By Angus Brown | Source: MLA, ALFA & Mecardo
The latest figures from Meat and Livestock Australia (MLA) and the Australian Lot Feeders Association (ALFA) show the numbers of cattle on feed are at new record highs. The figures to the end of June were a little before the latest boom in grain prices, with the main driver seemingly a lack of grass, rather than strong feeding margins.
The June survey posted numbers of cattle on feed at a record high of 1.12 million head. The new record is a solid 9% lift on the March quarter and 3% higher than June 2017. New records were set in Queensland, NSW and Victoria, although it was the 4% increase on last year in NSW which really drove the new high.
Figure 1 shows grainfed cattle marketings were up slightly (6%), but placements were much stronger, recording a 12% lift. Placements didn’t quite reach a new record, falling 2% short of the mark set in the second quarter 2017.
The dry weather in the June quarter drove more cattle into feedlots, with limited grass available for finishing. It wasn’t a record for grainfed marketings, however. In the June quarter last year 40,000 more grainfed cattle were marketed (Figure 2).
The coming quarter should see a new high record for marketings, as cattle currently on feed should be hitting the market in coming months. The historical seasonal trend usually has the September quarter as the peak of grainfed cattle supply and the dry this year will exacerbate this.
Feedlot capacity has continued to rise, moving to a new record just above 1.3 million head in June. Increasing numbers of cattle on feed has outstripped the rise in capacity. Feedlot utilization increased, matching the 86% hit last June (Figure 3). Feedlot utilization has never been higher than 86%.
As an interesting aside, assuming all cattle on feed were eating 12kgs per day at the end of June, 14,500 tonnes were being consumed per day. That is 432,000 tonnes a month and 1.3 million tonnes a quarter. No doubt cattle are making a serious dent in remaining grain supplies.
Key points
* The June cattle on feed survey puts numbers at a new record of 1.1 million head.
* Strong placements in Queensland and NSW were the main driver of increased feedlot numbers.
* Increased numbers of cattle on feed is likely to detract from grassfed supplies in the spring.
What does this mean?
More cattle on feed brings the supply of finished cattle forward and detracts from the grassfed supply later on. We are seeing this to an extent now, with Heavy Steer prices in southern states higher than grainfed cattle. Expect this to continue in the medium term.
For feeder cattle, the record numbers don’t seem to be dampening demand. Next week we’ll take a look at lotfeeder margins and we suspect there isn’t much in it at the moment. There is however, little alternative if we want finished cattle.
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