Australian Lot Feeders' Association (ALFA) president Jim Cudmore says the decline in total cattle numbers on feed from 719,379 to 650,026 head, and capacity utilisation from 59pc to 52pc, was "not a surprising outcome given the prevailing market conditions".

"The global financial crisis in particular continued to create uncertainty in the export market place, with buyers unwilling to commit to forward purchases and grain fed beef export prices falling," Mr Cudmore said in a statement today.

"Cattle numbers on feed decreased mainly in New South Wales and Queensland, with the smaller lot feeding states of Victoria and Western Australia showing increases in line with normal seasonal patterns."

Mr Cudmore said the figures reinforced widespread industry sentiment that the December quarter results were "an aberration" which reflected the turnoff of drought-affected cattle from northern regions of Australia.

"These northern cattle have now exited the feedlot system and have not been replaced," he said.

"Notably, there were positive influences for the sector over the last quarter with national saleyard feeder cattle and feed grain prices averaging 4pc and 5pc lower than the December quarter respectively, while the Australian dollar was lower against most trading partner currencies."

Meat & Livestock Australia's chief market analyst, Peter Weeks, said the financial and currency market volatility, a run-down in stocks and an increasing US presence continued to stagnate Japanese and Korean beef export demand.

"However, there are grounds for optimism," Mr Weeks said.

"Stocks of Australian beef in these markets are now depleted and along with reductions in the Australian dollar, and resultant low import and wholesale prices, the potential to compete strongly in these markets is improving.

"The domestic market also remains one of the best markets for grain fed product, with the number of cattle destined for domestic consumption rising 18pc since the last survey."