Lotfeeding sector hits new highs
31 August 2017
The June quarter 2017 saw cattle on feed reach 1.1 million head – a record high for the Australian lot feeding industry and the second consecutive quarter of more than one million head on feed. Largely driving the increase were lower grain prices and deteriorating seasonal conditions across the eastern states.
On the back of tighter grassfed cattle supplies and record numbers on feed, grainfed beef accounted for the highest proportion of Australian production on record. During the June quarter, 40% of cattle processed were grainfed, while the 2016-17 financial year share was 39% – considerably higher than the ten-year fiscal year average of 32%.
While cattle slaughter levels have been low, production volumes have been assisted by heavier carcases – largely underpinned by a higher percentage of cattle being grainfed. In 2016-17, the national average adult cattle carcase weight reached a new fiscal year high, at 293.21kg/head. Typically, being a predominantly grassfed based industry, deteriorating pasture conditions can lead to a decrease in dressed weights. However due to the lower price of grain for much of 2016-17, cattle have been retained on feed for longer, producing more beef per beast.
Grain prices recently recovered from the lows that were apparent in 2016-17, as global production eases from high levels. During August, however, grain prices have again started to decrease as low production forecasts were revised – although lot-feeding margins are likely to be lessened somewhat by the fall in cattle prices.
The difference between store and finished cattle prices appears to be driving a shift in cattle production systems, particularly in northern regions that are still affected by dry seasons. The dearer young cattle prices are enticing producers to turn off younger feeder type cattle rather than a finished product. This, combined with poor seasonal conditions dampening restocker demand, has seen supply available to feeders increase.
The proportion of Eastern Young Cattle Indicator (EYCI) eligible cattle (C2 & C3 yearlings and vealers sold through MLA reported saleyards in the eastern states) sold to feeders in August equated to approximately 39% of total throughput – up from the 37% purchased in August 2016. Meanwhile, restockers purchased 41% of EYCI eligible cattle in August, down from the 47% share they secured the same time last year.
Further supporting the lot feeding sector is the continued growth in demand for Australian grainfed beef in many key international markets. Shipments to Japan accounted for 52% of total Australian grainfed exports in 2016-17, at 129,000 tonnes swt – up 1% from year-ago levels. Limited supplies of grassfed beef, increased grainfed production and the reduction in tariffs on 1st April under the Japan Australia Economic Partnership Agreement (JAEPA) assisted growth in the latter half of the year, particularly.
The proportion of grainfed shipments to Korea reached a high this year, accounting for 20% of total grainfed beef exports. Volumes lifted 1% year-on-year, to 37,000 tonnes swt, as larger volumes imported in the first half of the year triggered the calendar year safeguard. Increased production of Hanwoo beef in Korea, increased competition from the US and issues with import finance slowed Korean imports throughout the second half of the fiscal year. Meanwhile, growth in volumes to China has been substantial, lifting 86% from the five-year average as a result of greater market access and growing demand.
Join myMLA today
One username and password for key integrity and information Systems (LPA/NVD, NLIS, MSA & LDL).
A personalised online dashboard that provides news, weather, events and R&D tools relevant to you.
Customised market information and analysis.
Already registered for myMLA?