POOR export returns are pushing increasing numbers of lot-fed cattle on to the domestic market, according to the latest survey by the Australian Lot Feeders Association and Meat and Livestock Australia.
It's a situation that is unlikely to change in the short term, says ALFA president Jim Cudmore.
For the December quarter, the survey found that although cattle numbers on feed rose nationally to 770,000 head, only 65.7 per cent were being fed for export markets, compared to 73.8 per cent for the corresponding 2008 quarter.
Mr Cudmore said much of the increase was driven by deteriorating pasture in southern Australia and a decline in grain and feeder cattle prices.
Mr Cudmore said that unless export returns improved, it would be difficult to see any further increase in cattle feeding in the short term.
Numbers of cattle on feed peaked at 950,000 head in June 2006, but dipped to fewer than 600,000 head in December 2007 as the result of extremely high feed-grain prices.
On the positive side, Mr Cudmore said, average feed grain prices were 6 per cent lower for the quarter, while saleyard feeder cattle prices were 10 per cent cheaper on average in the December quarter.
The ALFA survey coincides with the latest monthly United States Department of Agriculture cattle-on-feed report, which said there was a 6 per cent fall in the number of cattle in US feedlots despite a fall in feed grain prices.
World feed grain prices were likely to be kept in check, with the US reporting a record 367.7 million-tonne corn crop last year, up 9 per cent on 2008.
The ALFA survey also found feedlot capacity was at 61 per cent for the quarter, compared to 57 per cent the previous year.
Victorian feedlots, with a total capacity of 80,419 head for the quarter, were operating at 69 per cent of capacity, considerably up on the 48 per cent for the corresponding quarter in 2008.
Feedlot consultant and manager of the Wahroonga Beef feedlots at Meredith and Winchelsea, Lachlan McKenzie, said his facilities were running at 100 per cent capacity on a minimum of 60-day feeding programs but "the margins were extremely tight".
Mr McKenzie said although he was operating to forward priced domestic contracts, he wondered how a lot feeder could make money on the prices paid at the recent weaner sales.
Meat and Livestock Australia chief economist Peter Weeks said export demand remained weak for the December quarter, particularly with the Australian dollar strengthening against the Japanese Yen and Korean Won by 26 per cent and 16 per cent respectively.
But despite the high Australian dollar, Mr Weeks said, last year Australia lifted its export of grain fed chilled beef by 10 per cent from the low levels in 2008.
