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OSU Extension - Fairfield County

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and the

OSU Extension BEEF Team

BEEF Cattle questions may be directed to the OSU Extension BEEF Team through Stephen Boyles or Stan Smith, Editor

You may subscribe to the weekly Ohio BEEF Cattle letter by sending an e-mail to smith.263@osu.edu

Previous issues of the BEEF Cattle letter

Issue # 698

August 11, 2010



Forage Focus: Are Annual Forages for You? - Clif Little, Associate Professor/Extension Educator, OSU Extension, Guernsey/Noble County

During the summer slump or late fall have you ever wondered if planting an annual forage crop would make your grazing program complete? We have all seen the advertisements describing the remarkable tonnage that annual forages can produce. In addition, we have highlighted annual forages at field days. What is not highlighted is a seeding failure due to lack of rain or the mature bolted annual forage that wasn't effectively utilized. Annual forages do have a place in some livestock operations but they are not a 'miracle cure.' There are many factors to consider before planting.

Perennial, cool season grasses and legumes can provide a tremendous amount of forage. Managing what you have should be the first priority. Do you practice rotational grazing, stockpiling, and fertility management? Assess the existing forage and determine if your current system of management contributed to what you are seeing.

One of the first benefits producers find after adopting managed grazing is that the grazing season is extended. Some producers have achieved close to year round grazing by just changing the way they manage their existing forages. Other producers have successfully evened out their forage production by using nitrogen fertilizer strategically.

The first step to increasing production is to manage cool season forages through paddock divisions and water distribution. This increases livestock utilization rates for existing forage and reduces over-grazing. If that still is not enough, determine when you need additional forage. Generally, we need forage during the summer slump or winter. Annual forages can help during these critical periods.

The time of year and intended use of the forage will dictate species selection. Summer annuals, small grains and brassicas all have periods of time when they can be utilized, planted and harvested. Do you want to graze, hay, or cut for silage and at what time of year?

Below is a list of important planting dates when considering various forage options:
Perennial cool season grasses and legumes: before April 20 or August 15 to September 10
Perennial warm season grasses: mid-April to mid-May
Brassicas: March-early May, and/or late July - mid August
Summer Annuals: early May - June
Cool season annual grasses: March (oats, winter wheat), August- mid Sept. (annual ryegrass, oats), September-October (winter wheat, winter rye)
Below are descriptions of forage options and the time of year they typically yield.
January-March: stockpiled fescue, oats, hay
March-May: winter wheat, winter rye, annual ryegrass
April-June: cool season perennial grasses/legumes
May-July: spring seeded cereals/brassicas
July-September: warm season perennial or annual grasses, warm season legumes
October-December: perennial cool season grasses/legumes, brassicas, oats, corn stalks
November-December: early planted winter wheat/rye, annual ryegrass, stockpiled grass/legume

What livestock species are the intended users of the forage? Some alternative crops are better suited to a particular species of livestock. In addition, animal species have varying nutritional requirements and different grazing behaviors. These factors should influence the forage species selected.

Evaluate the cost. Compare the cost per ton of forage dry matter (DM) produced to the cost per ton of DM from purchased pasture, hay or silage. Purchasing forages someone else has already produced may be the best option. Can you get the crop established? Do you have the time and access to equipment? Some producers have tried an annual and had trouble getting it established and/or efficiently harvested.

Annual forages can provide economical feed when it is most needed. However, several factors should be considered before planting. Assess your grazing system and forage needs. After considering the factors above you will come to your own logical conclusion, if annual forages are right for you.





Stockpiling as a Winter Feed Option - Rory Lewandowski, Extension Educator, Athens County, Buckeye Hills EERA

Early August is the time to make a decision about pasture use for stockpiling and winter grazing. The pasture grass best suited for winter stockpiling is tall fescue because it will deteriorate less and retain quality longer than other grasses over the winter period. Stockpiling is simply letting pastures grow and accumulate forage that will be grazed at a later date. The process is straight-forward: take a last grazing pass and then clip the pasture paddock at a 3-4 inch height. Apply some nitrogen fertilizer ahead of a rain to get some additional dry matter accumulation, and then let the forage grow until the end of the growing season. While the actual mechanics of stockpiling are fairly simple, the actual decision to stockpile may not be as simple.

Generally stockpiling a pasture for winter grazing is advocated for economic reasons. The highest cost of maintaining a cow herd in the winter months is stored feed cost, in particular, the cost of feeding hay. Grazing, on the other hand, is the lowest cost method of feeding a cow. To get an idea of the economics at work, compare the cost of hay to the cost of stockpiling forage.

For those who make their own hay, one way to generate a cost of that hay is based on the nutrient value of the hay (nutrients that will have to be replaced to maintain soil fertility) plus machinery and labor costs to make the hay. I made a phone call to some fertilizer dealers in the Athens County area and as of this date, July 26 (2010), farmers could purchase urea (46-0-0) for $375/ton, DAP (18-46-0) for $520/ton and Potash (0-0-61) for $450/ton. Each ton of dry matter (DM) hay contains/removes about 40 lbs of nitrogen, 13 lbs of phosphate (P2O5) and 50 lbs of potash (K2O). Applying current fertilizer prices to the N-P-K nutrients in a DM ton of hay figures out to a value of $40.03. On top of that must be added the machinery and labor costs to make the hay. I used the OSU Extension 2010 Ohio Custom Rate figures and a production level of 2 tons of hay/acre per cutting. I included the cost of mowing, one raking pass and one tedding pass and then the cost of baling 1000 lb round bales. This added up to another $25.80/ton. If hay is 88% dry matter (DM) then this cost on a DM basis is: 25.80/.88 = $29.32/ton of DM. The cost of moving bales out of the field was not calculated. The total value of hay based on the nutrient value and the machinery and labor costs associated with that hay comes to $69.35/ton of DM. If the nitrogen value is subtracted because nitrogen is being supplied by a legume component in the hay then the total value of the hay is about $55.05/ton of DM.

Stockpiling research that I have looked at indicates that in predominantly grass stands, providing 50 lbs of actual nitrogen per acre is economical. If we apply 110 lbs/acre of urea at a price of $375/ton, plus a spreading cost of $5.15/acre (from OSU 2010 Custom Rates), it would cost $25.83/acre to apply 50 lbs of actual nitrogen/acre. Provided there are some timely rains, we might expect an additional 1000 to 1250 lbs of DM to be produced by an early to mid-August nitrogen application. The cost/pound of each additional pound of dry matter (DM) is $0.026 if an additional 1000 lbs of DM/acre are gained from the nitrogen application. This equals $52/ton of DM.

At the current urea price of $375/ton, and using a return of an additional 1000 lbs of DM produced by applying 110 lbs/acre of urea, the breakeven cost of hay is around $46/ton comparing dry matter equivalents (46/.88 = 52.27). In other words, unless you could purchase hay for under $46/ton, it is more economical to stockpile forage for winter grazing than to feed hay. Of course, this isn't the whole story. Those 1000 lbs of additional DM from the nitrogen application are only going to happen if that nitrogen application is made by mid-August and if there is sufficient moisture to grow the grass. So far, 2010 has been a good grass growing year and there has been plenty of rain in our area, but this could change, so there is always an element of risk to stockpiling forage.

Is it necessary to apply nitrogen to stockpile forage? Forage will grow without supplemental nitrogen, again provided there is sufficient moisture. The advantage of supplemental nitrogen is two-fold. One, it produces additional DM, and two; it boosts the quality of the stockpiled forage. Dr. John Jennings, University of Arkansas Extension, writing in a recent issue of the OSU Extension Beef Cattle Letter about stockpiling forage in Arkansas says "We conducted a demonstration at the Livestock and Forestry Branch station at Batesville to compare fertilized vs. unfertilized stockpiled forage. One fescue field had abundant summer growth and was left as is. Another fescue field was grazed off in late August then fertilized in September to encourage high-quality fall forage growth. In January, forage tests revealed that the unfertilized fescue was 7.9 percent CP and 56 percent TDN, while the fertilized fescue was 11 percent CP and 66 percent TDN. The lower-quality field would have been adequate for dry mature cows but not for the fall-calving cows we had in the demonstration project."

Stockpiling grass in the late summer through fall period also benefits the grass plant. Fall is a critical time for the grass plant to store carbohydrate reserves that allow the plant to over winter and that determine the green up and vigor of new growth in the spring. Stockpiling allows grass to grow and build carbohydrate reserves during this critical period. If necessary, consider feeding hay in the August to November time period to allow some pasture paddocks to stockpile. Feeding first cutting hay at this time to cows as calves are weaned and the cow's nutritional requirement drops makes sense. The lower quality forage matches the cow's nutritional needs and allows a higher quality forage to be stockpiled and used when the cow's nutritional needs are higher.

To get the best return using stockpiled forage, strip graze across the pasture paddock. Giving cows access to no more than 3 days of grazing can result in a grazing efficiency where about 65% of the forage is consumed. If more intensive management is practiced and smaller strips and more frequent moves are used, grazing efficiency could be boosted to 80%.

Provided there is sufficient moisture for grass growth, stockpiling forage offers the cattle manager an economical alternative to provide good quality forage to the cowherd in the winter months while protecting the health of the grass plant and minimizing the use of costly hay.





Jefferson County Pasture Walk Planned

A Pasture Walk is planned for Thursday, August 26, 2010 near Mount Pleasant, OH on County Road 1. This pasture walk is scheduled for 6:00 p.m.

Join us this month as we travel to Spring Valley Farms, where you will have a chance to learn about the Finney family's experience with the ultra-high stock density grazing technique known as mob grazing. We will also be showcasing different temporary fencing and pressurized watering options.

Participants are encouraged to visit with the Eastern Ohio Grazing Council members, SWCD, and NRCS personnel during a social gathering following the workshop. Refreshments will be provided. Agland Co-op and Circle L Fence LTD have graciously agreed to sponsor this event.

Registration is required by August 20, 2010. The Pasture Walk is presented by the Eastern Ohio Grazing Council in cooperation with Carroll, Columbiana, Harrison, Jefferson, & Mahoning Soil & Water Conservation Districts and the Natural Resources Conservation Service. For more information, contact Carroll SWCD at 330-627-9852.





Monthly Market Profile: Beef Outpacing the Broader Economy - Nevil Speer, Professor, Animal Science, Western Kentucky University

Several observations have caught my attention in recent days:

* Nothing we are seeing in a post-bubble credit collapse is normal (Dave Rosenberg, Chief Economist and Strategist, Gluskin Sheff, Aug 5).

* The deceleration is broadbased, encompassing personal consumption expenditures (particularly for food and clothing), personal income, and certain types of business investment . . . It will not be a routine matter to keep profits moving forward in such an environment (ValueLine Investment Survey for week ending Aug 13).

* . . . the consumer deleveraging process is further along than we originally believed. But the drawback is that this also means consumers are finally undertaking the mindset that saving is critical, at the expense of spending and economic growth (Chris Maxey, Fortigent, Advisor Perspectives, Aug 9)

The statements concisely reflect general sentiment about what's happening within the broader economy. The August employment summary further underscored such perspectives; there remains lots of shifting sands in these early stages of recovery especially within the realm of consumer behavior.

Consumers remain entrenched and may actually be deepening their propensity towards careful spending. Standard and Poors second-quarter consumer discretionary spending is forecast to improve less than 4% versus last year and only .39% compared to 2010's first quarter. That estimate is reinforced by the National Retail Foundation's recent survey regarding back-to-school spending intentions: increased sale shopping and overall plans to spend less were reported by 53.3% and 42.6% of respondents, respectively. Unemployment trends, ongoing housing and mortgage concerns, and weak consumer confidence are contributors to stalling economic growth.

That reality prompted focus on beef demand in the course of economic slowdown in July's Monthly Market Profile. The primary theme being emergence of ". . . some clarity about the economy's overall direction and beef's subsequent fortunes would evolve . . . That's not been the case; the economy continues to churn ambiguous signals." But with all that said, it's hard to ignore the data and not ponder beef's incredible run in recent months.

The market has staged an impressive turnaround in 2010 - the beef complex has defied headwinds within the broader economy and proven to be amazingly resilient. Who would have ever guessed a year ago that live cattle would have managed to trade at $95 in the middle of July? In fact, 2010 established a new top for the fed market as prices averaged $92.93 through July - topping the previous high-water mark of $92.64 (remember the 2008 tax stimulus and surging summer cutout values?).

What's driving these higher prices? A number of critical factors have come together and proven supportive for the market. Those include weather, relatively limited cattle availability, and speculative presence at CME. But underneath all of that one thing has gone largely overlooked - the primary emphasis of last month's Monthly Market Profile - consumer spending. And somehow, someway the beef complex has managed to defy conventional wisdom.

The overwhelming expectation has been that consumers will trade down across all categories of discretionary spending. But nothing is normal - projections are touch-and-go in this environment. The protein industry has come up a winner while many other consumer sectors have struggled. Amidst spending angst and a trying economy the beef complex has been the benefactor of a personal mini-splurge at the meat counter; consumers are seemingly trading up at the retail level.

Strength in wholesale prices has been driven by end meats - not middle meats. That's the outcome of reduced restaurant expenditures coupled with invigorated burger enthusiasm - retailers are increasingly carrying the marketing load. Simultaneously, the industry has also benefitted from demand on the international front; beef exports through May have generated an additional $26 per head versus this time last year due to international trade (see graph below).

None of that should imply the industry should let down its guard. As noted last month, consumers are adopting "a new frugality" when it comes to purchasing habits. And nothing is certain in this post-crisis economy - any type of victory could prove to be very short-lived; consumer spending largely centers on perceptions making the marketplace very fickle. And as I've noted previously, it's "better to be defensive and pleasantly surprised than the other way around." Nonetheless, some good news is refreshing and encouraging; maybe, just maybe there's reason to express some cautious optimism (and at least for a moment just pause and celebrate).

One final market observation as it relates to the newly proposed GIPSA rule. If ever there was a period in which the market was prone to disintegrating because of inequitable practices 2010 would be it. The barrage of bad news is never ending; in fact, there's been increasing chatter in recent weeks about renewed threats of deflation. However, the market's resilience is partially attributable to the previous 20 years of work: alliances and value-based marketing have contributed to increased prevalence of effective price signals throughout the supply chain. That's enhanced beef quality and consistency while ensuring responsive precision and efficiency of product delivery to various consumer segments. The bottom-line being improved customer satisfaction that's anchoring spending in these challenging times.

Price Summary

Item

Week Ending:

8/6/10 7/30/10 7/23/10 7/16/10 7/9/10
Slaughter Steers ($/cwt) 93.00 92.83 94.83 93.80 92.75
Choice Cutout ($/cwt) 150.84 154.01 154.94 154.04 155.14
Select Cutout ($/cwt) 143.77 145.72 146.06 145.02 145.62
Hide and Offall ($/cwt) 10.66 10.58 10.65 10.68 10.78
USDA Slaughter Weights (lb) 1275 1272 1269 1266 1264
USDA Steer Carcass Weights (lb) 836 832 834 827 824
CME Feeder Cattle Index ($/cwt) 113.30 113.28 112.60 112.19 113.30
Cow Cutout ($/cwt) 129.84 131.42 130.86 130.72 129.11
Corn (basis Omaha: $/Bu) 3.64 3.44 3.43 3.59 3.59
Cattle Harvest (000 head) 654 654 666 666 602
Beef Production (million lb) 504.6 503.4 511.5 509.1 458.9




Weekly Roberts Agricultural Commodity Market Report - Mike Roberts, Commodity Marketing Agent, Virginia Tech

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) closed up on Monday with the exception of the October 2010. The AUG'10LC contract closed at $93.100/cwt; up $0.325/cwt and $0.930/cwt over last report. The DEC'10LC contract closed up $0.175/cwt at $97.575/cwt; $1.650/cwt higher than this time last week. The APR'11LC contract closed at $100.600/cwt, up $0.050/cwt and $1.13/cwt higher than last report. Higher retail prices, gains in outside markets, and short covering on technical positions were supportive. USDA put the box beef price at $152.74/cwt; up $1.95/cwt from Friday and $2.04/cwt over last report. On Monday USDA put the 5-area price at $93.05/cwt; $0.12/cwt over this time last week. Total open interest fell last Friday due to settled positions in the August contract ahead of delivery notices as that contract gets ready to come to a close. In other news, Argentinean beef exports slacked off on government limits and tight supply. Between January and June of 2010 Argentina exports were off 44% from last year. According to HedgersEdge.com, the average packer margin was lowered $3.40/hd from last week to a negative $14.50/hd based on the average buy of $92.78/cwt vs. the average breakeven of $91.66/cwt.

FEEDER CATTLE at the CME finished mixed on Monday. AUG'10FC futures closed at $112.275/cwt; off $0.125cwt and $0.325/cwt off last report. The OCT'10FC contract finished off $0.225/cwt at $113.000/cwt and $0.725/cwt lower than last week at this time. Rising grain prices had a negative impact on feeder prices. Spreaders sold September and bought August while others sold October and bought September. Also weighing on September futures were Goldman traders and others rolling positions out of the August contract. The CME feeder cattle index was placed at 113.00/lb; unchanged from Friday but 0.23/lb higher than last report. The Oklahoma National Stockyards in Oklahoma City, OK estimated Monday receipts at 6,000 head vs. 6,266 last week and 6,611 a year ago. Compared to last week's prices feeder steers were steady to 1.00/cwt lower while feeder heifers were steady to 2.00/cwt lower.





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BEEF Cattle is a weekly publication of Ohio State University Extension in Fairfield County and the OSU Beef Team. Contributors include members of the Beef Team and other beef cattle specialists and economists from across the U.S.

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