New records for cattle on feed and grainfed exports
15 August 2018
Cattle on feed at the end of the June 2018 quarter rose to a record 1.12 million head, which was an increase of 94,777 head (or 9%) from the March quarter, and 3% higher than the previous record set in June 2017.
Grainfed beef exports over the aforementioned period achieved a new high of 74,932 tonnes shipped weight (swt), up 10% from the same period last year and the impact of record numbers of cattle on feed has been further reflected in the latest export figures, as grainfed exports in July totalled 28,145 tonnes swt – the largest month on record.
Robust export demand across all traditional grainfed markets during the June quarter continued with shipments to Japan and Korea both up 8% year-on-year. Volumes to China lifted 74% from year-ago levels to 12,653 tonnes (swt) which for the June quarter saw China overtake South Korea to become Australia’s second largest grainfed beef market in volume.
Cattle on feed
Deteriorating seasonal conditions throughout the June quarter contributed to feedlot cattle inventory reaching record levels, despite demand for feed grain rising and prices trending significantly higher. Wheat ex-Darling Downs averaged $381/tonne, while barley averaged $383/tonne, an increase of 48% and 58% year-on-year, respectively.
During the June quarter, feeder buyers accounted for 44% of EYCI eligible cattle, a modest decline from the March quarter as opportunistic restockers, with feed on hand took advantage of falling young cattle prices. However, feeder buyers have also been incentivised by declining cattle prices.
The domestic feeder steer indicator throughout the June quarter averaged 278.14¢/kg lwt – representing a 7% decline from the March quarter and 19% lower compared to the June 2017 quarter. Despite the fall in cattle prices, the surge in grain prices more than offset any input cost gains; however, finished cattle prices provided some support. The Queensland 100-day grainfed steer over-the-hooks indicator averaged 521¢/kg cwt in the June quarter, representing a decline of 4% (or 24¢) from the same period last year. Processor demand for quality finished cattle and robust Asian demand for grainfed product underpinned the support for finished prices.
Elevated demand and higher prices for grain will continue to pressure lot feeders, as will the ability to source suitable entry weight cattle. The average weight of EYCI eligible cattle purchased by feeder buyers in the June quarter was 360kg, a drop of 14kg on the previous quarter.
Overall, the feedlot sector continues to support Australian beef production - as challenging conditions hamper large parts of the country - evidenced with feedlots at 86% utilisation and a record number of cattle on feed.
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