ALFA president Jim Cudmore said the increase in

cattle numbers was driven by the deterioration of pastures in southern Australia (particularly in WA) and a decline in grain and cattle prices in NSW, Vic and SA.

“Significantly, sluggish export demand as a result of the strong Australian dollar and the on-going global financial crisis were the overriding influences upon returns and profitability," he said.

Mr Cudmore said Queensland experienced a decline in cattle numbers on feed as a result of grain price volatility (due to the uncertainty surrounding the sorghum crop) and lack lustre export demand.

On average, feed grain prices were 6 per cent lower compared with the previous quarter though average

sorghum futures prices for northern NSW and Qld lotfeeders increased 6pc over the quarter.

Sale yard feeder cattle prices were on average 10pc cheaper than the September quarter”.

MLA chief economist, Peter Weeks said export demand remained lacklustre for the December quarter, as the Australian dollar strengthened against both the

Japanese Yen and Korean Won by 26pc and 16pc respectively on the previous year.

“However, the calendar year results for grain fed chilled beef product were heartening with a 10pc increase from the low levels experienced in 2008," he said.

“This was mainly driven by a 4pc rise for grain fed exports into Japan - Australia’s largest beef

market, though the Korean market partly offset this result with a 14% decline."

Mr Cudmore said while the domestic market had been extremely resilient, it was difficult to foresee cattle numbers on feed significantly increasing in the short term until ‘hand to mouth’ strategies were set aside and a stronger degree of export market certainty was provided.