Grainfed exports reflect fed cattle supply

09 March 2016


Australian beef exports in February were back 14% year-on-year, reflecting the continued decline in cattle slaughter over the past six months. However, the fall was driven by grassfed product, with grainfed exports in February actually lifting 13% year-on-year, to 23,376 tonnes swt.

In fact, combining January and February figures, this year was the second strongest start to grainfed beef exports on record (2007 is the standing record when the US has restricted access into Japan following a BSE outbreak).

January and February grainfed beef exports to:

  • Japan were 17,383 tonnes swt, back 20% year-on-year
  • Korea were 8,057 tonnes swt, up 62%
  • China were 2,803 tonnes swt, up 102%
  • The EU were 2,846 tonnes swt, up 24%

The trade echoes the December quarter number of cattle on feed, which were a record 997,765 head.

Over the past five years Australia has turned off 75-79% of the December cattle on feed in the March quarter (turnoff figures would also include cattle which entered feedlots after the start of the March quarter and were turned off in the same quarter). If history repeats itself, the record number of cattle on feed in December implies Australia should record 730,000-790,000 head turned off in the March quarter. Accounting for the lower overall cattle slaughter that has occurred already this quarter, the grainfed component of the kill will likely breach 40% - well above the five-year average of 32%.

This will flow through to production and exports, and more than likely result in grainfed beef shipments remaining more buoyant than grassfed beef.

The supply dynamic is also reflected in recent over-the-hook prices. This week, the Queensland over-the-hook 100-day grainfed steer indicator was 17¢/kg cwt above the grassfed heavy steer indicator, while a year-ago the premium was 52¢/kg cwt and in 2014 it was 64¢/kg cwt.

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