Buckeye Dairy News: VOLUME 24: ISSUE 2
Milk Prices, Costs of Nutrients, Margins, and Comparison of Feedstuffs Prices
April F. White, Graduate Research Associate, Department of Animal Sciences,The Ohio State University
In the last issue, the Class III futures for February and March were at $20.21/cwt and $21.32/cwt, respectively. Class III milk closed slightly higher than predicted for February at $20.91/cwt, with protein and butterfat at $2.32/lb and $3.02/lb, respectively. Compared to January, the component price for protein decreased by about $0.27/lb, while butterfat price is about $0.73/lb higher.The improved butterfat price should help to offset increased feed costs due to changes in global feed ingredient markets. In this issue, the Class III future for April is $23.29/cwt, continuing to increase in May to $23.50/cwt as we approach summer.
It can be helpful to compare the prices in Table 1 to the 5-year averages. The current price of NEL and MP are about 60 and 42% higher than the 5-year averages ($0.08/Mcal and $0.38/lb, respectively), while pe-NDF is about 60% lower than the 5-year average ($0.08/lb). These nutrient costs align well with recent trends, and although nutrient cost per cow may be higher than in previous issues, the Cow-Jones Index is fairing well.
To estimate profitability at these nutrient prices, the Cow-Jones Index was used for average US cows weighing 1500 lb and producing milk with 3.9% fat and 3.2% protein. For March’s issue, the income over nutrient cost (IONC) for cows milking 70 lb/day and 85 lb/day is about $13.04 and $13.53/cwt, respectively. As a word of caution, these estimates of IONC do not account for the cost of replacements or dry cows, or for profitability changes related to culling cows.
Table 1. Prices of dairy nutrients for Ohio dairy farms, March 26, 2022.
Economic Value of Feeds
Results of the Sesame analysis for central Ohio on March 26, 2022 are presented in Table 2. Detailed results for all 26 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 local price or were adjusted to reflect their true (“Corrected”) value in a lactating diet. One must remember that SESAME™ compares all commodities at one specific point in time. Thus, the results do not imply that the bargain feeds are cheap on a historical basis. Feeds for which a price was not reported were added to the appraisal set in this issue.
Table 2. Actual, breakeven (predicted) and 75% confidence limits of 26 feed commodities used on Ohio dairy farms, March 26, 2022.
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 based on current nutrient values, or in other words, moved a column to the right since the last issue are in oversized text. Conversely, feedstuffs that have moved to the left (i.e., decreased in value) are undersized text. These shifts (i.e., feeds moving columns to the left or right) in price are only temporary changes relative to other feedstuffs within the last two months and do not reflect historical prices. Feeds added to the appraisal set were removed from this table.
Table 3. Partitioning of feedstuffs in Ohio, March 26, 2022.
Bargains At Breakeven Overpriced Gluten meal 41% Cottonseed meal Mechanically extracted canola meal Feaher meal Corn, ground, dry Soybean meal - expeller Corn silage Wheat bran
48% Soybean meal
Distillers dried grains Alfalfa hay - 40% NDF 44% Soybean meal Gluten feed Solvent extracted canola meal Meat meal
Hominy Whole, roasted soybeans Wheat middlings Blood meal
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 a 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 NEL and MP contents.
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 Table 4 below.
Table 4. Prices of dairy nutrients using the 5-nutrient solution for Ohio dairy farms, March 26, 2022.
USDA Releases March Dairy Report
Chris Zoller, Extension Educator, Agriculture and Natural Resources, Tuscarawas County, Ohio State University Extension
The United States Department of Agriculture Economic Research Service (USDA ERS) released its March 2022 Livestock, Dairy, and Poultry Outlook. The complete report is available here: https://www.ers.usda.gov/webdocs/outlooks/103524/ldp-m-333.pdf?v=1835. This article will provide a summary of the dairy portion of the report.
Supply and Use
The graph below shows U.S. milk production for 2020, 2021, and January 2022. According to USDA National Agricultural Statistics Service (NASS), U.S. milk production in January 2022 was 1.6% below January 2021. This is the largest year-over-year percentage decline in average daily production for any month since 2002.
Milk cow numbers in January 2022 were 82,000 less than the inventory in January 2021 and milk production per cow in January 2022 was 15 lb less than the January 2021 production level. USDA ERS reports that high input prices, increased feed costs, and corn silage quality issues likely contributed to lower milk production.
Feed Price Projections
Corn for the 2021/2022 marketing year is now expected to average $5.65/bu, an increase of $0.20 from last month’s projection. Price increases for other feed inputs were also reported. Soybean meal is estimated at $420/ton and the January alfalfa hay price was $211/ton, an increase of $43/ton compared to January 2021. The five-state weighted average for premium alfalfa hay was $262/ton in January 2022, $56 higher compared to January 2021.
Dairy Forecasts for 2022
Milk production and milk cow numbers are expected to decline in 2022. Higher input prices, improved cull cow prices, and low numbers of replacement heifers are contributing factors. Milk per cow is anticipated to average 24,160 lb/head, a year-over-year increase of 212 lb.
Wholesale prices have been raised because of relatively high domestic and international prices. The 2022 prices are forecast at: $21.65/cwt for Class III, $23.70/cwt for Class IV, and the all-milk price forecast is $25.05/cwt.
The increase in milk price is positive, but with uncertainty continuing given high input costs and impacts of the Russian invasion of Ukraine. I encourage producers to continue to pay close attention to budgets. As you budget and plan, speak with your Extension Educator, nutritionist, lender, and veterinarian.
These resources may be of interest with planning and budgeting:
- University of Minnesota FINBIN: https://finbin.umn.edu/LvBenchOpts/LvBenchIndex
- Ohio State University Extension Farm Business Analysis & Benchmarking Program: https://farmprofitability.osu.edu/
- Ohio State University Extension Crop Enterprise Budgets: https://farmoffice.osu.edu/farm-management/enterprise-budgets
Pricing Standing Forage Crops – Your One-Stop Shop
Dianne Shoemaker, Farm Management Specialist, Ohio State University Extension; Dr. Mark Sulc, Professor and Extension Forage Specialist, Department of Horticulture and Crop Science; and Dr. William Weiss, Professor Emeritus, Department of Animal Sciences, The Ohio State University
Warmer weather is just around the corner. As forage crops break dormancy, so does the perennial question of how to price standing forage crops. Whether they are vegetative small grain crops, pure grasses, grass and legume mixes, or pure legume stands, the fundamental considerations are the same:
- Determine market price of an equivalent crop
- Calculate and apply deductions:
- Cost of harvest, including mowing, tedding, and raking
- Cost of baling
- Cost of hauling
- Risk – nutrient variation
- Risk – weather, etc.
- Adjustments: These optional adjustments can be made if a forage analysis is done post-harvest:
- Dry matter
- Feed value – If this option is chosen, then there is no deduction made for risk of nutrient variation (d above).
Clearly, this is not a quick process, but when broken down into these steps, it is doable, easy to document, and provides a framework for the buyer and the seller to agree on a process and price that is acceptable to both parties before the crop is harvested.
Tools are available to assist with this process, all available at https://forages.osu.edu/forage-management/forage-economics. These include:
Factsheet: “Assigning Value to a Standing Forage Crop”. This factsheet discusses each step listed above in detail, including links to helpful resources.
Spreadsheet: “Pricing Standing Forage Worksheet”. This spreadsheet follows the steps to calculate the ceiling price a buyer should pay based on the market price of equivalent forages and the costs of harvesting and transporting the crop, as well as considering adjustments for dry matter, quality, shrink, and risks that are transferred from seller to buyer.
Factsheet: “Pricing a Standing Oat/Spring Triticale Haylage”. Some farms grow these crops for cover crops while they are a dual-purpose crop for dairy farmers – winter ground cover and spring forage source. Sometimes dairy farms have the chance to purchase these crops out of the field, extending feed supplies. This factsheet walks through the process of pricing these standing crops harvested as haylage.
Spreadsheet “Pricing a Standing Oat or Triticale Haylage Worksheet Tool”. Save a little time with this spreadsheet as you work through pricing a standing crop, whether you are the buyer or the seller.
Setting the final, fair price for a hay or small grain forage crop rests on an understanding of the needs of both the buyer and the seller. It is critical that both parties agree on price, payment method and timing, crop yield measurement, restrictions, and similar details before the crop is harvested! Ideally, the agreement should be in writing and signed by both parties. These agreements are especially important when large quantities of crops (and money!) are involved. While this type of contracting may be uncomfortable for some producers, mainly because they are not used to conducting business on more than a handshake, it forces the parties to discuss issues up front and minimizes troubling misunderstandings after harvest.
Time to Assess Forage Legume Stands
Dr. Mark Sulc, Professor and Extension Dairy Specialist, Department of Horticulture and Crop Science, The Ohio State University
With the onset of recent warm temperatures, forage stands are beginning to green up. Wet soil conditions and widely fluctuating temperatures have presented tough conditions for forage stands this winter. This is especially true of tap-rooted legumes, like alfalfa and red clover. Many forage stands suffered significant fall armyworm feeding damage late last summer and into the fall, so those stands should be carefully evaluated this spring as they green up. It is time to start walking forage stands (especially in southern and central Ohio) to assess their condition so decisions and adjustments for the 2022 growing season can be planned if necessary.
Forage stand evaluation can be performed when 3 to 4 inches of new shoot growth is present. Select random sites throughout the field and count the plants in a one-foot square area. Check at least 4 to 5 random sites in each 20- to 25-acre area. Random sampling will give the best unbiased overall evaluation of the field.
Plant heaving is always a concern in northeast Ohio and wherever heavy clay soils are present with poor drainage. Crops such as alfalfa and red clover are particularly susceptible to heaving damage. The likelihood of heaving is greater in wet, saturated clay soils with high shrink/swell potential that were exposed to rapid freeze/thaw cycles. Plants can be physically lifted (heaved) out of the soil, exposing the plant crowns to low temperatures and/or physical injury from wheel traffic at harvest time. In severe cases, the plant can be heaved several inches or more out of the soil, breaking the taproot and killing the plant.
While plant counts are useful, crown and root tissue should be evaluated for an indication of how the plant will hold up to stresses in the coming growing season. Dig up 5 to 6 plants in each random field location you sample and split the crowns and roots lengthwise. A healthy plant will have a creamy white color with little to no discoloration in the crown and taproot. These healthy plants will also have numerous shoots that are evenly distributed around the crown of the plant.
Damaged plants often have fewer stems, and those stems often are more numerous on one side of the crown (i.e., shoot growth is not symmetrical). Splitting roots and crowns will reveal darker tissue than the creamy white color of healthy plants. The color tends towards a tan. There also may be obvious areas of root and crown rot that are dark brown to black in color. Streaks of brown might be seen running down the length of the taproot. Generally, these plants green up in the spring of the year and might appear productive, but because of their compromised root system, they may not survive the entire production year, especially if we have a hot, dry year, or periods of excessive wetness followed by dry spells.
In general, yield potential is significantly reduced if more than 30% of the split roots have brown streaks running down the root and/or black areas of root/crown rot that cover greater than 30 to 50% of the root diameter. The grower may want to consider alternative forage options, such as terminating the stand after a first cutting and planting to silage corn or possibly to a warm season annual forage crop (e.g., sudangrass or sorghum x sudangrass; BMR varieties are preferred for dairy cattle).
If the alfalfa stand looks tough, it might be a blessing in disguise. Consider that yield declines as the stand ages, especially in year 4 and 5 for alfalfa. Consider also that a terminated forage legume stand can supply all the nitrogen needs for first year corn (or sorghum grasses) and will even supply a significant amount of N to second-year corn after alfalfa is terminated. This too should be considered when deciding whether to keep an old forage legume stand that might not be so productive this year, especially considering the current high price of fertilizers. Perhaps the old alfalfa stand will serve you better as a N supplier and yield booster for your corn, with the opportunity to plant a new alfalfa or other forage stand where you would have planted the corn.
Numerous studies have demonstrated that alfalfa N credits can supply all the nitrogen needs of first year corn, including first year no-till corn following alfalfa. If it makes you sleep better, apply a little starter or sidedress N (30 lb/acre or less) to “prime the pump” in anticipation of the organic nitrogen release from the forage legume stand. But most studies show no response to any fertilizer N on first year corn after alfalfa. In addition, second year corn after alfalfa has a substantial N-credit from the alfalfa! What’s more, corn will yield more following alfalfa than soybeans. Yes, your grandfather was smarter than you might think with that corn – alfalfa (or red clover) rotation he always used! There are many more benefits to that rotation, not to mention the nutritional complimentary benefits of alfalfa/red clover and corn in a dairy cow ration!
For more details on winter injury evaluation in forages, please refer to the Corn, Soybean, Wheat, and Forages Field Guide available at https://extensionpubs.osu.edu/corn-soybean-wheat-and-forages-field-guide/.
Although winter temperatures, snow cover, and soil wetness are primary driving factors affecting tall forage legume winter survival, there are several management factors that can affect the degree of winter injury suffered by forage stands. Those factors include:
- Variety selection: Varieties with good winter hardiness and disease resistance generally survive longer.
- Soil fertility: Adequate soil potassium is associated with enhanced tolerance to winter injury.
- Soil drainage: Tiling and improving drainage helps prevent ice-sheeting and heaving and slows development of crown and root diseases.
- Harvest management: Frequent cutting is associated with a higher risk of winter injury, particularly if the last fall cut was made in late September to mid-October.
I have not written much here about assessing grass stands, but grass hay and pasture stands should also be walked early to assess their spring vigor and growth as the stands green up. This is especially true where armyworm feeding was severe last fall.
Taking the time to do a stand evaluation and further assess forage plant health and the extent of winter injury will allow the grower to have a better idea of the yield potential of the stand. This will help inform if the stand can continue another year or would be better suited as a rotational crop this year.
Nitrogen Management of Forage Winter Cereals
Jason Hartschuh, Extension Educator, Agriculture and Natural Resources, Crawford County, Ohio State University Extension
Winter annual cereal crops for forage are greening up very nicely, thanks to the warm weather over the last several weeks. Over the next several weeks before stem elongation, you will be deciding how much nitrogen to apply, and by the end of April, checking fields to select a harvest date. Nitrogen rates and harvest timing greatly effects forage yield and quality.
Nitrogen is not only a driving factor of yield but an even bigger driver of crude protein (CP) content but has little effect on digestibility. A study from New York found on average cereal rye removes 121 lb/acre of nitrogen with an average dry matter (DM) yield of 2.37 tons/acre. Selection of the most economical nitrogen rate revolves around yield potential, species planted, manure application history, and soil drainage. When a fall application of manure was made containing over 120 lb/acre of nitrogen on well drained soils and the crop was planted before October 1st, multiple studies have found little yield benefit to spring applied nitrogen at green up. A linear increase was found though in CP content from about 12% CP at zero nitrogen to 20% CP when 120 lb of spring nitrogen was applied. Even though CP greatly increased with nitrogen fertilization, the economic return was often negative. With current nitrogen price of a $1/lb or more, the 120 lb/acre of nitrogen would need to increase CP from 12 to 16.8%. If it was really increased to 20%, the fertilizer dollar value as CP to replace soybean meal would be about $196, making it a positive investment. This investment though can be quickly lost if the rye matures too much prior to harvest.
On poorly drained soil with a history of manure applications, a spring nitrogen application of 50 of 60 lb/acre at green up improved both yield and CP. When the field did not have a fall manure application, the most economical spring nitrogen rate was 70 lb/acre, but some fields had positive returns with nitrogen rates as high as 120 lb/acre. On average, winter annual cereal crops need 15.5 lb of spring nitrogen per ton of forage DM produced. Utilizing higher rates than required may leave nitrogen in the soil for the following crop, but also increase the potential for lodging, which will cause harvest challenges. Lodging is also affected by harvest timing and species. Rye is the most likely to lodge, followed by triticale and then wheat.
Manure is an excellent source of nitrogen. Liquid manure can be applied before jointing. The thickness of your liquid manure should be considered though. Thick straw manure may still be present at harvest time and be harvested with the forage. This can be a concern with disease transfer from the manure to the livestock eating the forage. When looking at manure nitrogen, the ammonia and nitrate nitrogen fractions are available for the cereal grain forage crop. While the organic nitrogen will probably not be available for the current crop, it will be released over time to future crops. If you have swine manure available, applying it to your cereal grain forage can be a great synergy between your two operations. The swine manure has more nitrogen, is thinner, and will not transmit Johne’s Disease or Bovine Leukosis Virus if some of the manure resides in the harvested forage. If more manure nitrogen is applied than the crop utilizes, this nitrogen can be calculated into your corn nitrogen budget. This can be done by calculating how much nitrogen was applied minus removed nitrogen by the cereal forage crop. Also, a pre-sidedress nitrate test is suggested to determine how much nitrogen is in your soil at corn sidedress time.
When selecting the correct nitrogen rate and harvest timing, knowing your livestock’s nutrient requirements is important. For lactating cows, higher CP and digestibility is the goal. Applying 50 to 70 lb/acre of nitrogen at green up and planning to harvest all species between feeks 9 (last leaf is emerged but head is still down in the plant and stem in not fully elongated) and 10 (grain head is in the boot at the top of the plant but is not visible yet) will allow you to have the best forage possible. For heifer and dry cow rations, a delayed harvest at feeks 10 to 10.5 (head fully emerged and flowering has begun) may provide more tonnage and high enough quality feed. If harvest is delayed further, forage value will peak again when the grain is in soft dough stage. At this point, you are maximizing non-fiber carbohydrates instead of CP and digestibility. Late harvest forages will store much better as silage since it is very hard to get the soft dough grain dry enough at this point for dry hay and fermentation as baleage is often poor.
Haley Zynda, Extension Educator, Agriculture and Natural Resources, Wayne County, Ohio State University Extension
Heifers are their own beasts when it comes to nutrition. We have to first make sure they successfully develop into mature ruminants, then we must ensure they grow at an appropriate rate and not become overweight, then we must make sure they smoothly transition into a member of the lactating herd. The presentation “Heifer Nutrition” can be found on YouTube and it goes over feeding heifers during different stages of life, as well as money saving tips when it comes to feed cost. The link to the video is at: https://youtu.be/tc6ow3NeZJs
2022 Animal Health and Handling Certificate Program
Dr. Shaun Wellert, Agricultural Technical Institute, The Ohio State University
Are you interested in gaining hands-on experience working with cattle and calves in key management areas? Faculty at The Ohio State University are offing a two-day in-person program for farm owners and employees that aims to provide marketable skills for participants while promoting the health and welfare of dairy animals. The Animal Health and Handling Certificate Program will offer participants hands-on experiences in the following areas of proper drug administration (IV, Intramammary, IM, SQ, oral), low-stress animal handling, dehorning, record keeping and residue avoidance, and clinical examinations. For additional information and to register, click HERE for the program flyer.
Winter Dairy Webinar Recordings
Jason Hartschuh, Extension Educator, Agriculture and Natural Resources, Crawford County, Ohio State University Extension
This winter, the OSU Dairy working group hosted a series of four webinars to help producers with challenges on their operations. If you missed these webinars, they were recorded and can be viewed at your convenience on YouTube at the following links.
Dairy Risk Management Programs for 2022: Dairy Margin Coverage and Dairy Revenue Protection
Risk management is critical to any farm operation. There are two USDA subsidized programs available to dairy farmers to help manage risk. One protects the margin between milk price and feed cost, while the other allows for protection from a price decline. While milk price and futures are strong now protecting that strong futures price may be a worthwhile investment on your farm. Learn more about they Dairy Margin Coverage Program for 2022 from Dianne Shoemaker and the Dairy Revenue Protection program from Jason Hartschuh by watching this recording:
Dairy Market Outlook for 2022
Dairy market conditions are ever changing and greatly effected by world events. Dr. Chris Wolf from the Cornell University joined us on Feb 18th to discuss dairy markets and the supply and demand situation at the time. A lot may have changed in the world since then, but many of his points are still true today and can help you budget and manage your farm.
Safety on the Dairy farm
Agriculture is the 7th or 8th most dangerous industry in the US, depending on the year. Two big risks on dairy farms include handling manure or working in other confined spaces, such as silos and grain bins. Join OSU Extension educators Taylor Dill and Jamie Hampton as they discuss safety on the farm and making sure everyone stays safe on the farm.
Manure Utilization and Maximize Manure Nutrient Utilization
Manure management on your dairy farm is critical, especially with rising fertilizer costs. Maximizing manure usage as a fertilizer source can turn it from an expense into a profit center. Learn from OSU Extension personnel Chris Zoller, Eric Richer, Glen Arnold, Chris Shoup, and Haley Zynda about the fertilizer situation, composting of dry manure to reduce volume to be hauled, utilizing liquid manure to maximize nitrogen utilization, understanding manure variability, and possible ration changes to decrease nitrogen emissions. Learn more about these topics by listening to this recording.