More cattle through feedlots raises questions on supply

The Stock Take | More cattle through feedlots raises questions on supply

Beef
FIGURE 1: Cattle on feed, marketings and placements. Cattle on feed in the December quarter of 2018 were 14pc higher than December 2017 according to the recent cattle on feed survey.

FIGURE 1: Cattle on feed, marketings and placements. Cattle on feed in the December quarter of 2018 were 14pc higher than December 2017 according to the recent cattle on feed survey.

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The Stock Take | Mecardo's Angus Brown analyses the feedlot sector.

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The feedlot sector has taken a break from it's trending growth, with a 1 per cent fall in cattle on feed in the last quarter of 2018. In terms of number of head, that's only 16,000 fewer cattle on feed (Figure 1).

A 3 per cent and 7 per cent quarter-on-quarter fall in the biggest lotfeeding states of Queensland and NSW respectively, was offset by seasonal increases in southern states.

The arrival of summer and lack of feed saw Victoria increase numbers by 7 per cent, SA up 17 per cent and WA gaining 60 per cent.

There were plenty of records in grain-fed cattle marketing as record numbers on feed flowed through the system.

There were 9.4 per cent more cattle turned off on a national scale, which was 15.5 per cent more than December 17 and 8.3 per cent larger than the earlier record in March 2017.

With record cattle exiting feedlots, for there to be only a 1 per cent fall in numbers of cattle on feed, placements still need to be very strong. Placements of cattle on feed were up 6.4 per cent on the September quarter.

What does it mean?

Demand for feeder cattle to fill space should remain strong and prices relatively good. However, there is a continued trend towards cattle being fed grain and turned off earlier, rather than grass and sold later.

Additionally, there is yet another cull of breeding stock going on currently.

This raises serious questions around how the supply of prime grass-fed cattle might fare for the remainder of 2019 and into 2020, it's looking like it might be very tight.

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