Buckeye Dairy News : Volume 18, Issue 4

  1. Milk Prices, Costs of Nutrients, Margins and Comparison of Feedstuffs Prices

    Mr. Alex Tebbe, Graduate Research Associate, Department of Animal Sciences, The Ohio State University

    Milk Prices: Are we coming out of the rough?

    In the last issue, the May Class III future price was projected to be $13.69/cwt and then drop in June to a lowly $13.14/cwt. The Class III price for May closed much lower than expected at $12.67/cwt and bumped back up to $13.22/cwt in June. Currently, the Class III future price is set marginally lower at $13.16/cwt for July. However, the USDA just released that the month of August Class III price is expected to jump nearly $2/cwt to $15.07/cwt.  Is this the beginning of a bullish market?

    Many market analysts are starting to think the answer to the question above is ‘yes’ as we move into 2017. Some even think it will be the biggest bullish market seen in the last decade, regardless of any sort of weather event. The reason is that global milk production has come to a screeching halt because of the current rock bottom price exploited by a bad year of crop production in South America and recent political events occurring in the European Union. Thus, buyers are really starting to scurry to chase the lack of exported milk, perhaps giving US dairy producers a sigh of relief.    

    Nutrient Prices: For good, for better, or for worse

    In the last issue, we saw a major surge in the price of protein due to the nearly $90/ton price spike of soybean meal, resulting from a bad crop year in South America. Unfortunately, the price of soybean meal has continued to rise to nearly $450/ton for the month of July compared to just over $320/ton back in March.

    Is this just a temporary spike, bound to drop just as quickly? Looking at the record production of corn and soybeans in the Midwest and the huge surplus carried over into the 2016 growing season, the answer should be ‘yes’. Moreover, some analysts are even expecting the price to collapse based on the type and number of future contracts purchased by commercial and private investors. However, the low rainfall for the year may sway our opinion otherwise. Normally, market changes from bad weather are determined in June and slowly diminish as we enter July. Nevertheless, it still could happen. Bottom line, nutrient prices (primarily soybeans) are bound to become very volatile in the near future, and we will not know if it will cause a collapse or another spike until closer to harvest.

    As in previous issues, these feed ingredients were appraised using the software program SESAME™ developed by Dr. St-Pierre at The Ohio State University to price the important nutrients in dairy rations, to estimate break-even prices of all commodities traded in Ohio, and to identify feedstuffs that currently are significantly underpriced as of July 23, 2016. 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.  For MP, its current price ($0.45/lb) has increased slightly from May’s issue ($0.40/lb). There was also a slight bump of NEL price from last month ($0.10/lb) to $0.11/lb this month.  The cost of e-NDF and ne-NDF are identical to last month at 7¢/lb and -14¢/lb (i.e. feeds with a significant content of non-effective NDF are priced at a discount), respectively.

    To estimate the cost of production at these nutrient levels, I used the Cow-Jones Index with a target cow milking 70 lb/day at 3.7% fat and 3.1% protein eating 50 lb/day of DM. In this model, the average income over nutrient costs (IONC) is estimated to be $3.89/cow/day or $5.56/cwt.  The same cow producing 85 lb/day will increase average IONC to $5.11/cow/day and the income per cwt to $6.01/cwt. In the last issue, the income per hundredweight was on average over a $1/cwt more at $6.61/cwt and $7.04 for the 70 lb/day and 85 lb/day cow, respectively. I must note, however, these costs neither include the costs of feeding the dry cows nor the replacement herd. Overall, the dairy industry has continued to get economically worse since the beginning of the year and is not very profitable as of now.

    Table 1. Prices of dairy nutrients for Ohio dairy farms, July 23, 2016.
    Table 1

    Economic Value of Feeds

    Results of the Sesame analysis for central Ohio on July 23, 2016 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 those for which we didn’t have a price. One must remember that Sesame compares all commodities at one point in time, late July in this case. Thus, the results do not imply that the bargain feeds are cheap on a historical basis.

    Table 2. Actual, breakeven (predicted) and 75% confidence limits of 27 feed commodities used on Ohio dairy farms, July 23, 2016.
    Table 2
    Table 2a

    For convenience, Table 3 summarizes the economic classification of feeds according to their outcome in the Sesame analysis. Feedstuffs that have gone up in price, or in other words moved a column to the right, since the last issue are red. Conversely, feedstuffs that have moved to the left (i.e., decreased in price) are green.

    Table 3. Partitioning of feedstuffs, Ohio, July 23, 2016.

    Bargains

    At Breakeven

    Overpriced

    Bakery byproducts

    Alfalfa hay – 40% NDF

    Blood meal

    Corn, ground, dry

    Beet pulp

    Canola meal

    Corn silage

    Brewers grains, wet

    Citrus pulp

    41% CP Cottonseed meal

    Gluten meal

    Fish meal

    Distillers dried grains

    Hominy

    Soybean hulls

    Feather meal

    Molasses

    44% CP Soybean meal

    Gluten feed

    Whole cottonseed

    48% CP Soybean meal

    Meat meal

     

    Roasted soybeans

    Soybean meal - expeller

     

    Tallow

    Wheat middlings

     

    Wheat bran

    As coined by Dr. St-Pierre, 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. Also, there are reasons that a feed might be a very good fit in your feeding program while not appearing in the “bargains” column. For example, your nutritionist might be using some molasses in your rations for reasons other than its NELand MP contents.

    Appendix

    For those of you who use the 5-nutrient group values (i.e., replace metabolizable protein by rumen degradable protein and digestible rumen undegradable protein), see the table below.

    Table 4. Prices of dairy nutrients using the 5-nutrient solution for Ohio dairy farms, July 23, 2016.
    Table 4

     

  2. New Online Application for Prevention of Johne's Disease

    Dr. Maurice Eastridge, Extension Dairy Specialist, Department of Animal Sciences, The Ohio State University

    Johne’s Disease continues to be a considerable health issue in the dairy industry. The USDA’s DAIRY 2014: Dairy Management Practices in the United States study provided some insights on the current management practices to prevent Johne’s Disease in the US. The Dairy 2014 study was conducted in 17 of the US major dairy states and refers to estimates for the calendar year of 2013. Data collected for the study represented 76.7% of U.S. dairy operations and 80.3% of US dairy cows at the time of the study.

    Of the 28.6% of the operations that brought cattle onto their operation during 2013, 11.4% of the small herds (30 to 99 cows), 12.9% of the medium herds, and 20.1% of the large herds required information on Johne’s Disease status of the herd of origin for the purchased cattle. Of operations that tested new animal additions, 74.6, 41.8, and 50.1% of the small, medium, and large herds, respectively, tested new additions for Johne’s disease. Cows that test positive for Mycobacterium avium subspecies paratuberculosis—the causative agent of Johne’s disease—are likely to shed the bacteria in feces or in colostrum around the time of calving. Test-positive cows about to calve should be managed in a separate area away from test-negative cows. There was no difference by herd size in the percentage of operations that tested for Johne’s disease; overall, 74.4% of the farms tested for Johne’s disease and 7.3% allowed test-positive cows in the calving area.

    A Johne’s Disease Risk Assessment Practicum has been developed that is sponsored by the National Milk Producers Federation, the Johne’s Disease Integrated Program, and the American Association of Mycobacterial Diseases. This program is an online application designed to help evaluate a farm for management practices that may increase the risk of introducing Johne’s Disease into a herd and/or spread the disease to uninfected animals. It provides an introduction to farm risk assessments and the development of management plans. The resource is located at http://jdrap.info. You are encouraged to review this resource and work with your local veterinarian to develop specific herd management practices for your farm to minimize the risk of acquiring or spreading Johne’s Disease.

  3. Administrative Changes in the Department of Animal Sciences

    Dr. Maurice Eastridge, Extension Dairy Specialist, Department of Animal Sciences, The Ohio State University

    Effective August 1, Dr. Henry Zerby will have resigned as Chair and Professor at The Ohio State University and be working with Wendy’s International. The Interim Department Chair will be Dr. Bill Weiss and two interim associate chairs have been named. Dr. Anthony (Tony) Parker who is on the Wooster campus will focus on research programs and Dr. Pasha Lyvers-Peffer who is on the Columbus campus will focus on academic teaching programs. The interim dean of the College, Dr. Lonnie King, will be meeting with the faculty soon to discuss future leadership of the Department.