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Previous issues of the BEEF Cattle letter

Issue # 711

November 17, 2010

Forage Focus: Using Low Quality Hay - Rory Lewandowski, Extension Educator, Athens County

Producing high quality hay depends upon cutting the forage plant at a vegetative stage and then getting enough dry sunny days to allow the plants to dry, ideally, to 15 to 18 percent moisture content before baling. While the frequent rainfalls we received earlier this year was good for forage growth, it also hindered quality hay production. Many hayfields were cut at a full bloom or later stage of development. Remember that for any grass or legume plant quality as measured by crude protein, energy and digestibility declines as the plant matures. It looks like hay supplies in terms of quantity are in good shape this year, but quality, particularly of first cutting hay, is generally low.

One management decision cattlemen should give more thought to this year is the timing of when poor quality hay is used. In the past, when corn and soybean meal were relatively inexpensive, they were used to plug the gap between the cow's nutritional need and what the low quality hay failed to provide in terms of energy and/or protein. In today's economic reality, that practice can quickly eat away potential profitability. Ideally the cattleman should strive to match hay quality to the nutritional needs of the cow while minimizing or eliminating expensive supplemental grain. Let's take a look at the nutritional needs of the spring calving cow at this time of year, along with some expected low quality hay values.

What kind of nutrient values might be expected in low quality hay? I found a reference to some research work in Virginia that analyzed orchardgrass hay harvested at various maturity stages. Full bloom orchardgrass hay was listed at 7.5 -8.0 % CP, and about 50% TDN. I would expect similar results for tall fescue hay at a comparable maturity stage. This year I have seen hayfields harvested where maturity went beyond full bloom and into seed production. Nutrient levels will be lower for that type of hay. I have seen hay analysis results here in Athens County in past years come back with crude protein levels below 6% and TDN levels around 45%. While book values can provide some approximate ballpark figures, the only way to gain more reliable information about the nutrient value of your hay is to do a good job of sampling it and then have it analyzed.

The following table lists the daily nutrient requirements as defined by total digestible nutrients (TDN) and crude protein (CP) for a 1200 lb cow at the end of lactation and continuing after weaning into mid-gestation. (Adapted from the 1996 NRC for beef cattle)

Months Since Calving* CP (%DM) CP (lbs) TDN (%DM) TDN (lbs)
6 9.0 1.88 52.5 13.3
7 6.5 1.45 47.0 10.5
8 6.5 1.49 47.3 10.8
9 6.7 1.56 48.0 11.2

* Month 6 is the final lactation month.

Notice that after the calf is weaned from the cow, the nutrient requirements of the cow decrease by about 20%. This represents an opportunity to use a poor quality hay to meet the cow's nutritional needs without having to spend money for additional supplementation.

Using our example of full bloom orchardgrass hay, it can be seen that this hay will meet and exceed the nutrient requirements of a 1200 lb dry cow in mid-gestation. It is likely that hay harvested after full bloom will be adequate in this situation. However, if this hay is fed beyond mid-gestation it is not likely to meet the cow's nutritional needs without supplementation. In addition, the NRC requirements are minimal requirements. As weather conditions deteriorate in the winter, nutritional needs increase above these minimal levels, causing a larger deficit between the nutrients supplied by poor quality hay and what the cow actually needs. All of this adds up to say that August and September and in to October may be good months for the cattle producer to feed poor quality hay rather than waiting for winter use.

Feeding some of that low quality first cutting hay in August through October offers another advantage to the cattle producer. It provides a window of opportunity to stockpile some pastures for winter grazing. In most cases that stockpiled forage will be higher quality than mature first cutting grass hay. Feeding hay now can also provide any pasture paddocks that may have been overgrazed an adequate rest period to recover and recharge root reserves.

Matching forage quality to a cow's nutritional needs takes some management skills. In a year when there is plenty of low quality hay and high grain prices, feeding that hay at a non-traditional time of year can make dollars and cents.

Sampling Forage - Clif Little, Extension Educator, Agriculture Natural Resources, Guernsey & Noble Counties

Testing the nutrient value of forage is a valuable tool that can be utilized to balance livestock rations. Guessing the nutrient content of a major feed ingredient such as hay or silage can be costly to livestock producers. For example, the Dairy One Forage Lab maintains a feed library listing the range in nutrient content of various forages and feeds. For mixed grass hay from 5/2000-4/2010 they have analyzed more than 35,000 forage samples. Utilizing corn, soybean meal, feed limestone and dicalcium phosphate we can establish a price for energy, protein, calcium and phosphorus and compare the value of mixed grass hay based on the laboratory range in hay nutrient content. Utilizing current prices from our local feed supplier as of 10/26/10, the range in nutrient value of the mixed grass hay tested at the Dairy One Laboratory was $207 per ton to $150 per ton. The average value of the hay was $182 per ton. The difference in value from top to bottom is over $56 dollars per ton. The value difference from the average to the low quality hay is over $31 per ton. To realize the value in hay or other stored forage we need an analysis. Most livestock producer will need to supplement this winter with some kind of stored forage. High prices for soybean meal, corn and other commodities further justify the cost of a forage analysis.

Forage test forms can be obtained from your county Extension office. These forms contain complete instructions on how to collect forage samples. Proper collection and identification of a sample is very important. A tool is needed to collect hay samples. Your local Extension office may have a Penn State Forage Sampler. This device consists of a long tube with a cutting edge on one end and a shank on the other that can be fastened to an electric drill or hand brace.

1. To correctly sample a rectangular bale, the bit is driven into the end of 15 to 20 bales from a particular lot of hay. Drill to the full depth of the sample tube on loose bales and half depth in tight bales. Mix the cores thoroughly and send the entire sample to the lab in a sealed plastic bag.

2. Large round bales should be sampled on the rounded side of the bale. Collect a single sample from each of 10 to 12 bales from the same lot, combining the core samples into one sample for analysis. If the outer layer of the round bale is weathered, pull away 1 to 2 inches and sample below. Drill to the full depth of the tube.

Each hay type and cutting should be sampled and analyzed separately. Hay harvested on different dates within a cutting should also be sampled separately. Therefore, it is important that each cutting is stored separately and can be identified with its forage test. When sampling forages one cannot over stress the importance of proper sampling technique. Samples should be representative and selected at random. In summary, sample each lot of forage separately, and make sure that the forage can be identified with its analysis when feeding.

Silage can also be analyzed. To sample silage, run the unloader and collect from the feed bunk in 5 to 6 places. Put four handfuls of silage into a plastic bag. Collect samples for two or three days, then mix thoroughly and subsample 1 to 2 pounds. Keep samples in the refrigerator during the collection period and store them in a plastic bag. Seal the bag, attach a completed tag and mail immediately or freeze and mail the frozen sample to the laboratory.

Bagged silage can be sampled by cutting slits along the side of the bag in 5 to 6 places. Collect handfuls and mix in a clean plastic bucket. Mix well and bag in plastic with a tag. Reseal the slit with heavy duty tape.

Silage can also be sampled while it is going into the silo. Collect representative samples from each wagon as it is unloaded and mail immediately or freeze the samples. Take the same number of samples from each wagon and keep them in a container. If the silage lot changes (i.e., a particular hybrid, field, area of the farm), start another container. When all samples have been collected, mix the sample within each container, and collect a random 1 to 2 pound subsample for analysis. Seal in a plastic bag and send to the lab immediately or freeze if they can't be mailed promptly. Fresh silage samples are a good way to plan your feeding program. However, it is a good idea to sample silages when they are being fed and have gone through the fermentation process.

Pastures can be sampled by collecting pasture grass at the height animals are grazing. Collect random grab samples of forage from several locations. Air dry the sample if possible, before sending to the laboratory. This can be done by hanging the forage inside a burlap bag for about a week. Fresh samples should be mailed immediately.

Knowing the forage nutrient content can save money in the winter feed program. A forage analysis is the only way to accurately balance a ration or mineral program. Lastly, the forage analysis determines forage value. For assistance contact an OSU Extension, Agriculture and Natural Resource Educator.

EDITORs NOTE: You will find more information on the subject of managing hay quality in the OSU Extension fact sheet Forage Testing for Beef Cattle, and a list of forage testing labs you might consider using under this link.

Google, Apple and Beef - Nevil Speer, Professor, Animal Science, Western Kentucky University

There's sure no lack for good action. October's outset had steers and heifers being weighed up at mostly $95. Onward and upward from there: cattle subsequently fetched $97 and then surged another $4-6 to mostly $101-2 - the best mark since July, 2008 (more on '10 vs. '08 later). The month closed $5 better than it started with negotiations settling at $100.

At that point, the market appeared poised for some setback, or at the very least a breather, during the remainder of the year. November, in accordance with normal pre-Thanksgiving seasonality, backed up another $2 and ended at $98. Traders at the CME are closely watching consumer demand. December live cattle contract wedged out some support at $97 - down sharply from mid-October's $102 level. However, the contract found some renewed vigor on the 10th and jumped past $99.

That said, mixed signals and ambiguity seem to rule the day throughout the economy. The FOMC's November 3 commentary about the current economic environment possesses dual implications for the beef complex:

Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts continue to be depressed.

First, observations relative to consumers is straight-forward. Economic pressure and subsequent consumer frugality is an ongoing theme. Recent weakness at the CME, as alluded above, is partially a function of seasonality coupled with overarching angst regarding food price trends. The primary question surrounds beef's competitive position within the mounting commodity cost structure and prospect for higher food prices. However, beef has proven amazingly resilient within that structure. And for some, the proper interpretation is that further easing will help spur consumer spending. Is the glass half-full or half-empty?

Also important, though, are implications for the cowherd stemming from QE2. Those come primarily in the form of the foreign exchange market. Stimulus establishes downward pressure on the dollar and makes imports relatively more expensive. That'll further underpin support for domestic cull prices as a source of lean trimmings. That proved to be the case last year and certainly incentivized beef producers to liquidate cows (see graph below). It will likely continue to be the case going forward. Rising commodity prices also means higher input costs. Simultaneously, the prospect for incrementally higher corn prices potentially buys acres from pasture going into spring. All factors which don't readily encourage rebuilding the cowherd.

The other side of trade balance continues to be friendly to the market. Export value through August is equivalent to $160/head to the market. Let's put that in some perspective. The fed market through the summer averaged a little over $93/cwt - nearly equivalent to 2008's $93.50 average. The market several years ago was supported by a huge contraseasonal wholesale surge largely resulting from stimulus checks. Clearly, the beef complex hasn't had that type of shot-in-the-arm during 2010. Rather, the fed market's achievement has largely been lifted by exports: international markets have provided a boost equivalent to nearly $40/head, or $3/cwt, above 2008. In other words, absence of expanding international markets year-over-year would have us trading cattle at $90 through August instead of $93.

We can't overlook the grain market. Last month's MMP noted that, "Commodity markets are inherently cyclical. Hang on tight! This may only be the beginning of a wild ride." All indicators are that corn has a ways to run. Carryover deems that acres will have to be purchased and the fight is on. In the interim, the common question surrounds some absolute price that will initiate rationing. However, as noted last month, the more proper question is about the margin risk. Average crush values are depicted in the graph below - underlying those values are the assumption of risk management. The fed market has bailed out crush values and they've taken a normally-favorable seasonal turn. Clearly, hand-to-mouth management looks very different - especially in light of replacements purchased during the summer now arriving against a $6 corn market.

Lastly, and most importantly, the Monthly Market Profile has always emphasized broader business applications, economic principles and their application to the beef complex (and agriculture in general). That said, several weeks ago, Russ Roberts, renowned economist and host of EconTalk, visited with Thomas Hazlett - the discussion providing further insights into Hazlett's recent Financial Times essay entitled, "Is Google More Open than Apple?"

What does Google versus Apple have to do with our business? Everything, especially in context of Hayek's knowledge problem - that is, the ability to know what will, or will not, shape incentives, preferences and/or future decision-making is unknowable. Conversely, assumption of knowledge potentially limits the capitalism's greatest asset - creativity. And therein enters the danger of inappropriate regulation. Those principles are fundamentally important to business and cogently captured in the last few minutes of the EconTalk podcast.

Russ Roberts: Your view is that, similarly to our conversation about strategy, the difficulty of assessing which strategies are going to dominate, the idea that we can design a regulatory environment that would ensure competition is problematic. Right?

Thomas Hazlett: Well, it's certainly problematic - all these things are challenging. With the structures that are in place now, I think it's the received wisdom of those who really follow the way this plays out is that the regulators should be very circumspect as to their interventions and they should try to be as general as possible in the competition policy they institute. They really need to be very careful about going any farther than anti-trust policy. And they should be very careful with their anti-trust policy. They should be very tuned into the consumer welfare standard and they should be very respectful of dynamic efficiencies that can result from things like the browser war or the Google-Apple war. The battle of the giants fighting it out over rival business models - that is enormously productive innovation that comes out of that. We've seen time after time after time, trying to micromanage the direction of competition - that is what we have to avoid.

I'll leave it there - the parallels to the beef industry, amidst pending regulation, are self-explanatory.

Price Summary


Week Ending:

11/5/10 10/29/10 10/22/10 10/15/10 10/8/10
Slaughter Steers ($/cwt) 97.79 99.69 100.79 96.51 94.77
Choice Cutout ($/cwt) 159.57 161.54 159.19 153.18 152.42
Select Cutout ($/cwt) 152.33 154.12 152.31 146.04 145.21
Hide and Offall ($/cwt) 11.59 11.44 11.25 11.17 11.17
USDA Slaughter Weights (lb) 1302 1299 1297 1294 1293
USDA Steer Carcass Weights (lb) 860 861 859 854 852
CME Feeder Cattle Index ($/cwt) 111.32 111.07 110.38 107.48 109.78
Cow Cutout ($/cwt) 121.94 121.83 121.07 120.20 120.16
Corn (basis Omaha: $/Bu) 5.59 5.42 5.11 5.10 4.90
Cattle Harvest (000 head) 651 668 662 659 664
Beef Production (million lb) 511.4 524.3 518.1 514.5 517.7

At What Point Do We Run Out of Cattle? - Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

The U.S. beef cow herd has decreased 12 of the last 14 years, dropping from a cyclical peak of 35.3 million head in 1996 to the January, 2010 level of 31.3 million head. This represents the smallest beef cow herd since 1963. Combined with smaller dairy cow numbers, the 2010 calf crop is expected to be 35.4 million head, the smallest U.S. calf crop since 1950. Total U.S. cattle inventory has decreased by almost 10 million head since 1996 to the January, 2010 level of 93.7 million head, the smallest cattle inventory since 1959.

In contrast, total beef production has not changed accordingly. In fact, 2010 beef production is projected at 25.9 billion pounds, slightly higher than the 1996 level of 25.4 billion pounds. This leads to two questions: how have we maintained beef production with declining inventories? and can we continue to maintain production? We have maintained production thus far in two primary ways. First, decreasing inventories allows the industry to utilize that inventory as production while numbers are declining. Secondly, for the decade, between 1996 and 2006, cheap corn allowed the industry to feed animals to ever increasing carcass weights and to feed lightweight calves for many days in feedlots. Feedlot inventories are thus maintained by a slower rate of turnover. Thus, the industry was able to effectively turn fewer cattle into more pounds of beef.

The situation is now different. Expensive corn forces the industry to feed heavy yearlings and move them through the feedlot faster. Carcass weights in 2010 have been below year ago levels almost all year and high feed costs likely limits carcass weights to little or no trend in coming years. A faster feedlot turnover rate exposes the shortage of cattle quickly as feedlots scramble to find sufficient supplies of feeder cattle to place on feed and maintain feedlot inventories. So far, we appear to have been able to do that. Total cattle slaughter for 2010 is running almost two percent above 2009 levels. However, an analysis of the slaughter mix is instructive. Steer slaughter is up less than one percent this year. By contrast, heifer slaughter is up nearly 3 percent and cow slaughter is up 4 percent. It is clear that we are maintaining slaughter rates, in the short run, with our females. This is not sustainable without accelerating herd liquidation going forward. At some point we will try to stabilize the herd size and then expand a bit. Given the current situation this implies a significant reduction in cattle slaughter in the short run even to hold the cow herd size steady. It seems likely this process will start in 2011.

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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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