INSIDE THIS ISSUE

Are You Playing Blackjack With Your Milk Price?, Dr. Cam Thraen, Milk Marketing Specialist, Ohio State University
Evaluating Forage Stands After the Winter Season, Dr. Mark Sulc, Forage Specialist, Ohio State University
How to Adjust a POSILAC® Supplementation Program to a Temporarily Limited Supply of POSILAC, Dr. Mark Armfelt, DVM, DABVP; Adjunct Faculty, Department of Veterinary Preventive Medicine, Ohio State University; Technical Service Representative, Monsanto Dairy Business
Viable Alternatives for Animal Protein Feeds, Dr. Maurice Eastridge and Dr. Bill Weiss, Dairy Nutrition Specialists, Ohio State University
Economics of Dairy Production in Ohio, Dr. Don Breece, Farm Management Specialist, OSU Extension
Tips for Spring Application of Manure, Mr. James J. Hoorman, Water Quality Extension Agent, Hardin County Extension
Tri-State Dairy Nutrition Conference, Ms. Amanda Hargett, State Dairy Extension Associate, Ohio State University
Calendar of Events

Are You Playing Blackjack With Your Milk Price?, Dr. Cameron Thraen, Milk Marketing Specialist, Ohio State University,
Additional milk marketing information by Dr. Thraen

We all have played the card game Blackjack at one time or another. In this card game, we are dealt two cards, one face up and the other face down. The dealer also gets two cards, one face up and the other face down. The object is to get a score on our cards as close to 21 but not 'bust' by going over 21 points, and to have a score or point total that is greater than the dealer's point total. We get to see the one card from the dealer and then we can request additional cards for our hand. In Blackjack, there are rules guiding whether or not we request additional cards or 'stand-pat' with what we have on the table. For example, if our two card total is 19 points, we do not request another card, hoping to get an ace or deuce for 21, but we 'stand-pat' and wait to see what the dealer has for total points.

The current Chicago Mercantile Exchange (CME) cash and Class III futures market is very much like the Blackjack game. You, the producer, have been dealt a very good hand. The dealer, that is the market, is showing cash prices for both Grade AA butter and Cheddar cheese (blocks and barrels) at levels that have not seen before at this time of the year. The Grade AA cash butter price rose above the $2.00/lb mark on March 5th to settle at $2.11/lb. The Grade AA CME cash price average for the week of March 1 to 5 was $2.00/lb. This will calculate to a milk fat price of $2.262/lb. The last time producers earned this much for milk fat was back in August of 2001. As for cheese, the CME average price for the same week will pay producers $1.9198/LB of protein. Put both of these cash market prices together, along with expected prices for nonfat dry milk and whey, and the implied Class III price is $13.69/cwt.

The CME March Class III futures contract is currently trading in the $13.58 to $13.63/cwt range. The last time producers experienced $13/cwt plus milk in March, under current Federal Order pricing rules, was, well never. Even if we do not constrain ourselves and look back to the decade of the 90's, we still cannot find a March price anywhere near this high. Now, looking at the CME Class III futures prices for April ($14.60 to 14.71/cwt), May ($15.23 to 15.39/cwt), June ($15.20 to 15.45/cwt), July ($15.33 to 15.50/cwt), August ($15.35 to 15.65/cwt), and September ($15.50 to 15.75/cwt), our 'price hand' is showing CME futures prices that start at $14.70/cwt for April and go up from that month through September (Figure 1). On March 8th, the average for the April through September contracts is $15.38/cwt. As it stands, this is a very good hand indeed! In fact, to achieve this average milk price, we require an average of $2.30/LB Grade AA butter and $1.65/LB Cheddar cheese to hold over the next six months.

Like the Blackjack player, having been dealt a hand of 19, or even 20, you must make a decision. Do you stand-pat and price your milk at the current level, or do you take the risk that you will draw a deuce or an ace and win out with even higher milk prices over the next six months? Current prices for the CME futures contracts are the cards that you see on the dealer's side of the table. What you do not see is the market card still face down. That card will play out over the next six months. Will the impact of the reduced availability of bovine somatotropin (rBST) be greater or less than anticipated? Will dairy cow numbers continue to decline or will higher prices slow the rate or even reverse the direction? Have we seen a significant slow-down in dairy cow culling? Will the border with Canada be opened? Will the general economic recovery be stronger or weaker than anticipated? Will product inventories continue to decline or begin to build? What will the weather be like over the next six months? Will the market deal an even tighter supply to demand balance and push prices up or will the final card dealt result in better that expected production and lower that expected commercial demand and lower prices?

The final result for each of these questions is difficult to anticipate. Right now, you have been dealt an excellent hand and you should be pricing a good share of your monthly milk shipment through forward price contracts, futures contracts, or using options on futures to put floors under the current Class III market prices. In fact, and you may think I have lost my mind, you should price your milk at these CME futures prices, produce milk like gang-busters, and hope for a decline in the actual Class III price for each of these coming months. Why? With lower actual Class III prices you will receive higher Producer Price Differential (PPD) payments (Class III prices and PPD are negatively correlated), and with a lower Class III price, you may even receive a Milk Income Loss Contract (MILC) payment on top of your locked-in $15/cwt plus Class III price. What better 'price-hand' could you expect!

How are you going to respond? Do you 'stand-pat' with the 'price-hand' already dealt or do wait it out and hope to draw an Ace or a Deuce and risk 'going bust'?

Figure 1. Substantial premiums exist in the current Chicago Mercantile Exchange futures Class III contract prices.

For an up-to-date look at anticipated dairy product and milk component prices connect to the Ohio Dairy Web 2004 and click on 'Cam's Price Outlook'.

Evaluating Forage Stands After the Winter Season, Dr. Mark Sulc, Forage Specialist, Ohio State University (top of page)

As winter releases its grip, forage crops initiate new spring growth. April is a good time to walk hay fields and pastures to assess stand density and plant vigor. I don't expect any major problems with winter survival this year, but there are always isolated cases where stand density is less than desirable. Take a close look at stands that were marginal at the end of last year and summer seedings that were planted late.

As forage stands greenup, walk your fields and estimate the number of live plants per square foot. Actual counts in several spots can be made with a 2 x 2 foot square. If the planting is in rows, measure off a known area and make plant counts in the rows. Second year stands should have 8 to 12 plants per square foot, and third year or older stands should have 5 to 6 plants per square foot.

Visually estimating ground cover of desirable forage plants is also a useful way to assess stands. This should be done when there is about six inches of growth. Stands with more than 80% ground cover should produce excellent yields, 60 to 80% ground cover should produce normal yields, 40 to 60% ground cover will likely yield in the 60% range of normal, and 20 to 40% ground cover will yield less than half the normal potential. Weeds will be a problem in thinner stands, so over seeding with grass and clover or destroying the stand and rotating out of it should be considered.

It is useful to dig up alfalfa plants and split the crown and taproot lengthwise to evaluate general root health. This gives some indication of stand vigor and future life span. Very healthy plants have creamy and firm internal root and crown tissue. Some crown rot (dark discoloration of inner tissue) will be present in older stands. Healthy stands have fewer than 30% of the plants with significant discoloration and rot in the upper taproot and crown region. Stands showing more than 50% of the plants with significant rot across the entire diameter of the taproot or crown are likely to go downhill during this coming growing season.

Chickweed and other winter annuals can be a real problem in late summer seedings, especially those with poor vigor. So walk those fields and be prepared to make necessary herbicide applications in a timely manner, before the winter annuals get too big.

While it is important to evaluate forage stands in early spring, recent research in Ohio and Missouri has shown that more alfalfa plants die during the growing season (between spring and fall) than during the winter. Of course, there are some winters when catastrophic heaving causes complete stand loss. But during most years, alfalfa stand density changes more during the growing season than during the winter. Winter injury and other stresses during the growing season can accumulate and weaken plants, causing them to die at some point during the growing season. So as you walk your fields this spring, make a mental note to walk them again in the fall.

How to Adjust a POSILAC® Supplementation Program to a Temporarily Limited Supply of POSILAC, Dr. Mark Armfelt, DVM, DABVP; Adjunct Faculty, Department of Veterinary Preventive Medicine, Ohio State University; Technical Service Representative, Monsanto Dairy Business (top of page)

There is currently a limited supply of POSILAC® (a registered trademark of Monsanto Technology LLC, St. Louis, MO) available. Many dairy producers find themselves in a situation where they cannot supplement all the cows they normally would if the supply were not limited. This article will suggest some ways to deal with this limited supply and make you aware of some choices to avoid when dealing with this situation.

POSILAC provides maximum value when supplementation is started at 57 to 70 days in milk (DIM) and continued until the end of lactation. It takes 4 to 6 weeks (ramp-up period) for cows to maximize milk production and dry matter (DM) intake in response to POSILAC. When supplementation begins at the time approved by the FDA (57 to 70 DIM) and continues to the end of lactation, cows will then spend the maximum number of days at the expected response of 8 to 12 LB/day of milk. When supplementation of POSILAC is discontinued at the end of lactation, cows return to the level of production they would have been had supplementation never occurred.

When considering the biology of POSILAC as described in the previous paragraph, the logical approach to dealing with a limited supply is to supplement fewer cows at label recommended times. Once you determine the number of cows you can supplement (your Monsanto representative can help you with this), there are a couple of things you can do to help you reduce the number of cows being supplemented. One is to immediately stop adding new cows to the supplementation list. The other is to stop supplementing open cows due to be culled, or cows in their terminal lactation. Caution: Stopping supplementation in late lactation may cause milk production to decline to a level that is not profitable, forcing producers to market open cows or dry-off pregnant cows.

Do not use extra-label approaches such as the following [Note: FDA regulations do not allow production drugs such as POSILAC to be used in an extra-label manner.]:

1. Do not extend the interval beyond 14 days. This can cause unwanted variation in DM intake and could lead to a loss of body condition.
2. Do not split injections. Using one dose of POSILAC on more than one cow will increase the risk of disease transmission, increase the risk of injection site abscesses, and increase the labor costs without getting an increase in milk production.
3. Do not start cows later than label recommendations. This is associated with an increased risk of udder edema, and a loss of economic opportunity because cows spend a larger percent of their supplementation period in ramp-up.

If you have any questions, please contact your local Monsanto Dairy representative.

Viable Alternatives for Animal Protein Feeds, Dr. Maurice Eastridge and Dr. Bill Weiss, Dairy Nutrition Specialists, Ohio State University (top of page)

In an attempt to reduce the risk of spreading Bovine Spongiform Encephalopathy (BSE; Mad Cow Disease) and to lower the associated human health risks, the Food and Drug Administration (FDA) has prohibited since 1997 the feeding of ruminant derived meat or meat and bone meal to ruminants. To further reduce these risks in the event that additional cases of BSE exist in the US, the FDA has proposed prohibiting the feeding of mammalian blood to ruminants (uncertainty remains whether the additional restriction will be only ruminant or all mammalian blood). These new rules will affect the availability and prices for protein sources fed to dairy cattle. These animal protein sources have primarily been targeted as sources of rumen undegraded protein (RUP) for lactating cows. Generally, a balance between corn-based (lower in lysine) and legume-based protein (lower in methionine) sources will provide a rather balanced supply of lysine and methionine to the small intestine for absorption. For Ohio, the grain byproducts listed in Table 1, especially brewers grains, corn gluten feed, corn gluten meal, soybean meal, and distillers grains, should be selected based on availability in local markets, price, and nutrients most limiting in the ration formulation. However, most of these grain byproducts are low in lysine and may not the best choice for meeting the amino acid requirements of dairy cows, especially with high corn silage rations. If additional RUP and energy are needed, whole-roasted soybeans should be considered. If additional RUP is needed for the high-producing cows, commercially available, high RUP soybean meal or fish meal may be economical alternatives. Rumen-protected amino acids should only be considered for very high-producing cows. If economically priced, feather meal can be used but is not a preferred feed for high-producing cows because of its lower digestibility of RUP and lower quality protein (low in methionine and tryptophan). For more information on pricing of feedstuffs, see the article titled "Fast Changing Feed Markets Bring Opportunities" in the January 2004 issue of the Buckeye Dairy News.

Table 1. Protein fractions in feed ingredients commonly available in Ohio.^1,2

¹Taken from NRC (2001).
²CP = crude protein, RUP = rumen undegradable protein, RUP Digest = digestibility of the RUP, Lys = lysine, and Met = methionine.

Economics of Dairy Production in Ohio, Dr. Don Breece, Farm Management Specialist, OSU Extension (top of page)

Analysis of dairy enterprises found in the Ohio Farm Business Summary¹ reveals feed cost as the number one reason for the difference in profitability of Ohio dairy farms. In the past seven years, the feed cost per hundredweight of milk sold has averaged about $2.20 difference between the lower and highest profit third of producers participating in the summary. At 19,970 LB of milk sold (2002 DHIA average), that would suggest a difference of $433 in net return per cow.

An attainable goal is $6.50 feed cost per hundredweight of milk produced, including purchased feed and the value of home grown feed. About a third of this feed cost is used for raising the replacement heifer. When feed cost per hundredweight of milk is too high, often it is found that the cost of raising replacements is out of line. Therefore, separate enterprise analysis of the replacement herd would assist producers in identifying problems.

The Ohio Farm Business Summary reports data from Ohio farms using the FINPACK computer program FINAN for year end analysis. The summary is published by Ohio State University Extension. Participation in this summary is voluntary, through educational programs offered by Ohio State University Extension and several Farm Business Planning and Analysis programs.

FINPACK is a comprehensive financial planning and analysis system developed and supported by the Center for Farm Financial Management, University of Minnesota. It is designed to help farmers understand their financial situation and to make informed decisions. RANKEM was the summary program used to compile the data and describe the averages for all farms, the lower third, and upper third of farms. The whole farm analysis is sorted by net farm income. Enterprise data are sorted by return to overhead.

Homegrown feed is valued at the opportunity cost. Opportunity cost is the cost of using a resource in one way based on the return that could be obtained from using it in the best alternative way. For example, feeding shelled corn that could otherwise be sold for an average of $2.24 per bushel (2002).

Tables 1 and 2 describe differences in milk production costs of a sample of Ohio dairy farms over a seven-year period. The data within the summary report, however, were not collected from a scientifically chosen sample. Therefore, the financial information cannot necessarily be used to generalize the situation of Ohio farmers. It is useful, however, to identify the resulting differences in cost control, production management, and marketing that separates the most profitable from the average operations.

Table 3 compares the 2002 Ohio data with a larger number of dairy farms from Minnesota. These numbers are very comparable and are useful to assist a producer to establish benchmarks. An enterprise analysis of farm records, therefore, will provide comparative numbers to bounce off of these benchmarks. A team of OSU Extension agents from across Ohio are available to assist producers in completing an enterprise analysis, using the FINPACK computer program. Contact your local Extension office for assistance.

¹The Ohio Farm Business Summary Report coordinator is Donald J. Breece, Ph.D., Agriculture and Natural Resources Specialist - Farm Management, Ohio State University Extension - West District, 1219 West Main Cross, Suite 202, Findlay, Ohio 45840, (419) 422-6106.

Table 1. Average costs per hundredweight of milk for Ohio dairy farms using Finpack analysis.

¹Not necessarily the same farms each year.

Table 2. Costs for high-profit third of Ohio farms using Finpack.

¹Feed prices used for enterprise analysis were the annual average commodity prices received by Ohio farmers, Ohio Agricultural Statistics Service, National Agricultural Statistics Service, January-December.

Table 3. Average costs to produce milk in 2002 for Ohio and Minnesota farms using a Finpack analysis.

¹Feed costs for Minnesota herds ranged from $7.47/cwt of milk for the lowest profit herds to $5.86/cwt of milk for the highest profit, a $1.61/cwt of milk
difference when divided in 20th percentile groups.

Tips for Spring Application of Manure, Mr. James J. Hoorman, Water Quality Extension Agent, Hardin County Extension (top of page)

Spring applications of manure can cause livestock producer's problems with the preferential flow of manure to tile lines. If not addressed by proper manure management, preferential flow can negatively impact the environment, particularly water quality. The damage is typically indicated by fish killed in nearby streams. In the past three decades, the number of fish kills related to agriculture has increased by 72%. In the past four years, 560,000 fish covering 430 miles of Ohio streams have been killed. Agriculture is the number one cause of fish kills in Ohio and accounted for 80 fish kill cases (22.5%) of the 356 Ohio fish kills in the last four years. Livestock and manure accounted for 72% of all fish kills related to agriculture during this four-year time period.

Anything that promotes good drainage may increase preferential flow and can lead to an increase of manure flowing to and through subsurface (tile) drainage outlets. Liquid manure acts just like water! Through gravity, water and manure move downward through the soil profile following a path of least resistance. Liquid manure moves through deep cracks in the soil, root channels from old and new plants, and earthworm channels. There are many factors that can contribute to increases in preferential flow occurrences: excess precipitation, saturated soils, excessive manure application rates, poor management decisions due to lack of manure storage, concentrated manure applications, operator error /equipment failure, high pressure/deep injection, and damaged or shallow tile. Producers should be especially aware of weather conditions (rain, excess moisture) and management decisions (application rates, calibration, and equipment limitations) to avoid problems.

To prevent manure in tile lines, livestock farmers should consider adopting and following various management practices. Appropriate application rates must be followed. Basing the application rate upon the moisture holding capacity of the soil and calibrating manure application equipment can accomplish this goal. Producer management decisions on when to apply manure are critical. Often, producers may make bad decisions when manure storage gets too full. By regularly monitoring manure storage and applying manure in a timely manner, livestock producers can avoid applying the manure when conditions may not be optimal.

Manure application equipment should be designed to allow for calibration and spreading of large volumes of manure evenly over or into soil at low rates and low pressure. Keep in mind that each piece of equipment (irrigation, tankers, dragline, and solid spreaders) has distinct advantages and disadvantages. The type of equipment utilized should not only be economical to operate but should also allow for manure to be applied in an environmentally friendly, responsible, and sensitive manner. Ideally, manure application equipment should allow for manure to be applied evenly to the top three to five inches of the soil surface.

Application rates depend upon the available water capacity (AWC) of the top eight inches of the soil. Manure should not be applied above the AWC. Generally, liquid manure should never be applied at rates greater than 1/2 inch or roughly 13,500 gallons per acre. Lower manure application rates decrease the chance for liquid manure to flow to tile lines because the soil has a better chance of absorbing the liquid manure. Multiple applications of 1/4 inch per acre or 7,000 gallons per acre is better than one large manure application to prevent the flow of liquid manure to tile lines.

Different species of livestock produce manure with distinctively different characteristics, and this should be taken into consideration as well. For example, the make-up of swine manure is typically 95 percent water and five percent solids, while dairy manure usually consists of 97 to 98 percent water and two to three percent solids. Waste from eggwash or milk house operations is typically very thin but contains a very high BOD5, which is the five-day biochemical oxygen demand and is deadly to fish. As water content increases, solid content decreases and viscosity (stickiness) of manure decreases so it flows easier. Liquid manure acts just like water because it is basically dirty water with the ability to kill fish and humans if it is untreated. Agitating the manure to increase the solids content can help decrease the potential for manure flowing to tile lines.

The presence of earthworm burrows, which prefer loamy soil types and are typically present within one to four meters of tile lines, may further exasperate preferential flow problems. Tile plugs and control structures may provide some type of relief. Keep in mind, however, that tile plugs are an emergency measure and fail about 50% of the time because of improper use and installation. Tile plugs should not be used if tile lines are flowing with water nor should liquid manure be applied if tile lines are flowing because the soils are too saturated with water. Drainage outlets should be inspected regularly if manure is being applied. Control structures are a great tool but must be installed and managed correctly to be effective. Check with your local Soil and Water Conservation District (SWCD) or United States Department of Agriculture (USDA) Natural Resources Conservation Service (NRCS) office to see if cost-share assistance is available for installing control structures.

As it is with many issues, management is the key to preventing preferential flow of manure. Therefore, you'll need adequate storage (minimum of six months recommended, one year preferred) and well-maintained and calibrated equipment that applies manure evenly. Additionally, you'll need to know the location of all tile lines and outlets, repair broken tile, maintain buffer zones and setback distances (100 feet from waterways), and inspect tile outlets regularly when applying manure. Manure should not be applied above the AWC of the top eight inches of the soil and should never be applied if tile lines are flowing. If possible, the soil should be tilled to a depth of three to five inches to disrupt macropores (cracks), especially during dry seasons. Lower manure application rates should also be given high consideration. An emergency management plan should be a part of your manure management plan, and accurate records should be maintained to document manure applications and, if any problems occurred, how these problems were addressed and resolved. If you utilize custom applicators for manure application, take time to educate them about this issue. Plan on attending the Manure Science Review August 24 to 26, 2004 or Farm Science Review September 21 to 23, 2004 for more information on manure management and application.

Tri-State Dairy Nutrition Conference, Ms. Amanda Hargett, State Dairy Extension Associate, Ohio State University (top of page)

The 13th annual Tri-State Dairy Nutrition Conference (TSDNC) will be held April 27 & 28, 2004 at the Grand Wayne Center in Fort Wayne, IN. The objective of the Conference is to disseminate current information on the nutrition and feeding of dairy cattle primarily to individuals who provide nutritional advice to dairy farmers. Feed industry personnel, nutrition consultants, Extension personnel, veterinarians, and interested dairy producers are encouraged to attend. The Conference is sponsored by The Ohio State, Michigan State, and Purdue Universities and allied industries. The registration fee is $130 per person (discounts are available for groups of 10 or more) and is due by April 9, 2004. Registration after the deadline and at the door is $155. The registration fee includes refreshments during breaks and the reception, one breakfast, and a copy of the Proceedings. Additional copies of the Proceedings will be available at $20/copy.

A free pre-conference program is sponsored by Alpharma Animal Health titled "Maximizing Calf and Heifer Performance by Minimizing Disease". This program takes place from 8:00 am to 12:00 noon on April 27, with a complimentary breakfast buffet starting at 7:00 am. Registration for the TSDNC begins at 11:00 am on April 27, with the program starting at 12:50 pm. The Conference concludes at 12:30 PM on April 28. The themes this year are Nutrition and Animal Health, Heifer Management, and Feed Ingredients.

The Ruminant Feed Analysis Consortium has invited all TSDNC attendees to a Wine and Cheese Reception and Public Information Session for those individuals interested in feed composition and ration formulation on April 26 at 8:00 PM Contact Paul Kononoff for more information at (603) 862-1815.

For additional information on the Conference or to register, contact Amanda Hargett at OSU (614) 688-3143 or go to our web site: http://tristatedairy.osu.edu. Additional information also is available by contacting: Dr. Maurice Eastridge, The Ohio State University, (614) 688-3059; Dr. Herbert Bucholtz, Michigan State University, (517) 355-8432; or Dr. Timothy Johnson, Purdue University, (765) 494-4810.

Calendar of Events (top of page)

March 17 - Carroll County Heifer and Calf Management Program. Contact Mike Hogan, 330-627-4310.
March 18 - Northern Ohio Dairy Conference. Contact Dianne Shoemaker, 330-263-3831.
March 20 - State 4-H Dairy Quiz Bowl contest. Contact Amanda Hargett, 614-688-3143.
March 29 - Holmes County DHI Recognition Banquet. Contact Dean Slates, 330-674-3015.
April 1-3 - Spring Dairy Expo, Ohio Expo Center, Columbus.
April 1 - Ohio Dairy Producers Annual Meeting. Contact Tim Demland, 419-523-6294.
April 2 & 3 - Collegiate National Dairy Challenge. Contact Maurice Eastridge, 614-688-3059.
April 3 - State Dairy Judging Contest, Spring Dairy Expo. Contact Amanda Hargett, 614-688-3143.
April 23 - Dairy Heifer Nutrition Program. Richland County. Contact Duane Rader, 419-747-8755.
April 27 & 28 - Tri-State Dairy Nutrition Conference. Contact Amanda Hargett, 614-688-3143.

Web link to Milk Futures: http://www.cme.com/prices/delayed_intraday_quotes/futuresandoptions.cfm