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OSU Extension - Fairfield County

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OSU Extension BEEF Team

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

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Previous issues of the BEEF Cattle letter

Issue # 647

August 5, 2009



Forage Focus: Stockpiling Pasture for Winter Feed - Rory Lewandowski, Extension Educator, Athens County

The idea behind stockpiling pasture is to let a pasture grow and accumulate forage tonnage that is set aside for later grazing. The amount of tonnage that accumulates and when it is best grazed depends upon some variables and management decisions. Some of the production variables can be controlled and some can't be controlled. Let's take a look at the process, variables and economics behind stockpiling pasture.

Generally, if a pasture is going to be stockpiled for winter feed, the recommendation is to take a last cutting, clipping or grazing pass in early to mid-August and then let the pasture regrow and stockpile or accumulate forage until the end of the growing season. Stockpiling research and on-farm trial results have shown this is the best compromise between quantity of forage stockpiled and quality of forage stockpiled. Beginning earlier can result in more tonnage but quality will be lower, while beginning later will result in higher quality forage, but lower total tonnage. Tall fescue is our best stockpiling option, especially for late winter grazing, because it holds its forage quality value better than something like orchardgrass. However, orchardgrass can be stockpiled, just manage it to graze it off in the late fall through early winter.

Variables in this system include weather and nitrogen fertilization. Nitrogen fertilization can increase both the quality and the quantity of the forage being stockpiled. Research results from a southeastern Ohio location showed that applying nitrogen increased the crude protein content of stockpiled fescue by an average of 2 to 3 percentage points as compared to the unfertilized fescue across late fall and into winter. Nitrogen applied to tall fescue in the early to mid-August time period should return 20 to 30 lbs of additional stockpiled dry matter (DM) per lb of nitrogen as compared to stockpiled fescue without supplemental nitrogen. Of course without rain none of this matters. Look no further than the past two dry falls we have experienced. No rain equals no growth.

The main reason for considering the practice of stockpiling pasture for winter feed is to reduce the cost of raising livestock. In most ruminant livestock operations the highest cost of raising an animal or maintaining a flock or herd through the winter, is the cost of using stored feed. For most ruminant livestock farmers that stored feed is hay. In most situations you just can't beat the cost of livestock out harvesting and eating their own feed compared to the fertilizer, machinery, and labor costs associated with making, storing and then feeding hay.

A good place for the farm manager to begin when considering the decision to stockpile pasture or not to stockpile is with some basic economic comparisons between the costs of hay and the costs of stockpiling. 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 plus machinery and labor costs to make the hay. I just made a phone call to some fertilizer dealers in the Athens County area and as of this date, July 22 (2009), farmers could purchase urea (46-0-0) for $385/ton, DAP (18-46-0) for $400/ton and Potash (0-0-61) for $745/ton. Each ton of dry matter (DM) hay contains/removes about 40 lbs of nitrogen, 15 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 $45.85. On top of that must be added the machinery and labor costs to make the hay. I used the OSU Extension 2008 Ohio Custom Rate figures and a production level of 2 tons/acre DM per cutting. This added up to another $29/ton. The total value of hay based on the nutrient value and the machinery and labor costs associated with that hay comes to $74.85/ton. 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 $60.55/ton.

What does it cost to stockpile pasture? The answer to that question depends upon whether synthetic nitrogen fertilizer is applied. If the pasture that would be stockpiled has 30% or more legumes evenly distributed throughout the stand, there is no need for any additional nitrogen. If the legume component is under 30% and/or unevenly distributed in the stand, it may be beneficial and economical to apply nitrogen. Stockpiling research results indicate that in predominantly grass stands, providing 50 lbs of actual nitrogen per acre is economical. Considering today's urea price of $385/ton, plus a spreading cost of $6/acre, it would cost $27/acre to apply 50 lbs of actual nitrogen. 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. This figures out to $43 - $54/ton of additional DM. This is cheaper than producing a ton of hay and doesn't involve the cost of moving the hay bale out to the livestock.

OK, now let's look at the total management picture involved in stockpiling pasture. Going back to research done by Extension Educators at the Jackson Experimental station, it can be expected that fescue without supplemental nitrogen fertilizer will stockpile on average about 2000 lbs of DM from a mid-August to end-of-the-growing season time period. Our economic analysis of nitrogen at current prices looked favorable, so if the forecast for rain looks favorable, supplemental nitrogen could be applied and the total amount of stockpiled forage should be around 3000 to 3250 lbs of DM. If the livestock manager wants to get the most return from this stockpiled pasture, access must be controlled. Strip grazing is the most efficient way to utilize stockpiled pasture. Giving livestock access to no more than 3 days worth of intake can provide a utilization rate of around 65%. If the manager is willing to restrict access more and move fence every day, that utilization rate might be bumped to 80%. On the other hand, if management is less intense and livestock have access to an entire stockpiled pasture without restriction, utilization might be no better than 35 to 40%. The point is that how a stockpiled pasture is managed has a big impact on the bottom line cost.

Another management consideration that can be thrown into the decision on whether or not to stockpile is the timing of feeding hay. What I am getting at here is the question: If pasture is limited, should hay be fed during the stockpiling time period rather than through winter and early spring? I believe there is merit to seriously consider this question, especially if there is some late July or early August rainfall in an amount that would insure that grass will be growing during the stockpiling period. In this case, feeding hay during this time period while stockpiling some pastures would allow pastures to recover from any overgrazing that occurred during the season and would allow those pastures to build carbohydrate reserves during the critical fall period. This system might also match up forage quality with livestock nutritional needs better than winter/spring feeding of hay. I say this because often first cutting hay is low quality due to rainfall that delays cutting or hay getting rained on. Feeding this low quality hay anytime from August to November is going to come closer to meeting early gestation nutrient requirements as compared to feeding it in late winter/early spring when the animal is in late gestation or, in some cases, early lactation and needs a higher level of nutrient intake. Meanwhile, stockpiled fescue, especially if some nitrogen has been applied, could supply 13-15% crude protein forage from January-March, generally higher quality than first cutting hay and about equal to a lot of 2nd cutting hay.

In practice, a livestock farmer might think about stockpiling enough acres to permit grazing for 90 days, January - March for example. For a 30 cow herd with an average weight of 1200 lbs and figuring cows eating about 2.5% of their body weight in DM per day, this equals 30 lbs/cow/day. So, that 30 cow herd needs 900 lbs of DM/day. Over a 90 day period this adds up to 81000 lbs of DM. If 3000 lbs of DM is accumulated by stockpiling and strip grazing is used to get 70% utilization, then about 39 acres need to be set aside to stockpile. Pasture acres above this amount could be rotationally grazed in combination with feeding hay until the stockpiled pastures are grazed beginning in January, when hay feeding would end.

Stockpiling pastures is not without risk, but if Mother Nature cooperates and the livestock owner is willing to apply some management skills it offers an opportunity for an economic return and the possibility of greatly reducing the practice of feeding hay during the winter months.





Late Summer is a Good Time to Plant New Pastures & Hay Crops - Mark Sulc, OSU Extension Forage Specialist

Late summer can be an excellent time to establish new forage stands. It is also a good time to seed in bare or thin spots in stands established this spring. While we can't control the weather, there are several things we can control that will improve the chances for successful forage stand establishment this time of year.

First, apply lime and fertilizer according to a recent soil test. Also control problem perennial weeds ahead of seeding. Be careful with herbicide selection because some have residual soil activity and will harm new forage seedings if proper waiting periods are not observed. Be sure to read the labels of any herbicides being considered.

If you are going to use tillage, don't over-till and be sure to prepare a firm seedbed. Loose seedbeds dry out very quickly. Deep tillage is not ideal for late summer seedings. A cultipacker or cultimulcher is an excellent last-pass tillage tool. The soil should be firm enough that the your boot leaves a print no deeper than 3/8 inch (you can bounce a basketball on it).

No-till seedings conserve moisture and can be very successful provided weeds are controlled prior to seeding. Remove all straw from fields previously planted to small grains. Any remaining stubble should either be left standing, or clipped and removed. Do not leave clipped stubble in fields because it will form a dense mat that prevents good emergence.

Plant the seed shallow (1/4 to 1/2 inch deep) and in firm contact with the soil. Carefully check seeding depth, especially when using a no-till drill. Use a drill with press wheels for greatest success with summer seeding. Broadcasting seed on the surface without good soil coverage and without firm packing is usually a recipe for failure in the summer.

Use high quality seed of known forage-type varieties from reputable dealers. Cheap seed often results in lower yield and shorter stand life. Check out our variety performance trials and those of neighboring states at the following websites:

Ohio: http://oardc.osu.edu/forage2008/

Kentucky: http://www.uky.edu/Ag/Forage/ForageVarietyTrials2.htm

Pennsylvania: http://cropsoil.psu.edu/pdf/2008_forage_trials_report.pdf

Michigan: http://web1.msue.msu.edu/fis/

Make sure legume seed has fresh inoculum of the proper rhizobium to ensure nitrogen fixation.

If you plan to seed alfalfa, don't plant new alfalfa immediately after an older established alfalfa stand. Autotoxic compounds are released by old alfalfa plants, which inhibit growth and productivity of new alfalfa seedlings. You can seed in alfalfa in late summer to thicken up a new alfalfa seeding that was made this spring. The autotoxic compounds are not present in young alfalfa plants. They are released from older, established alfalfa plants.

Recent rains have resulted in good soil moisture conditions across much of Ohio, which increases the chances for successful forage establishment. But do keep in mind that it is risky to place seeds into dry soil - there may be just enough moisture to germinate the seed but not enough to get the seeding established.

Plant new perennial forages as soon as possible here in August. Seedlings require at least 6 to 8 weeks of growth after emergence to have adequate vigor to survive the winter. Plant during the first two weeks of August in northern Ohio, and by August 30 in southern Ohio. Planting later than those dates may work, but there is more risk for establishment failure and the stand may have lower yield potential next year.

Slow establishing species should be planted this week. Fast establishing species like red clover, alfalfa, and orchardgrass can be seeded up to the dates listed above if moisture is present. Kentucky bluegrass and timothy can actually be seeded 15 days later than the dates listed above.

As the stand develops this fall, do not be tempted to harvest it. No matter how much growth accumulates, it is usually best to let the cover protect the new crowns during the winter. The only exception to the no fall harvest rule for late summer seedings is perennial ryegrass. If perennial ryegrass has tillered and has more than six inches of growth in late fall, clip it back to 3 to 4 inches in November or early December.

Finally, scout new seedings for winter annual weeds in October. Apply herbicides as needed. Winter annual weeds are much easier to control in late fall than they will be next spring.

By following these guidelines, and with a little cooperation from the weather, I trust you will have a vigorous and productive new forage stand next year that should yield the same as if it had been planted this past spring.





Monthly Market Profile: Same Story, New Chapter - Nevil Speer, Professor, Animal Science, Western Kentucky University

July's market was neither systematic nor necessarily orderly with lots of tug and pull week-by-week. But don't get too caught up in the weekly distractions, what really matters is the larger assessment. The month opened with a surprising move to the upside with cattle feeders earning $82-3. And the second week chopped along with slightly softer sales to finish mostly $82. Things became interesting, though, in the middle of the month: feedyards managed to squeeze the packer and drive the market to $84; that came without any discernible spot-market impetus as cutout values were steady. Fortunes reversed the very next week; wholesale values moved higher (up to $142-3) and processors strangled any further gains in live prices. The month closed on a sour note; live sales were mostly $1 off the previous week to end up back where we started ($82-3) despite cutout values remaining in the $140+ range. Needless to say, packer margins were very favorable as July ended and provided impetus for the largest throughput in the past five weeks.

The wholesale market's prosperity during the past several weeks is an important story. The upside represents a contra-seasonal move (though not nearly as large as last year's stimulus-driven surge). Perhaps more importantly, the market has seemingly established support at $135 for the Choice cutout. Simultaneously, though, cutout values continue to find resistance in the $140-145 range. Range-bound wholesale values will ultimately hamper upside potential for live prices; the market needs to break out to higher levels to facilitate any major moves in the fed market. So despite lots of continued enthusiasm about a supply-driven market, in the end what really matters is economics; consumers have to come back to beef to really drive the fed market to new levels. This is especially important to monitor given that 2nd-quarter GDP results indicate that consumer spending declined1.2% between April and June (following a .6% increase in the 1st-quarter); unemployment worries, consumer confidence and higher savings rates will potentially cap spending in the months to come.

Now let's shift gears and look more broadly at what's occurring within the beef business. During the past year (actually, make that several years) I've provided extensive coverage about the state of flux within the industry and what it means going forward from a business perspective. Along that theme, USDA's cattle inventory and cattle-on-feed reports converged with several key indicators about what's really going on out there and provide insight into the collective decision-making within the industry. None of this is really news but important to review.

First, July represents the 15th consecutive month in which USDA's cattle-on-feed inventory has culminated in declining numbers versus the previous year. July's inventory was 7% below the 5-year average and represents the smallest feedyard population since August, 2003. Even more important, though, are indicators that the slowdown may actually be hastening. Reluctance to place purchase cattle for feeding ventures has been especially pronounced during the past several months. June placements were pegged at 1.391 million or 8% below last year's arrivals and 19% behind the 5-year average; May arrivals were 14% behind 2008's pace and a whopping 22% behind the 5-year average. The 2-month combined total of 3.029 million head represents the slowest arrival rate since June/July, 1996. None of this is a new trend - waning appetite for risk has forced placements to be in decline over the past several years (see graph below).

Second, USDA's cattle inventory report revealed continued decline in beef cow numbers - 450,000 fewer (1.4%) versus 2008. More importantly, 2009 extends a long-term streak: producers have maintained fewer beef cows in the July 1 inventory report twelve out of the past 14 years (the other two years in that mix represent a zero- and 50,000-cow increase in 2006 and 2005, respectively). All said, we've witnessed 3.9 million cows, or a little over 10% of the total population, disappear since the recent peak in 1995.

Lastly, July's cattle-on-feed report also included regular quarterly breakdown of the respective steer versus heifer population. What's important here is the fact that waning placements aren't the result of sudden spring intent to build the cowherd and intent to retain heifers. In fact, the proportion of heifers within the feedyard population is actually inching upwards and currently stands at 38%. That trend coincides with the cattle inventory report: heifers held as beef cow replacements declined to 4.5 million head - a year-over-year decline of 100,000 head (2.2%). July's Monthly Market Profile asked the question whether the industry is caught in an adverse-feedback cycle. At the very least, recent data indicate an industry which is in deep distress.

The question then becomes what to make of strategy going forward. There are two fronts to deal with. The first is consumer psychology and spending - an important component which ultimately dictates the amount of revenue flowing through the industry. Unfortunately, it appears over the short-term the consumer will remain under pressure to shore up his/her personal balance sheet until there's substantial job creation within the economy. Joshua Shapiro, Chief U.S. Economist, MFR Inc., recently explained why spending improved following the previous recession despite being coined as a "jobless recovery" (interview with Tom Keene, Bloomberg on the Economy, July 23): "The last time around, consumers outperformed the labor market because they were using their homes as ATMs and credit was freely available. That's not the case this time." That issue mandates careful monitoring and speaks directly to the wholesale market discussion above.

The second front comes in the form of overall business investment front and the overarching issue of excess capacity. Mr. Shapiro also made some important observations that have direct application to the beef sector. He was asked about clearing capacity and the economic history as it relates to this recession. Does it stem from consolidation?:

"Yes, consolidation is the best way. And again, if you look at a lot of things the government has been doing, it's kind of anti-consolidation. A lot of it is s propping up things that maybe shouldn't be propped up and we should at least allow the process to naturally take its course and reduce excess capacity that way. The more you do the "Japan sort-of thing" the longer your pain lasts."

Consolidation and government involvement - two imperative issues we constantly wrestle with in the beef complex.

What's really important here is to evaluate all of this within the current business and economic environment. To date, producer-level consolidation has largely occurred because of demographics and/or lifestyle choices at the cow-calf level and pursuit of economies of scale at the feedyard level. The next wave of, or impetus of ongoing, consolidation will likely prove to be different; it will be not be driven by either of those factors but rather be catalyzed by the financial industry. Access to capital (or lack thereof) - both on a personal or corporate level - will dictate the entities which can continue to pursue their respective business interests.

Price Summary

Item

Week Ending:

7/31/09 7/24/09 7/17/09 7/10/09 7/3/09
Slaughter Steers ($/cwt) 82.76 83.19 83.62 81.36 82.81
Choice Cutout ($/cwt) 142.53 141.45 137.22 137.81 138.76
Select Cutout ($/cwt) 136.79 135.20 131.22 132.44 132.79
Hide and Offall ($/cwt) 8.23 7.57 7.17 7.10 7.20
USDA Slaughter Weights (lb) 1282 1279 1276 1272 1270
USDA Steer Carcass Weights (lb) 846 840 840 832 832
CME Feeder Cattle Index ($/cwt) 102.13 102.55 101.29 100.93 98.87
Cow Cutout ($/cwt) 109.93 110.70 112.35 112.68 112.02
Corn (basis Omaha: $/Bu) 3.20 2.95 3.02 3.04 3.20
Cattle Harvest (000 head) 639 615 627 628 628
Beef Production (million lb) 497.2 477.3 484.9 483.6 482.2

EDITOR's NOTE: Be sure to read Speer's thoughts on index funds and their interaction with futures markets and risk management in agriculture in his August Agsight column entitled "Another Round of Excessive Speculation."





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

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) were up on Monday with the exception of the nearby August ahead of contract expiry positioning and last week's weaker tone to cash cattle. The AUG'09LC contract closed down $0.25/cwt at $84.45/cwt; $0.250/cwt lower than this time last week. DEC'09LC futures closed at $89.600/cwt; up $0.357/cwt but $0.300/cwt lower than a week ago. Cash cattle traded $1-$2/cwt lower in the Southern Plains with USDA putting the 5-area price at $82.61/cwt; $0.68/cwt lower than last report. Support was seen from a declining U.S. dollar, general gains in grains, a higher NY Stock Exchange, and strong crude oil prices. Tighter cattle supplies were helpful with feedlot numbers near 10-year lows. USDA placed the Choice Beef Cutout at $142.83/cwt, up $1.19/cwt from Friday but $0.99/cwt lower than last Monday. According to HedgersEdge.com, average packer margins were raised another $9.55/head to a positive $23.00/head based on the average buy of $83.04/cwt vs. the average breakeven of $84.79/cwt. Hold off on pricing feed for a couple of weeks if you can. If not, consider hedging rising corn costs for the next three weeks.

FEEDER CATTLE at the CME were down on Monday. AUG'09FC futures finished at $102.000/cwt; off $0.350/cwt and $0.400/cwt lower than last report. The OCT'09FC contract also closed at $102.000/cwt; down $0.525/cwt; $0.570/cwt lower than a week ago. Gains in grains pressured feeder prices as grass continues to dry up amid rising feed costs. This is reducing demand for replacement feeders despite empty pens everywhere showing tight cattle supplies. The U.S. calf crop is expected to be reach lows in 2010 not seen in 59 years. Cash feeders in Oklahoma City were $1.50-$2/cwt lower. The CME Feeder Cattle Index for July 30 remained unchanged from last Friday at $101.61/cwt but $0.44/cwt higher than this time last week. It is a very good idea to sell feeders on the heavy side if you have grass as feeder buyers will want to buy as little grain as possible.





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