Australia’s cattle on feed fell by 15,977 head, or 1.4 per cent, in the October to December 2018 quarter from the record set in the previous quarter, according to the latest results from the Australian Lot Feeders' Association survey.
Despite the modest decline in cattle on feed, there was 1,110,689 head on feed at the end of the year. It’s the fourth consecutive quarterly survey when there have been more than 1 million head of cattle on feed, which is looking like the new norm.
Small decreases in cattle numbers on feed were recorded in Queensland and NSW. Queensland decreased by 20,788 head, or 3.2pc, to 631,286 head; while NSW decreased by 20,636, or 5.9pc, to 326,322 head, compared to the September quarter. These declines were partially offset by gains in Victoria, SA and WA which were up 6.8pc, 17.1pc and 60.5pc from the September quarter to 73,173 head, 40,439 head and 39,469 head respectively.
Beef exports from feedlots for the 2018 calendar year were record high on strong demand from Asian for quality Australian beef. Meat and Livestock Australia said grain feed beef exports for 2018 exceeded 300,000 tonnes shipped weight for the first time in a calendar year.
It’s been a challenging year for feedlot operators, with Queensland and northern NSW suffering the worst winter crop season in more than 20 years followed by one of the driest summers on record, keeping grain prices high.
Stockfeed wheat values for the October to December quarter range from $430 to $450 into the Darling Downs. Barley values started to soften in the quarter after China announced an antidumping investigation into Australian barley falling to an average of $360 Downs for the quarter, which was about $40 below the previous quarter.
Feedlot numbers are set to remain high for the foreseeable future as margins start to improve as both cattle and grain prices fall.
ABARES forecast that wheat production in Australia would recover to 23.9 million tonnes for the 2019 season after the east coast drought reduced crop of 17.3mt in 2018. However, ABARES did flag the threat of continued dry weather.
Some traders are already anticipating another year of below average winter crop in Queensland and northern NSW after poor summer rains.
Northern grain markets remained soft in the early stages of last week but firmed towards the end of the week. Stock feed wheat finished the week $5 to $10 higher at $415 delivered Downs markets with barley up to $360 delivered.
International grain markets continued to soften as investors focus on favourable crop conditions in the northern hemisphere which is expected to result in larger global wheat supplies. United States wheat futures fell by a further 2 to 5pc last week.
The USDA released its March world supply and demand estimates report last week, that was viewed as bearish wheat. US wheat exports were lowered, with the USDA citing stronger than expected competition for some grades, despite major droughts through much of Europe and Australia’s east coast.