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Previous issues of the BEEF Cattle letter
Issue # 563
November 21, 2007
Forage Focus: LMIC Trends . . . Record High U.S. Hay Prices
On a national basis, hay prices are record high. For the current U.S. hay crop-marketing year (2007-08), the national average all hay price is forecast to be about $130.00 per ton, surging past the prior record set last year of about $110.00 per ton. This crop year, the national alfalfa hay and other hay price are both forecast to be record high at over $135.00 per ton and over $115.00 per ton, respectively. Record high hay prices are the result of very tight supplies and strong demand, as all feedstuff prices are closely related based on nutritional components. That is, current hay prices largely reflect high energy and protein values as indicated by corn and soybean meal prices.
Hay prices differ on a regional basis due to the high cost of transporting hay. Still, national data provide important market indications. Since 2004, U.S. hay production has steadily declined with U.S. hay production in 2006 being the smallest since 1988. In 2007, U.S. hay production increased but at about 140 million tons it was still the second smallest since 1993. At the beginning of the 2007-08 hay crop-year (May 1), U.S. hay stocks were just 15 million tons, the smallest in relevant history (since 1960). With normal winter weather, U.S. hay stocks as of May 1, 2008 may not increase much. Current forecasts put May 1, 2008 national hay stocks at 15.4 million tons, just 3 percent above 2007's.
Preliminary forecasts suggest U.S. hay acreage harvested will increase some in 2008. But competition from other crops, especially in irrigated areas, will remain intense. Overall, national average hay prices are expected to remain well above a year ago for the balance of the 2007-08 crop-marketing year. Hay prices like other feedstuffs will remain very high next crop year (2008-09) and may average over $100.00 per ton in 2008-09 for the third consecutive year.
Hay is a valuable commodity, Save money by limiting storage and feeding waste! - Stephen K. Barnhart, Department of Agronomy, Iowa State University Extension
What a Waste! Storage and feeding losses can accrue for any hay bale type, but large, round hay bale management systems often lead to the greatest and most consistent losses. By the time that hay is fed, much of it will have lost more than 25 percent of its feeding value. Research on hay storage often supports what many producers say, "I get about three bales' worth of feed out of every four bales that I put up."
The traditional large, round bale storage method has been "outside, on the ground." Under average weather conditions, you can expect 25 to 35 percent dry matter and nutritive quality loss on unprotected bales stored outside, on the ground. While there are a few inches of weathering on the tops and sides, much of the loss is on the bottom of the bales where they are in contact with the wet soil. Simply storing round bales on a few inches of crushed stone (or on pallets, tires, etc.) can lead to considerable savings during storage. A stone pad is a cost, yes, but often a very economical one.
The next most often used storage step is to cover individual bales or groups of bales with some type of tarp or plastic cover. Another significant savings in forage can be gained by covering outside-stored bales but at additional cost and, in this case, shorter useful life for the investment. Covered and off the ground is getting close to the savings of inside or under-roof storage. I must note that there is still about a 5 percent loss in dry matter under the best of conditions with inside storage. The cost of permanent roof cover for the hay storage site can be quite economical, depending on the initial cost and any alternate uses that the structure can provide. The table below is a good summary of some of these cost and savings tradeoffs.
| Method | Total Cost | Useful Life of Investment | Dry Matter Loss (%) |
| Outside on Ground | -- | -- | 30 |
| Outside on Gravel Pad | $4,000 | 10 years | 20 |
| Outside on Gravel Pad | |||
| with Tarp | $3,500 | 10 years (pad only) | 10 |
| Plastic Bale Wrap | $350 | 1 year | 7 |
| Under Roof | $6,000 | 25 years | 5 |
From University of Kentucky Hay Storage Decision Aid program with assumptions of the storage methods
Feeding losses are expensive too. Hay costs between $0.02 and $0.07 per pound of dry matter, usually more than double the cost for the same amount of nutrients from pasture. In many forage/livestock production operations, more than 50 percent of the hay that is produced is wasted by either poor storage methods or improper feeding practices, or both.
No matter how hay is packaged, if you waste it during feeding, you lose money. Below are some general recommendations that can help minimize waste during feeding.
Feed hay in small amounts or in a feeder to minimize waste: When fed a limited amount of hay at a time, cattle have less opportunity to trample and soil the hay. As shown in the table on page 278, feeding hay in a rack or a "hay ring" also limits the opportunity that animals have to trample or soil hay and will reduce waste substantially if you intend to provide more than a day's worth of hay at one time. This applies to large hay packages too. Large bale systems are designed to minimize labor, not waste.
Another popular system is to unroll the bale and feed it on the ground as loose hay. This can result in high trampling and soiling losses if too much hay is fed at one time. If a three-day (or longer) supply of hay is unrolled and left for cattle to consume on their own, feeding losses of 40 percent or more can be expected. However, if fed on a daily basis, feeding losses run about 12 percent. One advantage of unrolling bales is that it gives you the opportunity to move the hay feeding areas around the pasture and distribute manure and nutrients evenly over a large area.
Feed hay in well-drained areas: If you intend to feed hay in a single location all winter, then providing a footing, such as crushed stone or even concrete, can help minimize problems with mud. Perhaps more cost effective is to move hay-feeding areas around the farm to minimize the damage to any one area of the pasture.
Feed hay stored outside before hay stored inside: Hay stored outside usually has more spoilage during storage and lower palatability than hay stored inside. Cattle will waste a greater percentage of poor-quality hay than they will of good-quality hay. Animals fed high-quality hay early in the season will often refuse poor-quality hay when it is offered later.
Estimated losses (percentage of hay offered) from different hay-feeding methods.
|
With Rack |
Without Rack | |||
| Bale Type | 1-Day Supply (%) |
7-Day Supply (%) |
1-Day Supply (%) |
7-Day Supply (%) |
| Small square | 3.9 | 4.1 | 6.7* | -- |
| Large round or square | 4.9 | 5.4 | 12.3* | 43.0* |
| Formed haystacks | 8.8 | 15.0 | 22.6 | 41.0 |
"Make or Buy" Heifer Economics - Cattle-Fax "Trends" publication, August 2007
After 10 consecutive years of cow/calf profits, and coming up on the fifth year above $100 per head, will producers begin expanding herd sizes? History tells us "yes"; the real question is "when?"
A key factor working against expansion has been the high value of heifer calves. Should a $600-675 heifer calf be kept as a replacement as compared to buying bred heifers at $1,050 to $1,200 per head?
The best strategy has been to buy more heifers when calf prices are low. However, we haven't seen price cycle lows for 10 years and are currently in the highs.
Herd size is one deciding factor. Usually, small pro-ducers find that buying replacements is more cost-efficient due to economies of scale. Other economic factors such as opportunity costs, feed costs, interest, labor, replacement costs and tax advantages will weigh on the decision to buy or raise heifers. Each producer must develop a budget that accurately reflects the individual operation.
The table below shows an example of how to calculate heifer development costs. We realize that no set of values represents all operations, so we've added a column for "Your Estimate":
| Our Estimate | Your Estimate | |
| Value of heifer @ weaning (550 x $1.12/lb) | $ 616 | |
| Cost of gain: weaning to breeding ($.50/lb x 200 lbs) | $ 100 | |
| Bull cost (bull cost-less salvage/25 cows/3 years | $ 20 | |
| Interest at 10% | $ 38 | |
| Grazing and feeding cost: breeding to calving | $ 220 | |
| Vet, med, vaccinations | $ 30 | |
| Death loss, 1.5% | $ 15 | |
| TOTAL | $1039 |
This analysis is not all-inclusive. Our analysis doesn't include charges for labor, the cost of "open" heifers, or the opportunity cost of foregoing any interest made from selling the $616 heifer calf.
It's Not Too Late!!! Ohio Heifer Development Program Still Accepting Consignments!!!
Still debating about how to develop your replacement heifers for this year? Wondering how you will be able to find enough grain and hay resources to feed both your cows and replacement heifers through the winter?
No problem. The Ohio Beef Heifer Development Program still has room and is currently accepting consignments for 2007-08. As a result of the program's initial success, the number of development centers has been increased with three cooperators identified for 2007-08. In addition to Heifer Development & Breeding Services in Russellville, John and Mick Ritchie of Lancaster and Dennis Blakeman of Oak Hill will be working with the program to develop heifers in the coming year. These cooperators have the capacity to develop over 300 heifers.
To consign replacement females or for more information, go to www.ohiocattle.org and look under the Beef Improvement tab to find a consignment form or call the OCA office at 614-873-6736. All forms should be returned to Bill Doig, OSUE/OCA Beef Program Specialist, 10600 US Highway 42, Marysville, Ohio, 43040.
Livestock Mortality Composting Workshop Scheduled
A livestock mortality composting certification workshop for local livestock producers (this includes dairy, swine, sheep, horses, poultry, and exotic operations) is scheduled for Thursday, November 29, 7-9 p.m. at the Newport Sportsmen's Club located on Rangeline Road, between St. Rts. 47 and 66, Newport, Ohio. Steve Foster, Darke County Ag Agent and Roger Bender, Shelby County Ag Agent are the instructors. Refreshments will be available.
The livestock industry is faced with discovering innovative and economical ways to dispose of mortality losses. This need has been brought on by the disappearance of rendering plants, concerns over potential ground water pollution from burial, and the economic and environmental issues of incineration. Composting of dead animals is an option that is available to all Ohio livestock producers. Composting is a natural process in which the animal carcass is bio-degraded by bacteria to avoid pollution of air and water.
The process of composting dead animals allows bacteria and fungi to decompose the animal carcasses in an aerobic environment. By providing oxygen to this environment, the microbes are able to decompose the animal without the production of objectionable odors and gases. When done properly, composting destroys disease causing bacteria or viruses and reduces problems associated with flies, vermin, and scavenging animals at the composting site.
Before beginning to compost livestock mortalities in Ohio you must meet the following requirements:
Cost of the manual is $10.00. Please register for the meeting by contacting the Shelby County Extension office at (937) 498-7239 or email bender.5@cfaes.osu.edu prior to November 26.
Weekly Roberts Agricultural Commodity Market Report - Mike Roberts, Commodity Marketing Agent, Virginia Tech
LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) closed down on Monday with the exception of the APR'08LC contract which gained $0.150/cwt on the day. DEC'07LC futures finished off $0.125/cwt at $95.175/cwt but $0.075/cwt higher than a week ago. The FEB'08LC contract closed at $97.400/cwt, down $0.50/cwt and $0.55/cwt lower than last Monday. Short covering cut losses in late trading. Last Friday USDA showed October marketings at 106% of last year while most estimates expected around 107.4%. A larger number of heavier cattle in October placements, 112% of last year, came in around expectations. The 800-lb and up group of cattle came in 23.1% higher than last year causing most of those cattle to be market ready just after the start of the year. This and December/February spreading caused most of the selling, according to a couple of floor sources in Chicago. Bearish influences on the market were the expectations of the planned opening of the U.S./Canadian border to a broader age-range of cattle. Meat from animals has been more limited until now. Hedge lifting was supportive in early trading. USDA's cash cattle figures for the 5-area-average as of last Friday were placed at $92.68/cwt - $92.83/cwt. Monday cash auctions in the Texas/Oklahoma area were steady to $1/cwt higher. First thing Monday, USDA put the choice boxed beef cutout at $145.44/cwt, up $1.37/cwt. The average beef plant margin for Monday was estimated at a negative $30.95/head, $2.60/head better than last Friday and $26.55/head better off than last week at this time, according to HedgersEdge.com. Cash sellers should push market-ready cattle out of the door. It might be a good idea to price some short term corn supplies in the next few days.
FEEDER CATTLE contracts at the CME were off on Monday. NOV'07FC futures closed at $108.660/cwt, $0.190/cwt lower than last Friday but $0.235/cwt higher than last Monday. The JAN'08FC contract showed signs of strengthening finishing at $108.825/cwt, off $0.300/cwt and $0.150/cwt lower than a week ago. Trading was light all day while the premium to the index weighed on prices. Lower live cattle didn't help. Short covering late in the day provided some support. The latest CME Feeder Cattle Index for November 15 was placed at $108.66/cwt, up $0.100/cwt. Feeder sellers ought to consider holding off more cattle sales while pricing some feed for the short run.
CORN on the Chicago Board of Trade (CBOT) closed down on Monday. The DEC'07 contract finished at $3.774/bu, off 2.0¢/bu and 1.6¢/bu lower than last Monday. MAR'08 futures finished down 2.0¢/bu at $3.944 and also 1.6¢/bu lower than a week ago. The DEC'08 contract finished at $4.210/bu, 3.2¢/bu lower than last close and 3.4¢/bu lower than last week at this time. Profit taking and spillover selling put the pressure on prices. Exports were supportive. South Korea bought 385,000 tonnes (15.2 mi bu) of U.S. corn. Morocco sought 70,000 tonnes (2.8 mi bu) of non-origin specific corn. USDA placed corn inspected for export at 52.287 mi bu vs. an expected range of between 42-48 mi bu. Weather is cooperating with harvest clean up. The CFTC Commitment of Traders report as of November 13 showed funds decreasing bull positions in CBOT corn by 5,700 lots to 153,280 contracts. It might be wise to hold at 30% of the '08 crop priced. This market is still very volatile.
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
