Good morning,
A few notes from this week:
KEY POINTS
- Numbers on feed nationally continued their march north in Q4, driven by decade low livestock cattle prices in October 2023. Volumes reached 1.294 million head, the highest on record.
- Total national capacity for cattle on feed, rose again in Q4 to a touch under 1.6 million head.
- This is a common theme experienced most quarters, as the feedlot sector continues to expand.
- In calendar year 2023, grainfed beef exports reached their highest level on record at 318,900 tonnes.
- Frozen grainfed beef exports also reached their highest level on record, as cost of living pressures worldwide pushed consumers to the cheaper storage alternative.
NUMBERS ON FEED
- National numbers on feed rose lifted 3% or 36,154 head.
- NSW numbers on feed reached their highest level on record at 372,000 head, beating its previous record set in Q4 2015 by 4% or 15,000 head.
- South Australian numbers on feed also reached records, with strong expansion of feedlots in this space in the past few years supporting this growth.
- WA numbers on feed doubled QoQ to 58,562 head in Q4. This is a seasonal occurrence with WA numbers on feed peaking in the first quarter of each year.
- Based on data and the trends, you may expect to see record numbers on feed in Q1 2024 for WA.
- QLD numbers declined marginally, but numbers were still the second highest on record for the state.
TURNOFF
- Calendar year 2023 total grainfed turnoff reached its lowest level since 2016 at 2.63 million head.
- The full calendar year results for 2023 were 6% or 180,000 head lower than the 10-year average.
- Compared to the 10-year quarterly average for turnoff, Q4 2023 volumes of 668,000 head were down 32,000 head or 4.4%.
- What this tells you is, Australia is continually feeding cattle for longer, reducing quarterly turnoff volumes.
GRAINFED BEEF PRODUCTION & EXPORTS
- For calendar year 2023, grainfed beef production as a % of total beef production was 37.5%. In line with the 10-year averages and 3.8% below 5-year averages.
- This was a 9.5% decline year on year from 2022 which was a record grainfed beef production year at 46.9% of total beef production.
- On a quarterly basis, grainfed beef production was 36% rising 4% on quarter on quarter, with higher numbers of shorter fed cattle pushed through the system as lot feeders capitalised on decade low livestock prices.
- For calendar year 2023, grainfed beef exports hit their second highest quarterly volume on record at 84,363 tonnes.
- Frozen grainfed exports lifted 11% or 18,125 tonnes to reach their highest level on record at 182,700 tonnes.
- Due to the economic challenges the pandemic itself and post pandemic inflation era presented, grainfed exports were firm year on year at 136,000 tonnes
LOOKING AHEAD
- In 2024, I expect more of the same from the lot feeding sector.
- Continual expansion in capacity
- Consistent turnoff remaining lower than long term averages as wet weather retains cattle on farm
- Further growth in grainfed exports as economies recover and Australian beef in pricing terms remains attractive relative to the US.
- The challenge domestically for the lot feeding sector will be managing cattle prices against many silo’s filled with expensive grain and softer meat prices.
- The industry will most likely see the sector prefer to have pens filled than empty, meaning demand for feedlot cattle throughout the year should remain solid.
Kind Regards,
Report by Ripley Atkinson | Australian Livestock & Commodities Manager
M: +61-427-796-984
www.stonex.com | ripley.atkinson@stonex.com
StoneX Financial Pty Ltd (ACN 141 774 727 | ABN 50 141 774 727)
Suite 28.01 | 264 George Street | Sydney | NSW | Australia
Revised Disclaimer for SFPL
StoneX Financial Pty Ltd (ACN 141 774 727 | ABN 50 141 774 727) (“SFPL”) is a member of the StoneX Group Inc., group of companies. The StoneX Group Inc., group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC. (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI. StoneX Financial Ltd (“SFL”) is registered in England and Wales, Company No. 5616586, authorized and regulated by the Financial Conduct Authority [FRN 446717]. StoneX Financial Pte. Ltd. (“SFP”) (Co. Reg. No 201130598R) holds a Capital Markets Services Licence regulated by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFPL holds an Australian Financial Service License and is regulated by the Australian Securities and Investments Commission (AFSL: 345646). StoneX Financial (HK) Limited (CE No.: BCQ152) is regulated by the Hong Kong Securities and Futures Commission for Dealing in Futures Contracts. ‘StoneX’ is the trade name used by StoneX Group Inc. and all its associated entities and subsidiaries Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors.
