There has been a 13pc increase in the number of cattle on feed during the April to June quarter, according to the latest ALFA/MLA survey, but industry leaders say the result should be not be seen as a vast improvement in feedlot trading conditions.

Australian Lot Feeders' Association (ALFA) president, Malcolm Foster, says that although cattle numbers on feed increased, a soaring Australian dollar and higher feed barley and heavy feeder steer prices have ensured that feedlot margins remained low.

"Feed barley prices increased 11pc and heavier feeder steer cattle 6-8pc over the quarter, while sorghum prices (whilst slightly lower) were still 6pc above this time last year," Mr Foster said.

"These continued high prices were indicative of the 2007/08 year, with feed wheat, barley and sorghum up 49pc, 18pc and 27pc respectively compared to the previous fiscal year.

"However, access to cheaper drought affected cattle from northern Australia and relatively cheaper sorghum enabled Queensland and NSW feedlots to deliver the majority of the increase in cattle numbers over the quarter."

The survey shows that cattle numbers declined or remained stagnant in South Australia, Western Australia and Victoria due to normal seasonal conditions, whereby larger cattle numbers could be finished on grass.

The proportion of cattle numbers with respect to feedlot capacity increased from 51pc to 60pc over the quarter as compared to 77pc this time last year.

Manager for market information and analysis at Meat & Livestock Australia (MLA), Peter Weeks, says the strong dollar and cost of grain continued to negatively impact upon the competitiveness of grainfed beef exports.

There were falls of 53pc, 11pc and 4pc for year-on year volumes to the US, Japan and Korea respectively.

"This factor, along with weakening economic conditions in Japan, Korea and the US, has constrained the ability of exporters to pass on higher production costs for grainfed beef," Mr Weeks said.