Australian Lot Feeders' Association president Jim Cudmore said the decline in feed grain prices and the Australian dollar has improved lot feeder returns.

But he said the seasonal reduction in cattle numbers on feed in southern states was the overriding factor in the result.

"Seasonal conditions in Western Australia and parts of Victoria and South Australia (allowing more cattle to be finished on grass) led to reductions of 86pc, 35pc and 10pc respectively," Mr Cudmore said.

"With northern NSW and southern and central Queensland also experiencing improved seasonal conditions, the stronger buyer demand for store cattle led to national feeder cattle prices increasing by an average 8-13pc over the previous quarter.

"This tempered any increase in cattle numbers on feed."

According to ALFA, overall grainfed cattle numbers declined from 685,756 to 622,689 at the end of the quarter, while capacity utilisation levels also declined from 60pc to 55pc.

"However trading conditions are in general improving, due to the average 1-4pc reduction in feed grain prices and the more recent decline in the Australian currency against our major trading partners," Mr Cudmore said.