A SURGE in the number of cattle on feed and another boost to Aussie beef exports has added a sparkle to what's generally been a tough first half of the year for cattle producers due to drought in many regions.
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Traditionally the grain-fed beef market has been dominated by a couple of key overseas customers, but in recent years Australia has diversified its markets.
This means although the supply of Aussie beef overseas continues to increase, our industry has been less reliant on a limited number of large customers.
During the first quarter of this year, grain-fed beef exports to Japan declined four per cent year-on-year while they increased 19pc to South Korea, 47pc to China, 77pc to the European Union, 38pc to the Middle East and more than 200pc into the US, according to the Department of Agriculture.
Last month the number of cattle going to slaughter almost reached record levels, according to Meat and Livestock Australia (MLA), while at the same time beef exports also surged.
Markets of note in this export surge were the US, China and Korea.
Earlier this month MLA reported that, at almost 90,000 tonnes (shipped weight) for the first 26 days of May, beef and veal exports were on track to challenge the record monthly total set in March 2014, at 106,297t.
Demonstrating the supply driven surge in shipments for the past 12 months, MLA reported it was only in May 2013 (103,208t) when Aust- ralian beef exports first exceeded 100,000t for a month - which also smashed the previous monthly record of 94,693t set in November 2006.
At the same time, 10 of the past 12 months have exceeded the November 2006 benchmark, with shipments for May 2013 to April 2014 totalling 1.16 million tonnes swt, 17pc or 172,694t greater than the corresponding period in 2012-13.
The most recent quarterly feedlot survey, written by Australian Lot Feeders Association (ALFA) and MLA, reflected an 8pc boost to the number of cattle on feed compared to the prior quarter.
These results from the first quarter of 2014 (at 873,783 head) were the highest recorded since December 2006.
ALFA president Don Mackay said beef production across the world was not keeping up with demand, as more people enjoyed a higher standard of living.
"As this move to more and better protein is occurring, we are finally seeing a long-awaited change to trading arrangements in our traditional markets," Mr Mackay said.
In terms of the first quarter survey results, he said the result was driven by both an influx of cheaper drought-affected cattle entering the feedlot sector at the end of that period as well as heightened demand for Australian beef overseas.
"Feeder steer and heifer prices were down 2pc and 4pc from the December average or 4pc and 9pc year-on-year," he said.
"The increases in cattle numbers on feed were mainly felt in Queensland, NSW and Western Australia, results considered hardly surprising given ongoing drought conditions and the increased demand for grain fed cattle - a normal season occurrence at this time of year in the west.
"However, the dry conditions also led to grain and fodder price increases which largely offset lot feeder margins."
He said on Queensland's Darling Downs, wheat and barley averaged $346 a tonne and $334/t for the March quarter, up 23pc and 17pc year-on-year respectively.
"Darling Downs cereal fodder prices also rose to $425/t, a 55pc increase," he said.
At the same time, Mr Mackay said capacity utilisation in feedlots was at 79pc, which was the highest experienced since December 2006.