The Australian Feedlot industry has been on significant growth across the past 20 years. BeefEx 2024, reiterated that the lot feeding industry is built on sustainability and longevity for the Australian beef industry. As 2024 looks to close, a review of domestic and global impacts set the stage for an interesting 2025.
Using a combination of AuctionsPlus data and MLA Feeder Steer Indicator, the number of feeder steers sold January-October 2024 has hit 418,000 nationally. This number is higher than every year in the past 21 years, apart from 2015. We are on track to see over 550,000 head sold for the calendar year.
The number of cattle on feed in Australia is at record. Taken from the Quarterly Lot Feeding Brief from MLA, released last week, Australian feedlots have been running at capacity of 84% NSW, 90% QLD, 96% SA and overall 87% for Australia. This corresponds to the number of head in feedlots. The June Quarter for 2024 hit 1.4m head on feed, the highest ever on record. The September Quarter figures show that the number of Australian cattle on feed has remained above 1.4million head. However this is not an outlier, this is a trend that has been growing. Cattle on feed in June 2000 was 672,000; in June 2011 the quarter was 792,000 head on feed, and then the March quarter 2017, was the first time in broke 1m. So overall feedlots are growing, building and becoming more efficient.
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With more cattle through the feedlots are our processors keeping up the output? The answer is yes, looking at NLRS slaughter numbers, since the Covid lulls of low slaughter numbers the industry has risen back. In 2021 and 2022, numbers dipped under 1m hd of cattle slaughtered the March quarter of 2022, the lowest ever. but has since risen to over 1.3m for each quarter since 2023. Thus our ability to continue to process is beef is fine.
On a demand side, grain fed meat exports see’s Japan as our largest export market, followed by China, South Korea and America. Japan has been the number one grain fed export market for the past 25 years, however the dependency on this market has been reduced. In the 2000s Japan averaged 80% market share, but across the past 14 years that has reduced to 40%. The number of kilograms has not reduced, more markets have been developed. Across the past 10 years South Korea and China has held on average 20% and 19% market share, respectively.
As touched on above to above, our grain fed meat exports has been rising, from 140m tonnes in 2000, to now 318m tonnes in 2023. Looking at this year, the March quarter in 2024 is the largest amount grain fed meat export on record. Thus, our market share is much less volatile, and relationships have been built building consistent consumers of Australian Beef across Asia, which is growing.
From a competition perspective, the global outlook for Australian beef exports remains strong. The US cattle herd is at its lowest since 1951, couple this with the fact that, Japan and South Korea have been the top two beef and veal export markets for beef and veal from the US. US Beef is not cheap at the moment either, in August-2024 the USDA Beef Retail was at 851c/lb – the highest it’s been since records started in 1970.
Other competition which Australia will compete with is Brazil, who is seeing record cattle slaughter rates. The Brazilian Institute of Geography and Statistics (IBGE) released June quarter figures seeing 9.96 million cattle slaughtered. This is a record in the time series, which began in 1997. Both competitors in liquidation represent an opportunity for Australian beef to fill demand.
Finally, what about costs? Joe Reynolds, Senior Advisor, Lachstock Consulting says prompt feed values have firmed recently with a lack of freight. The current market is getting squeezed higher as growers resist selling cereals. However, the weight of production will create headwinds for feed grain’s ability to substantially ratchet higher; and over time incremental sellers will be drawn out. The benchmark of international values has slowly edged higher with Black Sea Wheat values firming $20USD. Aussie wheat is yet to see the flow of demand, in particular China has been absent to date, which is typically our biggest offtake of wheat. For a substantial rally to occur though a broader global rally in grains needs to happen.
So where is pricing heading? Global outlook paints a good picture for the lot feeding industry. Export markets are diverse and growing, with global demand set to increase. While feed grain is a low and predicted to remain low. All while the Australian feedlot sector has grown significantly but remaining efficient. With high cattle numbers in Australia, there is the scenario where prices are dulled through large volumes on offer due to hot dry Summer. However, I think this will be the case of a prices falling the short term in January/February 2025. Overarching the industry is in a robust position and poised to capitalise and several factors lining up.
Tom Rookyard is the General Manager at Ottley Livestock Finance.