Australia’s Cattle on Feed up Sharply; Grain-fed Exports Shift toward China, EU

Australia’s cattle on feed surged 11 percent from a year ago and 9 percent from the previous quarter, to 870,000 head, according to a June 30 survey conducted by the Australian Lot Feeders’ Association (AFLA) and Meat and Livestock Australia (MLA). This is the highest total in seven years, driven in large part by severe drought conditions in some of Australia’s major grazing regions.
Australia's Cattle on Feed for each region of Australia from 1996 through 2012

Source: AFLA/MLA

The largest numerical increase over the previous quarter was in Queensland (523,403, +11 percent) as dry grazing conditions in the western part of the state and in Northern Territory led to higher feedlot placements. Compared to June 2012, Queensland’s cattle on feed were up more than 20 percent. Significant quarterly increases were also seen in Victoria (50,907, +26 percent), South Australia (24,140, +8 percent) and Western Australia (36,356, +39 percent) due easing grain prices and low feeder cattle prices, though only Western Australia posted a year-over-year increase (+4 percent). In August, Australia’s feeder cattle prices remain 16 percent lower than last year, at around US$0.80 per pound, still reflecting drought conditions and ample availability of cattle to be placed on feed and also compounded by the weaker Australian dollar. In Australian dollars, prices have improved from the recent bottom in May, up about 14 percent, but are still down 12 percent year-on-year.

MLA reports that Australia’s grain-fed exports were 8 percent higher than a year ago during the April-May-June quarter, pushing the 12-month (July 2012 through June 2013) volume up 2 percent to 198,000 mt. Though Japan remains Australia’s largest destination for grain-fed beef, the 12-month volume (121,400 mt, -6 percent from a year ago) was the lowest since 2002-2003. Exports also declined to South Korea (31,909, -1 percent), but these results were more than offset by significant increases to China (10,507 mt, +429 percent), the European Union (8,724 mt, +82 percent), and the Middle East (7,039 mt, +54 percent and benefiting from the absence of U.S. beef in Saudi Arabia). During the same 12-month period, cattle slaughter was up 8 percent to 7.8 million head.
EU Chilled Beef Imports in Metric Tons from January through June 2013 with a side by side comparison of 2012's Chilled Beef Imports

Source: Global Trade Atlas

Australia captured a larger share of the EU chilled beef market (a combination of grain and grass-fed imports) in the first half of this year, posting a 39 percent increase to 7,581 mt. The EU’s total chilled import volume was up 16 percent (56,187 mt), as imports were also larger from Uruguay (10,119 mt, +50 percent), Brazil (9,298 mt, +34 percent) and the United States (7,841 mt, +7 percent), while imports from Argentina were lower (16,450 mt, -2 percent). Uruguay and Australia have been shipping larger volumes under the duty-free grain-fed quota, though the United States is still the larger supplier of beef imported under this quota.