Fed Cattle; Australia is a Player.
Courtesy of lmic.info
Cattle feedlots provide efficiency for the entire beef sector, let alone a ready market for calves and yearlings. On a large commercial scale, those advantages have mostly been the bailiwick of North America, the U.S. and Canada, and more recently Mexico. There also have been modest but growing commercial feedlots in South America (mostly Brazil, Argentina, and Uruguay), and some former Soviet Republic countries. Since 2000, the most aggressive growth rate in commercial cattle feeding has occurred in Australia. Recently, the Australian feedlot headcount is about 5% of the U.S. number. Importantly, compared to the U.S., Australia exports a very high proportion of its beef production.
Australian feedlot capacity had been steadily increasing and accelerated during the recent drought years. As a percentage of beef production, the grain-fed beef from feedlots is forecast to continue setting new record levels. Feedlot inventories have been consistently reported quarterly by the Meat and Livestock Australia (MLA) since 1999. Three countries report regular on-feed statistics (U.S., Canada, and Australia). Australia has the third-largest count but is closing in on Canada.
The long-term trends in Australia showed steady growth. Since December 2000, the annual growth rate was 4.7%. Late in a drought liquidation period and as recovery starts, it’s typical for Australian on-feed numbers to drop. For the first three quarters of 2019, the number of cattle on-feed was above 2018’s. After multiple years of severe drought, the count as of December 2019 had a year-over-year decline of 16.0%. Still, at 713,505 head the December 2019 inventory was the third-highest ever reported for that month. Note Australia also grain-finishes animals that are not in feedlots. Their estimates of “grainfed cattle turn-off” (sales) have increased to over 1 million head.
Increased cattle feeding has buffered beef production declines in Australia because grain feed animals have higher average carcass weights. Average Australian carcass weights declined in 2019, but without feedlots would have dropped even more.
Australia is more-and-more of a competitive concern in the high-quality grain-fed markets of Asia, and their focus on cattle feeding may grow. However, they have important constraints. Over the next couple of years, their feeders will be faced with compressed margins due to higher calf and yearling prices, especially if rainfall develops as expected during 2020. Bigger long-term issues may continue to be challenges compared to the U.S.; those are relatively expensive feedstuff costs due to the relatively small arable land base and a general lack of water availability.