By Angus Brown | Source: MLA, ALFA
Continued very strong feeder cattle prices are obviously not impacting cattle lotfeeders too much. At the end of March there were record numbers of cattle on feed, with the total eclipsing the 1 million head mark for the first time. This is a very strong rise in six months, with a number of factors seemingly contributing.
After the dramatic fall in cattle on feed numbers in the September quarter last year, one might have been forgiven for thinking that the drought driven lotfeeding boom was over. Figure 1 shows, however, that we have seen a massive bounce, with cattle on feed numbers increasing 8.6% on the December quarter, 11% on last March, and 29% on September 2016.
Cattle on feed numbers increased in all states, with NSW leading the way, adding 42,609 head, or 15% on last quarter, to easily set a new record of 329,170 head. Queensland also increased numbers, but didn’t set a new record, remaining 18,300 head below September 15.
Figure 1 also shows that Victoria, SA and WA are minor contributors to total cattle on feed numbers. However, WA is largely a separate market, and in March cattle on feed hit an 8 year high, albeit just 1.4% higher than March 2016.
Generally we can identify the driver of increased, or decreased numbers of cattle on feed either being large numbers coming onto feed, or a backlog of sales. In the March quarter it appeared to be a combination.
Grainfed cattle marketings jumped from the lows of December, jumping 13% on the December quarter, and 10% on March-16. However, placements easily outstripped marketings, so more cattle came in than went out. Figure 2 shows placements were relatively steady, up 1.8%, and just failed to set a record, set at 11,000 head in September 2015.
In NSW placements of cattle on feed rallied sharply, up 36.6%. This was offset by Queensland where placements were actually down 15%, but still managed to beat marketings, hence the rise in numbers of cattle on feed.
It could be theorised that cheap grain prices, and strong finished cattle prices led to more opportunity lotfeeding during summer, thereby driving increased in cattle on feed. If this was the case, cattle are being opportunity fed in large feedlots. Basically the entire rise in cattle on feed was due to a 12% rise in numbers in feedlots over 10,000 head.
It seems falling grainfed cattle prices in February and March might have been responsible for the large carryover in Queensland, shown in figure 3. Carryover is simply the number of cattle on feed last quarter, minus marketings, so they are cattle which have been fed for over 3 months.
The large numbers of cattle on feed at the end of March doesn’t seem to have impacted finished cattle prices in April and May thus far, with prices slowly rising. This is good news for both lotfeeders and those supplying feeders, as it suggests demand remains strong, and we should still see the winter price rise this year, despite heavy grainfed cattle supplies.
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