Buckeye Dairy News


Home / Events Calendar / Milk Marketing / Ohio Landscape / Dairy Business Resources
Farmer Organizations / Related Links / Contact Us / Back to Buckeye Dairy News Directory

July 2012
Volume 14, Issue 4

INSIDE THIS ISSUE

Dairy Market Watch, July 2012
, Dr. Cameron Thraen, State Extension Specialist, Dairy Markets and Policy, The Ohio State University
Dairy Policy Watch 2012, John Newton, Ph.D. Graduate Student and Cam Thraen, Dairy Markets Extension Specialist, Department of Agricultural, Environmental and Development Economics, The Ohio State University
The Costs of Nutrients, Comparison of Feedstuffs Prices and the Current Dairy Situation, Dr. Normand St-Pierre, Extension Dairy Management Specialist, Department of Animal Sciences, The Ohio State University
Making Corn Silage in Drought Conditions, Dr. Bill Weiss, Professor and Extension Dairy Specialist, The Ohio State University
Pricing Drought-Stressed Corn for Corn Silage, Dr. Bill Weiss, Professor and Extension Dairy Specialist, The Ohio State University and Diane Shoemaker, Field Specialist, Dairy Production Economics , The Ohio State University Extension
Where to Test Forages for Nitrates. Mrs. Dianne Shoemaker, Field Specialist, Dairy Production Economics, Ohio State University Extension, and Dr. Bill Weiss, Professor and Extension Dairy Specialist, The Ohio State University
Planting Small Grains in Late Summer and Autumn for Supplemental Forage. Dr. Mark Sulc, Professor and Interim Chair. Department of Horticulture and Crop Science and Stan Smith, Program Assistant, Fairfield County, The Ohio State University Extension
Variation in Corn Silage Will Result in Different Dietary Strategies, Dr. Maurice L. Eastridge, Professor and Extension Dairy Specialist, The Ohio State University
OSU Receives Awards During the 2012 Annual Meeting of the American Dairy Science Association, Dr. Maurice L. Eastridge, Professor and Extension Dairy Specialist, The Ohio State University
Ohio's Statewide 4-H Dairy Quiz Bowl, Bonnie Ayars, Dairy Judging Teams Coach and Extension Youth Specialist, The Ohio State University

Additional link:

Ohio State University Extension - Managing the Drought of 2012


Dairy Market Watch, July 2012. (top of page) pdf file
Dr. Cameron Thraen, State Extension Specialist, Dairy Markets and Policy, The Ohio State University

Dairy Commodity and Milk Price Outlook for August  - October 2012.

            To start this edition of Market Watch 2012, I will review a couple of trends in U.S. milk production and milk price and provide an outlook for milk prices and dairy farm returns the next 6 to 12 months.

US Milk Cows and Milk Yield

            Chart 1 shows the monthly history of: i) milk production per cow (right scale dashed line), and ii) total number of milk cows (left scale, solid line), for the United States, December 2009 - June 2012.  I have selected the start month of December 2009, as this was the month that the number of milk cows in the US bottomed out as a response to negative returns on most US dairy farms in 2009 (during 2009 an estimated 250,000 head were culled as a result of low milk price and high input cost).  The number of milk cows added to the US herd has been generally positive over the past two years, contributing to an upward rise in the total number.  Over this time period, 157,000 dairy cows have been added back to the US dairy herd.  The US herd expansion is at an estimated annual rate of +0.84%.  During this same period, milk production per cow has remained fairly flat (adjusted to a 30-day month), only showing an upswing beginning in December 2011.  For the first six months of 2012, average daily milk production per cow was 60.8 lb/cow as compared to 59.5 LB/cow for the same months in 2011.  For the January through June 2012 period, the average monthly US milk yield was 1,825 LB/cow.  In the last issue of Buckeye Dairy News, the story was very favorable weather and rapid growth in cow numbers and in milk per cow, now the story is just the opposite.  Heat, drought, and sky-high feed prices, along with falling milk cow numbers and output per cow is the current topic of discussion. With lower net returns, the expansion was stopped in its tracks as we moved into the summer months.  With an estimated 9.241 million dairy cows nationally, milk production growth slowed from a torrid 7.43% annualized rate delivered in February to a very modest 0.93% annualized rate in June 2012.  Should this continue, and I expect growth will slow even more in the coming two months, this will be put the wind in the milk price sail and we should see milk prices firm into the $18 to $20/cwt range by September.

Chart 1
Chart 1. US milk cows and milk yield, monthly 2010 through 2011.

Milk Production Growth and the Class 3 Milk Price

            Chart 2 depicts the recent relationship between: i) the Class 3 milk price (line, left scale) and the annualized rate of change in US milk production (bars, right scale) over this same time period. Milk production growth in the US was quite robust in early 2012, exceeding 3% annual rate for four of the six months to date.  During this same period, the Class 3 milk price lost ground and fell to under $16/cwt in the last four months.  With both cow numbers and productivity expanding in the last half of 2011 and into the first four months of 2012, the growth in US milk production grew considerably.  Milk prices responded, moving down from $19/cwt in November 2011, to bottom out at $15.23/cwt in May 2012.  Since then, with the annual rate of growth in milk production slowing to under 1%, the Class 3 milk price has strengthened considerably.  The current Chicago Mercantile Exchange (CME) futures market expectation for the July through December Class 3 price is $18.16/cwt.  The expectation for the next 12 months is $18.08/cwt.

Chart 2
Chart 2. Class 3 price and annual rate of growth in US milk production, 2010 to 2011.

What lies ahead in 2012?

            Taking a look at the CME Group Class 3 futures prices can provide an insight as to what the market participants are anticipating for the coming year.  Chart 3 shows the CME Class 3 futures price for 2012, as of settle on July 26, 2012 (the unconnected blue dots), the median Class 3 price over the period 2007 through 2012 (the solid line), the upper 25 percentile price line (upper dashed line), and the lower 25 percentile price line (lower dashed line).  Currently, the market is pricing Class 3 milk above the recent historical price range.  As we move into the last half of the 2012 summer months, the CME futures prices are at or above the 25% upper level at $18.60 to 18.70/cwt.  Overall, the CME market participants are pricing milk for a tighter supply demand balance over the coming 12 months.  In Ohio and the Mideast Federal Milk Marketing Order (FMMO) 33, the average dairy operator's milk check, as measured by the announced FMMO mailbox price, adds about $2.50 to $3.00/cwt to the Class 3 milk price.  With the current CME market anticipating an $18/cwt Class 3 milk price, the mailbox price for planning purposes will be in the range of $20.50 to $21.00/cwt.  For a relative comparison for the July 2011 through June 2012 period, the Class 3 price averaged $17.78/cwt and the FMMO mailbox price $19.83/cwt.

Chart 3
Chart 3. Chicago Mercantile Exchange (CME) Class 3 futures price, median Class 3 price, and 25% upper/lower percentiles.

What does this mean for a typical dairy farm in Ohio?

            Milk prices are obviously very important to the financial health of a given dairy.  However, as we witnessed in 2008, milk prices at the $20/cwt level mean little if expenses for feed and other inputs are soaring.  The data in Chart 4 are my estimates of the total dollars available to contribute to allocated costs on a per cow basis for Ohio.  Allocated costs include capital payments and returns to equity plus returns to management.  These are the dollars from the sale of milk which, after paying for feed and non-feed operating expenses, contribute equity to a dairy farming operation.

Chart 4
Chart 4.  Estimated allocated revenue available per cow 2003 through 2011 and 2012 (projected) for Ohio.

The financially difficult years of 2003, 2006, and 2009 are evident.  In these years, there was very little revenue remaining after paying operating costs to contribute to allocated costs.  This was especially true for 2003 and 2009.  Also evident are the years of 2007 and 2011.  Here, we see that in 2007 there remained $1200/cow available to pay down debt, build equity, and provide for a return to management of the dairy operation.  With milk prices recovering in the second half of 2012, I would project that the allocated cost per cow for 2012 will be closer to 2008 in magnitude when the Ohio mailbox price averaged $18.83/cwt against very high feed prices.  If you plan your business operation based on three year averages, the 2010 through 2012 average allocated revenue is estimated at $813/cow (red line, Chart 4).

Ohio Dairy Web has moved...


            My website have been moved to a new server.  For more information on the market outlook, as well as my insights on US dairy policy, please visit my Ohio Dairy 2012 website.  You can visit: (http://aede.osu.edu/programs-and-research/ohio-dairy-web/ for the latest market and policy information of importance to the Ohio dairy industry.

 

Dairy Policy Watch 2012 (top of page) pdf file
John Newton, Ph.D. Graduate Student and Cam Thraen, Dairy Markets Extension Specialist, Department of Agricultural, Environmental and Development Economics, The Ohio State University

On the surface, the dairy title of the House (H.R. 6083) and Senate (S. 3240) Farm Bill appear identical.  They both offer participating dairy farmers with a comprehensive income over feed cost margin protection program and a fast acting, and short-lived, milk supply stabilization program.  However, when you compare and contrast each piece of legislation, it becomes increasing apparent that these two bills have some noteworthy differences as they pertain to the margin protection and supply stabilization programs. 
In this article, we look at the House and Senate legislation and highlight the key differences among the programs (page numbers are given in parenthesis for reference purposes).  The differences are categorized into three sections: (i) margin protection program, (ii) milk supply stabilization program, and (iii) miscellaneous provisions. 

Margin Protection Program

  1. The administrative and premium fee structures for the margin insurance program are considerably different. 

    a. The administrative fee is based on the pounds (LB) of milk marketed by the farm in the previous calendar year.  The administrative fees in the House proposal are capped at $1,000 (p. 90), while the Senate bill caps the administrative fee at $2,500 (p. 83) per farm per year. 

    b. The premium schedule for supplemental insurance coverage depends on farm size.  Farms are grouped into one of two size categories (tiers) based on annual milk marketings.  Tier one farms deliver less than 4 million LB and tier two farms deliver more than 4 million lbs per calendar year.  The premium schedule in both bills for supplemental margin coverage is nearly identical for tier one farms.  However, for tier two farms, the premiums in the Senate bill range from $0.005 to $0.24/cwt higher (S. p. 91, H.R. p. 99) than the House premiums.  Figure 1 details the premium rates contained in the House and Senate bills for tier two farms.

    c. Combined, these two differences make the Senate proposal more expensive for participating farms delivering more than 4 million LB/year.

  2. The House bill offers retroactive margin insurance coverage for up to $6.00 for farms who file a notice of intent to participate in the program no later than 30 days after the effective date of the subtitle (p. 86).  The Senate bill allows farms to transition using either the milk income loss contract or the margin program as long as both programs are in existence (p. 81).

Milk Supply Stabilization Program

  1. Both bills contain language to suspend the stabilization program, depending on the relationship between US and world prices for cheddar and 1.25% skim milk powder (enhanced suspension thresholds).  The enhanced suspension thresholds used to suspend the stabilization program are different among the two pieces of legislation.  The price triggers in the House bill (p. 112) are set lower than the Senate bill (p. 104), making it easier for the stabilization program to be suspended.
  2. Both bills require an annual report on the impact of the stabilization program on dairy markets, including accounting for funds collected and used by the stabilization program (S. p. 102, H.R. p. 109) but the Senate bill also requires the annual report to address the impact of the stabilization program on markets.
  3. The Senate bill directs the Office of the Chief Economist to conduct a study of the impacts of the stabilization program (p. 108), while the House bill does not include such language.
  4. Neither bill currently specifies a process to remunerate milk processors for the costs of managing the stabilization program.  Management of the program includes: (i) maintaining farm production records to calculate payment reductions, and (ii) remitting monies to the USDA in the event of payment reduction.

Miscellaneous Provisions

  1. The Senate bill does not allow farms to participate in both the Livestock Gross Margin Insurance Program for Dairy (LGM-D) and the margin protection program (p. 84), while the House bill allows LGM-D participation only after operations that are not enrolled in margin protection program had the opportunity to purchase LGM-D (p. 91).
  2. The Senate bill begins no later than 120 days after the effective date of the subtitle (p. 77), and the House bill provides 150 days (p. 87) for establishment.
  3. The House bill provides a sign-up period of 12 months (p. 85), while the Senate bill allows up to 15 months for farm registration (p. 80).

Resources:

House Bill:
http://agriculture.house.gov/legislation/bills

Senate Bill:
http://www.ag.senate.gov/issues/farm-bill/

Newton Figure 1

Figure 1. Tier 2 premium schedule for margin insurance.

 

The Costs of Nutrients, Comparison of Feedstuffs Prices and the Current Dairy Situation (top of page) pdf file
Dr. Normand St-Pierre, Extension Dairy Management Specialist, Department of Animal Sciences, The Ohio State University

I'll be breaking a few hearts here... Do you remember the report issued by the US Department of Agriculture on January 12th of this year?  In this report, the USDA increased the 2011-2012 production estimates for both corn and soybean.  On report day, March corn futures reached the 40-cent down limit; the drop extended to 60 cents the following day.  Some were betting on how low corn prices would get this fall once the projected large US corn crop would start hitting storage bins and grain elevators. 

Here we are, just a little over 7 months later, in the middle of one of the worse droughts in US history, facing low corn yields not seen for decades - and that's for those who have any crop to harvest.  How quickly things change in agriculture.  Which is why we basically cannot predict with any reasonable degree of accuracy either commodity feed prices or milk prices.  Once in a while, you will catch me making a forecast, but with the clear disclaimer that I really don't know more than the average Joe.  I do it for entertainment; I am right about half the time and wrong the other half, which is about what you get when you flip a coin...  But I am honest, whereas all pseudo-experts keep missing the mark and by a considerable margin.  What the futures markets are reflecting is what other clueless people think prices will be in the future.  Unfortunately, the current situation provides an example as to why production and price risk management are increasingly important.

All is not a disaster.  One benefit of a surge in feed markets is that it takes time for all feed to reach their new price equilibrium; some prices go up too quickly, while some others lag.  This means that in this insane feed market that we are currently facing, there are some feeds that are relative bargains.  This column should assist you in identifying some of them.

Nutrient Prices

As usual in this column, I used the software SESAME that we developed at Ohio State to price the important nutrients in dairy rations, to estimate break-even prices of all major commodities traded in Ohio, and to identify feedstuffs that currently are significantly underpriced.  Price estimates of net energy lactation (NEL, $/Mcal), metabolizable protein (MP, $/LB - MP is the sum of the digestible microbial protein and digestible rumen-undegradable protein of a feed), non-effective NDF (ne-NDF, $/LB), and effective NDF (e-NDF, $/LB) are reported in Table 1. Compared to its historical average of about 10¢/Mcal, NEL is severely overpriced at 22.2¢/Mcal.  For MP, its current price (30.3¢/LB) is amazingly at about its 6-year average (28¢/LB).  Thus, we are currently in a period of very high dietary energy prices but average protein prices.  That's quite amazing when one looks at the late surge in commodity prices, including the soybean complex.  This is not intuitive at first.  Here is a simple example to help in understanding this.  Suppose that we are just valuing NEL and crude protein in feeds.  If we go from a situation where corn is at $100/ton and soybean meal is at $200/ton to one where corn is at $400/ton and soybean meal is at $500/ton, then we would be in a situation of increased dietary energy costs and decreased protein costs, although both commodities have gone up each by $300/ton.  This is about what has happened in feed markets as of late.

The cost of ne-NDF is currently discounted by the markets (i.e., feeds with a significant content of non-effective NDF are price discounted), but the discount of 12.3 ¢/LB is about at its 6-year average (-9¢/LB).  Meanwhile, the unit cost of e-NDF is amazingly favorable, being priced at about -6¢/LB compared to the 6-year average (3.3¢/LB).  Of course, this is primarily driven by the current price of corn silage, which is based on the December corn futures last September (at the time of harvest), and alfalfa hay, which at least based on the USDA survey is still quite reasonably priced in Ohio ("reasonably" here meaning compared to the insane prices for other feeds).

Table 1.  Prices of dairy nutrients for Ohio dairy farms, mid-January 2012.

Table 1

Economic Value of Feeds

Results of the Sesame analysis for central Ohio as of July 23 are presented in Table 2. Detailed results for all 27 feed commodities are reported.  The lower and upper limits mark the 75% confidence range for the predicted (break-even) prices.  Feeds in the "Appraisal Set" were either deemed outliers (completely out of price), or we simply don't have good market prices information (i.e., different quality of alfalfa hay - for these, the "corrected" values should be used).  One must remember that Sesame compares all commodities at one point in time, late July in our case.  Thus, the results do not imply that the bargain feeds are cheap on a historical basis.
For convenience, Table 3 summarizes the economic classification of feeds according to their outcome in the Sesame analysis.

Table 2.  Actual, breakeven (predicted), and 75% confidence limits of 27 feed commodities used on
Ohio dairy farms, late-July2012.
Table 2


Table 3. Partitioning of feedstuffs, Ohio, late-July 2012.

Bargains

At Breakeven

Overpriced

Brewers grains, wet
Bakery byproducts
Corn, ground, shelled
Corn silage
Distillers dried grains
Feather meal
Gluten feed
Hominy
Meat meal
Molasses
Wheat middlings

Alfalfa hay (40% NDF)
Cottonseed meal (41% CP)
Whole cottonseed
Soybean meal - expeller
Soybean hulls
Wheat bran
Tallow

 

Blood meal
Beet pulp
Canola meal
Citrus pulp
Fish meal
Gluten meal
Soybean meal (44% CP)
Soybean meal (48% CP)
Roasted soybeans

As usual, I must remind the readers that these results do not mean that you can formulate a balanced diet using only feeds in the "bargains" column.  Feeds in the "bargains" column offer savings opportunity and their usage should be maximized within the limits of a properly balanced diet.  In addition, prices within a commodity type can vary considerably because of quality differences, as well as non-nutritional value added by some suppliers in the form of nutritional services, blending, terms of credit, etc.  In addition, there are reasons that a feed might be a very good fit in your feeding program while not appearing in the "bargains" column. 

As of July 30, The USDA estimates that 48% of the US corn crop is in poor or very poor condition.  The grain markets eased up a bit last week, albeit at very high prices.  Where feed prices will land come fall is anyone's guess, but the odds of a significant decrease are in my estimate low.  This last statement is a disguised forecast; coming from me you may as well flip a coin...

 

Making Corn Silage in Drought Conditions. (Top of page) pdf file
Dr. Bill Weiss, Dairy Extension Specialist, The Ohio State University

The primary goal of making corn silage is to preserve as many nutrients in the corn plant as possible, to produce a feed that is acceptable to cows, and to minimize any risks associated with feeding the silage. 

Chop at the correct dry matter concentration.  The factor primarily responsible for meeting this goal is the dry matter (DM concentration of the plant when chopped.  This is the same whether it is a beautiful, record breaking corn crop or a severely drought stressed field with short plants containing no ears.  Chopping corn silage at the wrong DM concentration will increase fermentation losses and reduce the nutrient value of the silage.  Feed will be extremely expensive this fall which means that a small increase in shrink will be very costly.  The recommended ranges for silage DM are:

Bunker: 30 to 35%
Upright: 32 to 38%
Sealed upright 35 to 40%
Bag: 32 to 40%

Drought-stressed corn plants are often much wetter than they appear, even if the lower plant leaves are brown.  Before starting chopping, sample some plants (cut at the same height as they will be with the harvester) and either analyze DM using a Koster tester or microwave or send to a commercial lab (turn-around time may be a few days if you send it to a lab).  If the plants are too wet, delay chopping until the desired plant DM is reached.  The plant may continue to accumulate DM (increase yield), and you will not suffer increased fermentation losses caused by ensiling corn that is too wet.

Use a proven inoculant.  When silage is worth upwards of $80/ton (35% DM) reducing shrink by 2 percentage units has a value of about $2/ton. Homolactic inoculants (these are the "standard silage inoculants") produce lactic acid which reduces fermentation losses but sometimes can increase spoilage during feedout. The buchneri inoculants increase acetic acid which slightly increases fermentation losses but greatly reduce spoilage during feedout.  Severely drought-stressed corn can have a high concentration of sugars because the plant is not depositing starch into the kernels.  High sugar concentrations can increase spoilage at feed out because it is food source for yeasts and molds.  Use of a good (from a reputable company with research showing efficacy) buchneri inoculant may be especially cost-effective with drought-stressed corn. 

Check for nitrates.  Drought-stressed corn plants can accumulate nitrates which are toxic (as in fatal) to ruminants.  Silage from drought-stressed fields should be tested before it is fed.  Ideally, corn plants should be sampled and assayed for nitrates prior to chopping (most labs offer very rapid turnaround times for a nitrate assay).  If values are high, raising the cutting height will reduce nitrate concentrations in the silage because the bottom of the stalk usually has the highest nitrate concentrations.  Because forage likely will be very limited this coming year, do not raise the cutting height unless necessary to reduce nitrate concentrations.  Nitrate concentrations are often reduced during silage fermentation so that high nitrates in fresh corn plants may end up as acceptable concentrations in the fermented corn silage.  Silage with more than 1.5% nitrate (0.35% nitrate-N) has a high risk of causing nitrate toxicity in cattle.  See the following OSU fact sheet for more details: http://ohioline.osu.edu/as-fact/0003.html).

Chop at correct particle length.  Forage (i.e., effective fiber) is likely to be in limited supply this year. Do not chop too finely so that the effective fiber concentration of corn silage is reduced.  If the corn plants have limited ear development, fine chopping is not needed for good starch digestibility.  Generally a theoretical length of cut (TLC) of about ½ inch is acceptable (longer with kernel processing and BMR silage) but this varies greatly between choppers and crop moisture concentration.  If using a Penn State particle size sieve, aim for 5 to 10% on the top screen.

Reduce Shrink. Fill quickly, pack adequately, cover, and seal the silo as soon as you are done filling.  Practicing good silage-making techniques can reduce shrink by more than 5 percentage units, which can be worth more than $4/ton of corn silage (35% DM). 

Pricing Drought Stressed Corn for Corn Silage. (Top of page) pdf file
Dr. Bill Weiss, Dairy Extension Specialist, The Ohio State University and Dianne Shoemaker, Field Specialist, Dairy Production Economics, Ohio State University Extension

With a "normal" corn crop, pricing a standing crop for silage can be "interesting".  Pricing a drought-stressed corn crop is even more interesting.  What is the actual nutrient content of the  crop?  How well will the crop ferment?   Will nitrate concentrations put the potential silage crop at risk?  There are many unknowns, with the biggest challenge being how to determine the dollar value to assign to that risk. 

The value of drought-stressed corn silage can be estimated using expected nutrient composition and the cost of the nutrients.  The average composition of drought-stressed corn silage in Table 1 is reasonable, but the composition of silage for a specific situation (e.g., hybrid, growing conditions, etc.) could be substantially different. The nutrient values were calculated based on numerous feed prices in central Ohio.   

Table 1.  Average composition of drought-stressed corn silage and current (January - July 2012) value of nutrients in Ohio.1

Nutrient
Concentration (DM basis)
Units/ton DM
Nutrient Cost
Economic Value
NEL
0.60 Mcal/LB
1200 Mcal
$0.15/Mcal
$180
Metabolizable protein
6.6%
132 LB
$0.35/LB
$46
Non-effective NDF
12.5%
250 LB
-$0.05/LB
-$13
Effective NDF
37.5%
750 LB
$0.0/LB
$0
Total Value
$213/ton DM

1DM = dry matter; Mcal = megacalories; eNDF and neNDF = effective and non-effective neutral detergent fiber, respectively;
and NEL = net energy for lactation.

The $213/ton of DM (±$20) or $75/ton (± $7) assuming 35% DM is the value for the corn silage when fed to the cow and includes harvest and storage costs and shrink.  It assumes that the fermented feed is excellent quality and will allow for high DM intakes and good production when fed in a balanced diet.  When corn is standing in the field, you do not know whether the resulting silage will turn out good or bad.   Making silage from drought- stressed corn has some additional risks that must be considered when pricing.  It could be high in nitrates, which in the worst situation will make the silage totally unacceptable as a feed (for additional information on nitrates see: http://ohioline.osu.edu/as-fact/0003.html). The silage may have much higher fiber and lower energy than anticipated.  We are using the composition of "average" immature corn silage for these calculations.  Drought stress can greatly affect the composition of the corn plant and therefore it's value. 

If you are purchasing standing corn, the purchase price must be adjusted to account for these costs and risks.  When you purchase standing corn, in contrast to buying fermented corn silage, the user of the silage (e.g., the dairy farmer) assumes those risks and the price of standing corn should be discounted to account for the risk. We cannot give you a value for risk; each buyer must determine that value for themselves based on the conditions of the crop they are purchasing and negotiate the final price with the seller.  

In addition, for more than 6 years, good corn silage (made from normally developed corn plants) has almost always been a "bargain" feed in that its market price is 15 to 25% less than the value of its nutrients.  Based on this historic relationship, corn silage with a nutrient value of $213/ton of DM (see Table 1.) would sell for about $170/ton of DM ($60/ton at 35% DM) - remember that this value is for good quality corn silage in front of the cow.  This normal relationship between corn silage selling price and corn silage value should also be considered in the negotiations.

Example:  Price of Standing Corn (assumed 35% DM)
_________________________________________________________________________________
Nutrient value of corn silage when fed to cow: $75/ton of 35% DM silage
Harvest costs     - $ 6 to 11/ton depending on yield1
Storage costs     - $ 9/ton
Shrink (13%)     - $ 10/ton
Risk?                 - $???  (this could be substantial)

= Price of standing corn $48/ton at 35% DM (± $5) minus the value of risk. 

If you apply the typical selling price vs. nutrient value discount of ~20%, this becomes $38/ton at 35% DM. 
_________________________________________________________________________________
1Lower cost for "normal" corn silage yields, higher cost for lower, drought-stressed corn silage yields.

For many people, both the price of corn silage as fed to the cow ($60 to 75/ton) and the price of standing corn ($38 to 48/ton ± $5) seems high (and they are). However, you have to consider replacement costs, i.e., what will it cost if you have to purchase other feeds to replace the nutrients provided by corn silage. These are the maximum prices a farmer should pay for purchasing corn silage or standing corn.

Calculating the Floor Price

                The lowest price (on a per acre basis) a seller (the grower) should be willing to sell standing corn as corn silage is equal to the estimated dollar return per acre if the crop was sold as grain.  The seller should first estimate the potential grain yield and multiply that by the estimated market price they think that they will receive when it is sold. The seller should then estimate potential silage yield (see slides 4-7 in "Pricing Corn Silage in 2007" at http://dairy.osu.edu/resource/OSU%20Dairy%20Pubs.html).  The estimated dollar return per acre for the crop sold as grain divided by the estimated silage yield per acre would be the floor price per ton of corn silage for these negotiations.  At a price below this floor, the grower would be better off harvesting and selling the crop as grain.  For "normal" corn, the cost of harvesting the crop as grain approximately offsets the value of nutrients that are removed with the corn plant that would be left in the field if the crop were not harvested as silage. Additional articles on pricing corn silage are available at http://dairy.osu.edu.

 

Where to Test Forages for Nitrates. (Top of page) pdf file
Dianne Shoemaker, Field Specialist, Dairy Production Economics, Ohio State University Extension, and Dr. Bill Weiss, Professor and Extension Dairy Specialist, The Ohio State University

With many farms now considering early harvest of drought-stricken corn for silage to salvage some value from the crop, attention must be paid to the potential for high nitrate concentrations in the plants.  If nitrate concentrations are high enough, they can cause serious health problems for the animals consuming them, including death.   Good information on this topic is available in the factsheet "Nitrates in Dairy Rations", which can be found at http://ohioline.osu.edu/as-fact/0003.html.

Before beginning harvest, and especially if considering grazing or green-chopping and feeding corn fodder or other forages immediately, drought-stressed plants should be tested for the presence of, and if present, concentration of nitrates present.  The ensiling process can reduce nitrate concentrations present in the unensiled crop.

Most labs now offer nitrate tests, so if you currently use a particular lab for forage testing, it is likely that you can get forage plants tested for nitrates by the same lab.  A number of labs are listed below that have nitrate testing available.  This list is for your convenience and no labs are intentionally omitted.   Check your chosen lab's web site, as many are already posting information about nitrate testing and many have specific instructions about how to take and handle the sample.

Samples should be representative of the crop being harvested and include the parts of the plant that will actually be harvested and fed to the animals.  For corn silage specifically, the sample should include the whole plant cut at the height you will actually be chopping - nitrate concentrations are usually highest in the lower part of the plant. 
Some labs that test for nitrates (in alphabetical order):

Brookside Laboratories, Inc.
http://www.blinc.com/               
New Knoxville, Ohio
419-753-2448

Cumberland Valley Analytical Services
http://www.foragelab.com/                          
Hagerstown, MD
800 282 7522

Dairyland Labs
http://www.dairylandlabs.com
Wisconsin & Minnesota
608-323-2123

Dairy One
http://www.d airyone.com         
Ithaca, NY
800-496-3344

Holmes Lab
http://www.holmeslab.com/         
Millersburg, Ohio
330-893-2933

Rock River Lab
http://www.rockriverlab.com/index.html                                       
Watertown, WI
920-261-0446

Spectrum Analytic
http://www.spectrumanalytic.com/
Washington Court House, Ohio
800-321-1562    

While the "Nitrates in Dairy Rations" factsheet mentions a quick test that can be done in the field, the chemical ingredients, which include concentrated sulfuric acid and diphenylamine, are dangerous and no longer readily available.  Alternatively, some field test kits are available commercially.  It is important to note that these kits have limitations.  One kit indicates that its' testing range is from 0 to 1000 ppm nitrate nitrogen in a fresh plant.  This is the maximum safe level in a feed.  A lab test would be needed to determine actual concentrations present in the plants if they are above the kit's range.

 

Planting Small Grains in Late Summer and Autumn for Supplemental Forage (top of page) pdf file
Mark Sulc, Professor and Interim Chair, Department of Horticulture and Crop Science and Stan Smith, Program Assistant, Fairfield County, Ohio State University Extension

Dairy producers are looking to grow more forage this autumn and early next spring because of the reduced forage yields resulting from dry weather this year. Supplemental forage can be produced yet this year by planting small grains or annual ryegrass on land coming out of wheat or corn silage. In this article, we discuss options for planting in early August (on wheat stubble ground, for example), in late August to early September (after corn silage removal), and after soybean harvest (late September to mid-October).

Before making any plans to plant supplemental forages, be sure to check the plant-back restriction interval for herbicides used in the previous crop. Corn herbicides, especially atrazine products, have a long rotation restriction interval for many of the forage options listed below. So check the labels for the herbicides you especially used this year.

Early August Plantings
The best options are to plant spring oat, spring triticale, or annual ryegrass (see section below on annual ryegrass). An increasing number of Ohio producers are gaining experience with August planted oat. Oat seed usually can be purchased at a more economical price than spring triticale seed, but either species will produce good dry matter (DM) yields within 60 to 80 days after planting. When planted the first two weeks of August and with adequate rainfall, oat and spring triticale can produce from 4000 to 5000 LB/acre of DM by mid-October. They will reach the boot stage of growth in October, which provides the best compromise of yield and forage quality. If harvest is delayed until November, the early August planted oat and spring triticale will be in heading stage and will yield 6000 LB/acre of DM or more. Early August planted oats or spring triticale forage will have crude protein (CP) content of 12 to 15% and neutral detergent fiber (NDF) of 38 to 50%, depending on planting date and stage at harvest.

Late August to Early September Plantings
Spring oat, spring triticale, and annual ryegrass can also be planted from late August to mid-September, immediately after an early corn silage harvest. These later planting dates will produce lower yields (1500 to 3000 LB/acre of DM) and harvest will be delayed into months with poor drying conditions (November to early December), but this would be an excellent option for grazing or green chopping. Forage quality will be very high with these later plantings - CP will range from 20 to 32%, NDF will be 30 to 38%, and NDF digestibility will be 75 to 85%. If an early spring forage harvest is desirable next year, winter triticale and winter rye should be included in a mixture, with the spring oat and spring triticale planted in late August and early September.

Late September to October Plantings
Wheat, winter triticale, and winter rye can be planted to produce good yields of high quality forage next spring. Rye will grow and mature the quickest in the spring and has the deserved reputation of becoming "like straw" in a short period of time once it turns reproductive in the spring. Wheat and winter triticale will be easier to manage next spring because they mature later and more slowly than rye. Wheat planting should be delayed until after the Hessian fly-safe date, which is September 22 in northern Ohio and October 5 in southern Ohio. Forage quality can be excellent for these species if harvested in the vegetative to boot stage of growth in the spring, producing from 2 to 4 ton/acre of DM, depending on stage of harvest.

Seeding Rates and Mixtures
Plant high quality seed of a named variety to ensure high germination rate and avoid unpleasant surprises regarding varietal identity and crop characteristics. Oat should be planted at 75 to 100 LB/acre and spring triticale at 90 to 110 LB/acre when seeded alone. Winter rye should be seeded at 110 LB/acre, while wheat and winter triticale should be seeded at 110 to 120 LB/acre. For mixtures of these small grains, the seeding rate of each component can be reduced to 70% of the full rate.

When planting in early August, field peas or soybeans could be added to the mixture to boost the CP content of the forage, an important consideration for dairy producers this year. While we have no data on planting such mixtures in August, we would expect the CP content to be increased by 3 to 4 percentage units when including field peas or soybeans with oats or spring triticale planted by August 10 to15. This should provide an extra value of $40 to $50/acre from the increased protein content of the forage. This needs to be compared to the extra cost of the legume seed included in the mixture. Field peas should be inoculated with N-fixing bacteria and sown in the mixture at 70 to 90 LB/acre. Soybean seeding rates for this application are not well-defined but perhaps should be included in the mixture at 60 to 70% of normal soybean seeding rates. If the legume seed cost is no more than $50/acre, then including the legume in the mixture should be cost effective for lactating dairy cows because the legume-small grain mixture should have lower NDF content, leading to higher forage intake and greater milk production.

Annual Ryegrass Option
Annual ryegrass is another possible option for producing high quality forage, especially for grazing in late autumn and early winter followed by forage harvests or grazing next year. Some varieties are more likely to survive the winter than others. The forage quality will be at least equal to and is usually higher than that of the small grain forages discussed above. Refer to the Ohio Forage Performance Trials for selecting varieties
(http://hostedweb.cfaes.ohio-state.edu/perf/). Plant 20 to 25 LB/acre of annual ryegrass seed and apply 30 to 50 LB N/acre either at planting or at early tillering stage. Additional nitrogen will be required next spring for good production.

We have planted annual ryegrass in early September for several years, and one can expect 800 to 2000 LB/acre of DM by late November and early December, with yields of 3 to 5 ton/acre of DM the following year from improved varieties with good winter survival and with adequate N fertilization rates. Some varieties planted last September at South Charleston, OH produced 6 to 7 ton/acre of DM in 2012. Annual ryegrass can be planted earlier in August, especially if soil moisture is favorable, which should provide higher yields in late autumn (up to 3000 LB/acre of DM).

Agronomic Management

Harvesting/Grazing Options

Additional information on annual forages and their establishment and management is provided in Chapter 7 of the Ohio Agronomy Guide, 14th ed., available at Extension offices and at http://ohioline.osu.edu/b472/0008.html. Good management is important to achieve success with these alternative forages.

Variation in Corn Silage Will Result in Different Dietary Strategies (top of page) pdf file
Dr. Maurice L. Eastridge, Professor and Extension Dairy Specialist, The Ohio State University

With the drought situation this year and the variable amount of rainfall in different areas of Ohio, corn silage will be harvested ranging from no ears to being well-eared. Information elsewhere in this issue of Buckeye Dairy News provides guidelines to follow for proper harvesting and pricing of corn with different stages of development. The focus of this article will be on using alternative ingredients in situations of feeding corn with no ears to being well eared. Even with well-eared corn for silage, the cost of corn grain may result in favorable substitution of some alternative ingredients. Although there is no neutral detergent fiber (NDF) or starch requirement for dairy cattle, both of these dietary components are important for maintaining favorable rumen fermentation and optimizing microbial protein synthesis. Inadequate or excessive amounts of either NDF or starch can cause adverse issues. Although typical diets for lactating cows generally contain 25 to 35% starch, the cost of corn has caused us to re-examine the amount of starch in the diet. In general, dropping below 20% starch in the diet may compromise the microbial fermentation. Lack of ear on corn will result in high NDF corn silage, which can cause a reduction in intake if dietary NDF gets too high, e.g. in excess of 25% forage NDF in the diet.

A list of ingredients is provided in Table 1 of some commonly traded commodities that may be priced adequately at certain times for inclusion in dairy diets to provide protein, starch, and/or fiber. A few of the carbohydrate ingredients can be used to supply some starch in the diet (e.g. hominy), but most of them provide primarily nonforage fiber (NFNDF), and as a result, appreciable amounts of some nutrients, such as protein, are provided. The NFNDF can be used to dilute some starch in diets, e.g. feeding a lot of well-eared corn silage or trying to limit the inclusion of high-priced corn. Some of the FNDF can be replaced with the fiber from some of these ingredients (e.g. feeding a lot of corn silage with no ears) and NFNDF sources are useful in diluting starch when forage availability is low, but in general, the lower limit is 16% FNDF in a diet. This lower limit is determined by the concentration of starch in the diet, degradability of the starch source, and particle size of the forages. When feeding diets low in starch, 2 to 3 % supplemental sugar (e.g. molasses or similar course) may improve ruminal fermentation and milk yield.

Overall cow health and income over feed costs need to be monitored continuously during these times of dietary changes and high feed costs. Short term advantages need to translate into long-term benefits.

Table 1. List of typical alternative carbohydrate and protein sources that may be useful in dairy cattle diets.

Ingredient
% CP
% Starch
% NDF
Upper Level (%)
Carbohydrate Sources

Brewers grains

29.2
12.0
47.4
25
Citrus pulp
6.9
1.5
24.2
20
Corn gluten feed
23.8
18.0
35.5
30
Cottonseed1
23.5
0.3
50.3
15
Hominy
11.9
45.0
21.1
40
Distillers grains2
29.7
6.0
38.8
25
Soybean meal
13.9
5.3
60.3
30
Wheat middlings
18.5
30.0
36.7
25
 
Protein Sources
37.8
0.0
29.8
10
Canola meal
65.0
15.6
11.1
10
Cottonseed meal1
44.9
1.5
30.8
10
Feather meal
85.0
0.0
0.0
5
Meat meal
54.2
0.0
0.0
5

1Limit the amount of cottonseed and cottonseed meal in the diet due to the additive amount of gossypol contributed. The amount
of cottonseed included alone is limited because of its concentration of unsaturated fat (~20%).
2The composition of distillers grains can be quite variable, depending if it is coming from a whiskey or ethanol plant and if it is a fractioned
product (e.g., high or low fiber).

OSU Receives Awards During the 2012 Annual Meeting of the American Dairy Science Association (top of page) pdf file
Dr. Maurice L. Eastridge, Professor and Extension Dairy Specialist, The Ohio State University

The 2012 annual meeting of the American Dairy Science Association (ADSA), held jointly with the annual meeting of the American Society of Animal Science (ASAS), was July 15-19 in Phoenix, Arizona. The meetings attracted more than 3000 professionals and guests from the US, Mexico, Canada, and beyond and more than 120 undergraduate students and academic advisors from the US. Many activities occur during the annual meeting, including an awards program and undergraduate and graduate student contests. Ohio State was in the spotlight with the following recognitions:

Firkins

Dr. Jeffrey Firkins, Professor, Department of Animal Sciences, received the American Feed Industry Association Award for his outstanding research in dairy cattle nutrition.

 

Stayduhar

Emily Stayduhar, 2012 Spring graduate with BS in Animal Science and accepted into College of Veterinary Medicine for 2012 Fall, placed first in an undergraduate student production division presentation on "Monitoring the Composition of Waste Milk Fed to Dairy Calves".

 

Ohio's Statewide 4-H Dairy Quiz Bowl (top of page) pdf file
Bonnie Ayars, Dairy Judging Teams Coach and Extension Youth Specialist, The Ohio State University

They make the journey to the Ohio 4-H Center from all areas of Ohio. The individuals and teams spend countless hours examining reproduction, milk marketing, bovine health and diseases, and even places and locations of major dairy events. Toss in all those acronyms and it is enough to test the genius of Mr. Einstein. It is the journey that challenges the competitors, but the destination promises rewards if luck is on their side. Prompted by the four leaf clover, they find it fun to answer questions quickly and even wager a few bets. Although dairy farming is as risky as Vegas, our gamblers go home with a pocketful of memories!

On Monday, June 18th, our Ohio 4-H Dairy Quiz Bowl and Jeopardy was held at the Nationwide and Ohio Farm Bureau 4-H center on the campus of Ohio State. After a light breakfast, introductions of volunteers, and some orientation, junior and senior contestants went to separate rooms to complete a pre-test that would be evaluated for points and brackets. Questions such as what is another term for calving and who is the managing editor of Hoard's Dairyman were just two of the many answered correctly! A walking tour of campus helped to pass the time while tests were evaluated and team brackets organized. The junior competition included teams and double elimination rounds and the senior division was formatted similar to the popular "Jeopardy" game show.

Top senior

Top Senior Jeopardy Individuals (left to right):
6th place Logan Meier (Wayne County), 5th place Kadey Starkey (Champaign County), 4th place Mark Gordon (Wayne County), 3rd place Julie Gress (Wayne County), 2nd place Tessa Topp (Wayne County) and 1st and winner Levi Plocher (Mahoning County).

Jr. Quiz Bowl Team

Winning Jr. Quiz Bowl Team: Wayne A (left to right),  
Coach Lisa Gress, Todd Gordon, Denice Wolfe, Thomas Gress,
and Sara Wolfe.

High Score Senior

High Score, Written Senior Test:
Mark Gordon (Wayne County; pictured
with Bonnie Ayars)

High Score Jr

High Score, Written Junior Test (left to right):
All tied for high score: Thomas Gress (Wayne County)
JD Nelson (Champaign County), and Brennan Topp (Wayne County).