WITH the drop in feeder prices being matched by rising grain costs, it appears the desire to retain valuable export orders is dominating the cattle-on-feed story.
The latest lotfeeding figures show a five per cent lift in numbers for the January to March quarter and industry leaders expect that trend to continue, particularly given ongoing dry conditions.
Total cattle on feed reached 1,025,682 head, the second highest level ever recorded and 12 per cent above the five-year average for this time of year.
The national saleyard feeder steer indicator dropped 6pc or 17 cents a kilogram over the March quarter while feed grain prices increased 6pc.
Grain price is generally a more significant driver of numbers on feed.
However, Australian Lot Feeders Association president Tess Herbert said the other major variable - what processors offered on grainfed grids - was probably influencing dynamics strongly at the moment.
The indicative Queensland 100-day grain fed steer over-the-hook price averaged 501 cents per kilogram carcase weight during the March quarter.
“Processors need consistent supply to keep intact relationships with overseas customers so prices for finished cattle have remained stable,” Mrs Herbert said.
“We are hearing placements are still up, given the availability of cattle.
“With large parts of Queensland in drought, and big yardings of good quality lines in the south, it’s likely the next quarterly result will be similar.”
Queensland had the largest numbers of additional cattle coming onto feed, with South Australia second, while there were small reductions in Western Australia and Victoria.
Mrs Herbert said there had been small increases in capacity during that period and expansions were still occurring, including some new yards, which would also be reflected in the next quarter.
Contributing to the result in SA has been Wanderribby Feedlot at Meningie resuming custom feeding at capacity, lifting from 1500 head to 8000 in this quarter, but expansion is also happening in this state.
Family-owned Princess Royal Station at Burra is tripling capacity, driven by customer demand, and expects SA will probably continue to record higher numbers on feed in the next quarter despite the tough trading conditions.
Managers at both these southern feedlots said rising grain costs was a major issue - prices had lifted $100 a tonne in the past six months - and with shipments now headed north to Queensland and traders sitting tight on stock even more pressure was being put on prices.
Indeed, feedlot managers across the board are expecting September and October to be the tightest in terms of grain supply as competition from both graziers and grain traders looking to secure tonnage ramps right up.
“We are already seeing grain being moved from the south to Queensland but we’re likely to see all sorts of alternatives explored as things become harder, including much more shipping from state to state and railing it from WA to the east,” Mrs Herbert said.
In NSW and Queensland, lotfeeders report ration prices are now topping $400/t and will soon reach $450 in some instances – that will be a $200/t increase on 24 months ago.
One processor said we may be headed for a perfect storm later in the year, with United States grainfed beef exports already up 12pc this year and now expected to rise further from June, and grain prices at home skyrocketing.
Under current conditions, producers will no doubt have a keen eye on what can be done to ensure repeat custom.
Lotfeeders said pre-vaccination, knowing precisely what your supply chain is asking, rumen preparation and all measures to prepare cattle socially for feedlot entry were critical.
“Naturally, feedlots go back to the people whose cattle perform,” Mrs Herbert said.