The North American fed cattle industry continues to face increased competition from Australia, according to an analysis from the Livestock Marketing Information Center.
“Cattle feedlots provide efficiency for the entire beef sector, let alone a ready market for calves and yearlings,” the center says. “On a large commercial scale, those advantages have mostly been the bailiwick of North America, the U.S. and Canada, and more recently Mexico.
“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.”
The LMIC says feedlot capacity has increased steadily during recent drought years. Forecasters expect the percentage of grain-fed beef from Australia to set new records in the coming years.
“Feedlot inventories have been consistently reported quarterly by the Meat and Livestock Australia since 1999,” the center said. “Three countries report regular on-feed statistics (U.S., Canada, and Australia). Australia has the third-largest count but is closing in on Canada.”
Long-term, steady growth is expected to continue in Australia. The LMIC says since December 2010, the annual growth rate has been 4.7%.
“Late in a drought liquidation period and as recovery starts, it’s typical for Australian on-feed numbers to drop,” the LMIC said. “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.”
The LMIC adds that Australia also finishes animals on grain that are not housed in a feedlot. Estimates of grain-fed sale have increased to over 1 million head.
“Australia is more and more a competitive concern in the high-quality grain-fed markets of Asia, and their focus on cattle feeding may grow,” the LMIC says in its analysis.
“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.”