the quarter, while Japan also recorded strong growth.
September quarter export volumes to Japan lifted 9% year-on-year, to 41,150 tonnes shipped weight (swt), while exports to Korea rose 6%, to 16,734 tonnes swt. In our third largest market for grainfed beef, China, quarterly export volumes rose 184% on the same period last year, to 13,768 tonnes swt.
Export demand underpinned strengthening prices for grainfed finished cattle during the past year. The Queensland 100-day grainfed steer over-the-hooks (OTH) indicator averaged 533¢/kg cwt in the September quarter, an increase of 3% (or 16¢) year-on-year. On Monday, 19 November, the indicator reached 573¢/kg cwt, the highest level since February 2017.
In contrast to finished cattle prices, the store market has been more subdued, reflecting the challenging season.
The national saleyard feeder steer indicator averaged 279¢/ kg live weight (lwt) during the September quarter, up 1% on the previous quarter, but down 9% compared with the same period last year.
Rainfall across parts of eastern Australia during October lifted the market during spring. By 19 November, the feeder steer indicator had risen to 299¢/kg lwt.