A Publication of:

OSU Extension - Fairfield County

831 College Ave., Suite D, Lancaster, OH 43130

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 this weekly BEEF Cattle letter by sending a blank e-mail to beef-cattle-on@ag.osu.edu

Previous issues of the BEEF Cattle letter

Issue # 590

June 4, 2008

Forage Focus: Some Pasture Management Do's and Don'ts - Rory Lewandowski, Extension Educator, Athens County

To this point, (end of May) the 2008 growing season has been good for the cool season forages that make up the vast majority of our pasture acreage. However, barring a very unusual year, we can expect that June and July will bring us stretches of dry weather and hot temperatures. Growth rates of cool season grass pastures will decline. Getting the most out of your pasture demands management, especially as growth rates decline.

Here are some management dos and don'ts to consider as we enter the summer months:

* Don't ignore the seed heads that have accumulated in your pasture paddocks. A plant in reproductive growth producing seeds is not putting energy into leafy growth or producing tillers to fill in thin spots in the pasture sod.

* Do clip seed heads from pasture grasses, allowing the plant to go back into vegetative growth that will result in more total forage being produced over the course of the growing season.

* Don't ignore uneven grazing patterns in your pasture paddocks. This indicates that selective grazing is occurring, allowing some plants to be overgrazed while others are becoming too mature. In this situation, forage utilization is being compromised.

* Do consider adding more pasture divisions, more paddocks to your pasture system when uneven grazing patterns are noticed. This means you will be grazing your cattle on smaller areas, increasing the stocking density. This will reduce the amount of selective grazing that occurs. Forage utilization will increase, manure distribution will be more uniform and pasture clipping can be reduced. All positives given the high cost of forages, fertilizer and fuel.

* Don't ignore the take half leave half principle. If this rule is violated and pastures are grazed down too low, the result is that plant root growth stops, and plant root reserves may be used to re-grow leaf tissue, diminishing the vigor of the plant root system. In addition, when adequate leaf cover is not maintained, the sun is able to penetrate to the soil surface, increasing the soil temperature and moisture evaporation from the soil. This will result in reduced plant growth.

* Do pay attention to when it is time to move the cows to a new paddock, and do provide adequate rest periods to allow a paddock to recover to proper grazing height before allowing cattle to make another grazing pass. As we get in to drier and hotter weather, grass growth rates will slow down. Rotation speed between paddocks will also have to slow down to provide the plants with a longer rest or recovery period. Consider the following charts as a guide:

Pure or Dominant Grass Pastures

Grass/Legume Pastures (30% or greater legume)

* Do take some time to look ahead to the summer months and have a plan for slower cool season growth rates. Will you be able to feed hay and hold cattle in a sacrifice area if grass growth stops? Can you manage your pasture rotations to slow them down and give plants an opportunity to re-grow to a proper grazing height? If you think forage will be tight, can you plant a summer annual forage like sudangrass or a sorghum x sudangrass hybrid? If so, this should be planted before mid-June.

* Finally, don't ignore the economics of management decisions. Do take the time to analyze costs and benefits. If you can't take advantage of the extra forage and increase in quality that is produced by clipping pasture paddocks or by putting in more pasture divisions, then these may not be good decisions.

Determining the Cost of Hay - Rory Lewandowski, Extension Educator, Athens County

I've had several conversations regarding the cost of hay recently. One person, trying to determine what to charge for essentially renting hay ground, reasoned that if the renter was going to sell small square bales for $5 or more per bale, then they ought to have at least $2 per bale as their share. Another person told me that if there is a lot of grass growing that gets made into a lot of hay then hay will again be cheap ($50-60/ton?) as in past years. The cost of producing hay can be determined from the value of nutrients removed plus the equipment costs. Whether hay is actually worth what it costs to produce it is yet another question.

According to the Ohio Agronomy Guide, each ton of grass hay removes 40 lbs of nitrogen, 13 lbs of phosphate (P₂O₅) and 50 lbs of potash (K₂O). I called two local fertilizer dealers to get prices on per ton bulk quantities. Urea (46-0-0) was quoted at $690 and $788/ton, DAP (18-46-0) was quoted at $1050 and $1375/ton and potash (0-0-60) at $600 and $665/ton. Using these prices to replace the nitrogen, phosphate and potash removed in a ton of hay resulted in a cost of between $61.41 to $70.66 per ton. Since I was using DAP to replace the phosphate removed, this also provided about 5 lbs of nitrogen. The remaining 35 lbs was replaced using urea. Besides the fertilizer cost, there should be something figured in for spreading the fertilizer. Using the 2008 Ohio Farm Custom Rates, the average cost for spreading dry bulk fertilizer is about $4.50/acre.

It is true that hay can be produced without fertilizing. I see it happen all the time here in Athens County. So, should fertilizer cost be part of determining the cost of hay? Yes, because each ton of hay removes those nutrients whether they are replaced or not. It is a matter of pay now or pay later. The soil can get mined to the point where it is no longer practical to produce hay. To restore soil to good productivity then takes a massive investment to restore soil fertility. Every year I get phone calls where people say they will fertilize in the future, or they are waiting for fertilizer to get cheaper because it is too expensive. If your soil fertility levels are good, and you are pretty sure fertilizer prices are going to decrease, then go ahead and delay fertilizing. However, you should still include some fertilizer charge into your hay cost calculation based on that future fertilization.

The next part of calculating the cost of hay production is machinery/equipment expense. I used average cost figures from the 2008 Ohio Farm Custom Rates. These rates are based on survey responses of Ohio farmers. Your own equipment costs may vary, and if you know what they are, plug those in. For those who don't know, this is a good place to start. Mowing is valued at $11.13/acre, tedding at $6.13/acre, raking at $6.59/acre and large round bale baling and hauling at $8.81 per bale. Since we talk about hay in terms of price/ton, these per acre costs will have to get converted into costs /ton. Here is where fertility will pay some dividends. As tonnage yields increase, the machinery costs of mowing, tedding and raking decrease on a per ton basis.

Let's consider an example where hay production is at 2 tons per acre and large round bales weigh 1000 lbs. The machinery costs are $5.56/ton for mowing, $3.07/ton for tedding, $3.29/ton for raking and $17.62/ton for baling and hauling the bales. If we need to do one tedding and one raking before baling, our total machinery cost is $29.54/ton. Adding the machinery cost to the lower of our fertilizer quotes ($61.41) results in a total hay production cost of $90.95/ton. At the higher fertilizer quote ($70.66), the cost is $100.20/ton. This does not include the cost of spreading fertilizer.

Now, it may be possible to reduce these hay production costs somewhat. You might find a better deal on fertilizer. Maybe you have an even distribution of 30% or more legumes in your hay mix, so the legumes provide nitrogen. Possibly you can spread some livestock manure that accumulated on a heavy use-feeding pad. You might be able to take out a pass with the rake if the weather is right and just tedd the hay. Maybe your machinery costs are a little lower. The point is, even with some of these conditions, hay is still going to be an expensive commodity. If you are making your own hay, these production costs are there whether that hay is mowed and baled at 15% crude protein and 65% TDN or at 7% crude protein and 48% TDN.

Then again, maybe the best situation is to find a neighbor or some other person who likes to make hay and hasn't pushed a pencil on the costs. You just might run into a good deal.

CRP Critical Feed Use Initiative - Implications for Feed Grain Demand - Darrel Good, Extension Economist, University of Illinois

Beginning on June 2, 2008, Conservation Reserve Program (CRP) participants with certain established vegetative cover may request a voluntary modification to contracts to utilize certain land, or lease the privilege to others, for critical feed use including haying or grazing (A fact sheet outlining the program is at USDA's Farm Service Agency web site).

The critical feed use initiative is designed to augment the livestock feed supply during a period of high prices for field crops. There are a number of conditions for qualification for the program. Some of these include: only CRP acreage that is fully established and devoted to designated practices qualify; no more than 50 percent of the eligible CRP acreage may be used for haying; grazing is allowed at 75 percent of Natural Resources Conservation Service (NRCS) recommended stocking rate; the critical feed use is only available in 2008 for the period after the primary nesting season ends through November 10, 2008. The ending date of the primary nesting season varies by state and ranges from July 1 in the southwest to September 15 in North Carolina (A map identifying these ending dates by state is at the Farm Service Agency web site). Participants must obtain a modified conservation plan for haying and grazing management. There will be no reduction in the rental rate paid for contracts in this program, but owners will be required to pay a fee of $75 for modification of CRP contracts.

The immediate question raised by grain market participants is How much will this additional forage production substitute for grain feeding in the last half of the 2008 calendar year? There is no obvious answer to that question, but it can be approached in at least two ways. One way is to try to estimate the level of participation in the program, the amount of forage produced by the program, and the nutrient content of that forage. Under the assumption that all of the additional forage production is fed as replacement for grain, a calculation of the amount of grain displaced can be made.

Not all CRP acres are eligible for the program. Ineligible acreage includes wetlands, buffers, filter strips, useful life easements, and land within 120 feet of a stream or other permanent water body. The USDA's news release describing the program indicates that more than 24 million acres of CRP land are eligible and that the program will make available "up to" 18 million tons of forage. Under the assumption that the forage will have, at best, 50 percent of the nutrient value of grain, feeding of an additional 18 million tons of forage could replace nine million tons, or about 320 million bushels, of grain. This calculation assumes that forage produced under this program is a net addition to feeding and does not simply replace forage from other sources.

A second approach to estimating the impact of the program on potential feed grain consumption is to evaluate the capacity to feed additional forage. Presumably, the additional forage could replace grain consumption by beef cattle, dairy cattle, horses, and sheep. Most seem to believe that the quality of CRP forage is such that the primary use would be for beef cows, replacement heifers, and perhaps backgrounding of fed cattle. The USDA's Economic Research Service (ERS) estimates the number of grain consuming animal units by species for each feed grain marketing year. For the period September 2008 through August 2009, the ERS projects a total of 93.5 million grain consuming animal units, of which 3.78 million (4 percent) will be cattle other than cattle on feed or dairy cattle, about the same percentage as in the previous marketing year.

The ERS estimates that about 6.6 million bushels of grain will be fed in the September 2007 through August 2008 marketing year and projects that 5.73 million bushels will be fed in the September 2008 through August 2009 marketing year. If additional forage production replaced all of the grain fed to these "other cattle" for an entire year (four percent of all grain fed), the displacement would equal about 250 million bushels. If the grain fed to these cattle was replaced for six months rather than a year, which still may be too generous of an assumption, the displacement would be about 125 million bushels. The replacement would occur mostly in the last quarter of the 2007-08 feed grain marketing year and the first quarter of the 2008-09 marketing year. If evenly divided between the two years, the displacement would represent about one percent of the total feed grain consumption in each year. The secondary impacts of the program are expected to be minimal. The program announcement is too late for most producers to alter cropping patterns and the one year nature of the program provides little incentive to expand the beef cow herd.

Clues about the potential impact of the CRP critical feed initiative on feed grain consumption will come from the number of acres enrolled. The USDA's September 2008 and December 2008 Grain Stocks reports will provide an opportunity to uncover the impact in the calculation of quarterly domestic grain disappearance. Our guess is that the impact will be small enough that it will be difficult to detect, lost in the noise of the annual variation of quarterly feed grain consumption. If so, this program has little implications for grain prices.

EDITOR's NOTE: See last week's issue of the Ohio BEEF Cattle letter for more information regarding the use of CRP acres for haying or grazing after July 15.

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

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) were down on Monday amid chart based profit taking and further import restrictions from South Korea. The JUNE'08LC contract closed at $95.400/cwt, down $1.125/cwt but $2.300/cwt higher than Monday before last. AUG'08LC futures were off $1.025/cwt at $100.825/cwt but $2.925/cwt higher than week before last. News that South Korea again will delay imports and heavy selling by funds and large commercials was not supportive. As tens of thousands protestors rallied in the streets South Korea announced it would delay publishing import rules that would make it easier for U.S. beef to come into that country. USDA put the 5-area price for cash cattle at $95.18/cwt vs. $94.06/cwt two weeks ago. USDA early on Monday put the choice beef cutout at $155.77/cwt, up $0.38/cwt. Packer demand was light as HedgersEdge.com reported the average estimated packer margin for processed cattle at $23.90/head based on the average buy of $94.29/cwt vs. a breakeven of $96.23/cwt. Cash sellers should consider pushing cattle off the feed lot as soon as they are ready. It is not a good idea to price more corn inputs at this time.

FEEDER CATTLE at the CME were off on Monday amid profit taking, higher corn prices, and lower live cattle. AUG'08FC futures were down $2.325/cwt at $113.7/cwt but $1.950/cwt higher than last two weeks ago today. The SEPT'08 contract finished the day at $114.725/cwt, off $2.075/cwt. Chart signs showed that feeders are technically near overbought with the August 10-day Relative Strength Index (RSI) at 67.56. A contract is said to be overbought at an RSI at 70 or above and oversold at or below an RSI of 35. Cash feeders were trending up through last Friday near $110.32/cwt. The CME Feeder Cattle Index for May 29 was placed at $109.55/cwt, up $0.45/cwt. If you have good pasture and can afford to hold feeders to somewhat heavier weights it is a good idea to do that. It is not a good idea to price more corn needs at this time.

CORN on the Chicago Board of Trade (CBOT) registered gains on Monday amid surging crude oil. Gains were limited as the market traded cautiously ahead of possible policy changes on trading limits for large funds. The JULY'08 contract finished at $6.156/bu, up 16.4¢/bu and 27.0¢/bu higher than two weeks ago at this time. The DEC'08 contract closed up 16.6¢/bu at $6.432/bu and 30.2¢/bu higher than Monday before last. Corn prices gained ground on concerns that yields won't make expectations based on more rain in the cornbelt. The market traded ideas that this will push more soybeans to get planted on acres originally planned for corn. USDA on Monday reported the U.S. corn crop 60%-65% in good to excellent condition vs. 78% this time last year. Continued cooler temperatures along with estimates for about one fourth of the U.S. corn crop going for ethanol are seen as bullish demand signals. In export news, USDA reported that 120,000 tonnes (4.7 mi bu) of U.S. corn was sold to Egypt for delivery soon. USDA also put corn-inspected-for-export at 37.376 mi bu vs. expectations for between 32-37 mi bu. U.S. Midwest cash corn was noted as steady to firm early on Monday with cash bids for corn in the U.S. Mid-Atlantic States ranging 23.0¢/bu - 49.0¢/bu lower. Although funds reduced net bull positions by 3,500 lots to 181,864 contracts for the week ended May 27, they were noted as buying over 7,000 contracts on Monday. Hopefully 60% of the '08 crop has been priced. Watch for weather rallies if you want to price more than that, however, make sure you can deliver.

Visit the OSU Beef Team calendar of meetings and upcoming events

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.

All educational programs conducted by Ohio State University Extension are available to clientele on a nondiscriminatory basis without regard to race, color, creed, religion, sexual orientation, national origin, gender, age, disability or Vietnam-era veteran status. Keith L. Smith, Associate Vice President for Ag. Admin. and Director, OSU Extension. TDD No. 800-589-8292 (Ohio only) or 614-292-1868

Fairfield County Agriculture and Natural Resources