Buckeye Dairy News: VOLUME 24: ISSUE 6
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 October and November were $21.95/cwt and $20.92/cwt, respectively. Class III milk closing price for October was slightly lower than predicted at $21.81/cwt, with protein and butterfat prices at $2.45/lb and $3.66/lb, respectively. The increase in component prices compared to the September issue aligns with typical yearly price cycles near the holidays. For this issue, the Class III future for December is $20.16/cwt and the January future is $20.00/cwt.
It can be helpful to compare the prices in Table 1 to the 5-year averages. Since the September issue, the price of metabolizable protein (MP) has increased by about 5%, alongside a 13% decrease in the price of net energy for lactation (NEL). However, the current prices of NEL and MP are about 23 and 39% higher than the 5-year averages ($0.08/Mcal and $0.41/lb, respectively). These nutrient costs continue to reflect recent trends in ingredient costs, largely following swings in the cost of protein and energy ingredients.
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 the September issue, the income over nutrient cost (IONC) for cows milking 70 lb/day and 85 lb/day is about $14.32 and $14.85/cwt, respectively. Both estimates are higher than in September and likely to be profitable. 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, November 25, 2022.
Economic Value of Feeds
Results of the Sesame analysis for central Ohio on November 25, 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 for this issue.
Table 2. Actual, breakeven (predicted) and 75% confidence limits of 26 feed commodities used on Ohio dairy farms, November 25, 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, November 25, 2022.
Bargains At Breakeven Overpriced Alfalfa hay - 40% NDF
Mechanically extracted canola meal Feather meal Soybean meal - expeller Whole, roasted soybeans Corn silage Wheat bran Distillers dried grains Gluten meal 44% Soybean meal Gluten feed
Solvent extracted canola meal 48% Soybean meal
Corn, ground, dry
Blood meal Hominy Soybean hulls 41% Cottonseed 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.
Table 4. Prices of dairy nutrients using the 5-nutrient solution for Ohio dairy farms, November 25, 2022.
USDA Economic Research Service Dairy Outlook: November 2022
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 Livestock, Dairy, and Poultry Outlook on November 16, 2022. The full report is available here: https://www.ers.usda.gov/webdocs/outlooks/105249/ldp-m-341.pdf?v=2499.5. This article will highlight the dairy portion of the report.
Dairy Supply and Use
The National Agricultural Statistics Service (NASS) reported that milk production in September 2022 was up 1.5% compared to the previous September. Milk cow numbers were 2,000 head less than August 2022, but 6,000 more than September 2021. Per cow milk production was 27 lb higher than the previous September. The graph below summarizes these numbers.
The September all-milk price came in at $24.10/cwt. This is a few cents higher than August, and $6.10/cwt greater than September 2021. The higher milk price (compared to the previous September) also brought higher prices for alfalfa and soybean meal.
Outlook for 2023
USDA NASS expects 10,000 fewer dairy cows in 2023, a 30-lb increase in milk production per cow (24,350 lb/cow), and unchanged production of 229.2 billion pounds. The export market for dairy looks positive in 2023. Cheese, butterfat, and dry skim milk exports are expected to be strong.
Price forecasts for 2023 are summarized in the table below.
2023 Projected Price
Anticipated milk price decreases and rising input costs make financial analysis, management, and planning even more important. Talk with your accountant, lender, and Extension professional about your financial performance this year and plans for 2023.
These resources may be helpful as you plan:
- OSU Extension Enterprise Budgets: https://farmoffice.osu.edu/farm-management/enterprise-budgets
- OSU Extension Ohio Ag Manager Newsletter: https://u.osu.edu/ohioagmanager/
- Ohio Farm Business Analysis & Benchmarking Program: https://farmprofitability.osu.edu/
Dairy Margin Coverage 2023 Deadline Is Fast Approaching
Jason Hartschuh, Field Specialist, Dairy Management and Precision Livestock, Ohio State University Extension
The Dairy Margin Coverage (DMC) program through the Farm Service Agency sign-up deadline is quickly approaching on December 9th, 2023. DMC has payouts when the margin between the all-milk price and the DMC feed cost falls below the selected protection level of $4.00-9.50/cwt. Now is the time to consider if this program will improve your risk management in 2023. For the current year, 2022, 73.17% of Ohio dairy farms signed up for some level of coverage. While the first half of 2022 had strong margins well above $9.50/cwt, margins fell below the $9.50/cwt level in August to $8.08/cwt and in September was $8.62/cwt. The margins for the rest of 2022 have improved compared to earlier this month, but lower margins are predicted to continue into 2023.
With margin payouts currently forecasted for most of 2023, reviewing the DMC program could be beneficial for your operations bottom line. Table 1 shows the current forecasted all milk price, feed price, and the forecasted DMC margin for each month of 2023 from the DMC decision tool. The forecasted all milk price has a high of $23.53/cwt in November and bottoms out at $22.37/cwt in July, with a yearly average of $22.86/cwt. At the same time, forecasted average yearly feed cost is $13.59/cwt, reaching its highest in January at $14.53/cwt, and its lowest really depends on next year’s crop but is currently seen in December at $12.92/cwt. After reviewing these milk and feed cost forecasts, the margin forecast ranges from $8.65-10.48/cwt. After reviewing Table 1, you can start to make informed decisions about what level of margin coverage to utilize.
The DMC is a two-tiered program with you needing to make decisions on your production history below 5 million pounds, separate from your production above 5 million pounds. The premium cost for the first 5 million pounds is much more reasonable, with the $9.50/cwt coverage level costing $0.15 per cwt. With the current forecast on 5 million pounds of coverage, the producer premium is about $7,481, but the net total payout is about $22,200. The premium cost is covered by the payout during the first three months.
For production over 5 million pounds, the maximum coverage is $8.00/cwt, but the premium is $1.813/cwt. This coverage needs thought about carefully. There are no months below the $8.00 margin level at this time. This means you may only want to use the $4.00 margin coverage that does not have a premium or maybe the $5.00 margin which has a premium of $0.005/cwt in case the margin gets even worse for production history over 5 million pounds. Remember this is only a forecast, so hopefully milk price improves and so does income over feed cost margins so that the program doesn’t have payouts for all of 2023.
The DMC program does allow producers to participate in the other subsidized risk management programs that are administered through USDA-Risk Management Agency. Those programs include the Dairy Revenue Protection program, which allows producers to use a Class III, Class IV, or component blend futures-based program to set a floor under their milk price by quarter. Another program more like DMC is the Livestock Gross Margin-Dairy that allows producers to use Class III milk, corn, and soybean meal futures to lock in a margin above feed cost. These programs are available to all producers, regardless of pounds of milk shipped per month but could be a much better option for milk production over 5 million pounds.
Table 1. Forecasted all milk price, feed price, and DMC margin for each month of 2023.1
Month All Milk Price Forecast ($/CWT) Corn Price Forecast ($/BU) Premium/Supreme Alfalfa Hay Price Forecast ($/Ton) Soybean Meal Price Forecast ($/Ton) Feed Cost Forecast ($/CWT) DMC Margin Forecast ($/CWT) Jan $23.45 $6.38 $334 $422.96 $14.53 $8.93 Feb $23.07 $6.29 $332 $420.27 $14.39 $8.68 Mar $22.82 $6.24 $310 $417.95 $14.01 $8.80 Apr $22.72 $6.20 $296 $416.35 $13.77 $8.95 May $22.39 $6.16 $296 $414.81 $13.72 $8.67 Jun $22.24 $6.13 $290 $413.54 $13.59 $8.65 Jul $22.37 $6.10 $287 $412.98 $13.51 $8.86 Aug $22.50 $6.01 $286 $409.97 $13.38 $9.12 Sep $22.80 $5.87 $284 $405.04 $13.16 $9.64 Oct $23.07 $5.78 $283 $399.09 $13.00 $10.07 Nov $23.53 $5.71 $293 $397.72 $13.07 $10.46 Dec $23.39 $5.66 $287 $396.83 $12.92 $10.48 2023 $22.86 $6.04 $298 $410.63 $13.59 $9.28
1November, 2022 margin forecast from dmc.dairymarkets.org.
Nuisance Bird Economics, Prevention, and Control for Livestock Farms
Dr. Dwight Roseler, Adjunct Faculty, Department of Animal Sciences, The Ohio State University and Technical Consultant, Purina Animal Nutrition
“Dashing through the snow” is a phrase to the song Jingle Bells that often brings fun joyful memories this time of year. Dashing into your dairy barns this time of year are sparrows, starlings, and pigeons that bring bad memories of birds leaving a foul-smelling unsightly mess. Ohio has one of the highest breeding densities of European starlings in the US according to survey. Flocks can range from a few hundred to over 10,000 on a single farm. Starlings are known to fly 15 to 30 miles from roosting sites to a desirable feed source. On dairy farms, starlings consume grain and leave droppings, which results in feed and possibly milk production losses. The starlings may spread disease through droppings and pose health risks to livestock and humans.
Starlings consume the grain and protein ingredients in dairy cow diets and reduce the nutrient content of the remaining TMR. A small flock of 1200 starlings can consume up to one ton of protein and grain per month from a 200-cow dairy farm. Various studies have shown the economic cost of bird infestation in excess of $8,000/year. Health losses and disease risk can increase this loss.
Health and disease
Ohio State research from 2008 has shown that bird droppings transmit E. Coli, salmonella, cryptococcidia, and histoplamosis. These diseases reduce cow health and intestinal health and increase risk of mastitis. Several strains of salmonella exist and increase the risk of calf death and disease.
Nuisance bird prevention and control
Prevention methods of bird infestation must start before snow fall and heavy infestations of birds. Prevention includes netting, visual scare devices, distress calls, roosting adaptations, and health modifiers. Check with state wildlife divisions for regulations regarding control of nuisance birds before implementing control measures.
Nets will not entangle birds. Netting may be draped across the front of buildings; fasten it tightly from above windows to below the ledge to discourage perching. Visual scare devices and distress calls must be modified regularly throughout the year to be effective. Commercial sources of prevention tools can be evaluated at the websites www.birdbgone.com, www.birdgard.com and the Ohio Department of Natural Resources (ODNR): Division of Wildlife (https://wildlife.ohiodnr.gov/ ). Roosting adaptations include modifying the roosting surfaces with an angle of 60 degrees or greater. Birds prefer to perch on flat surfaces and angled surfaces reduce perching. Wood or metal sheathing cut at an angle can also be added to the problem area. Installation of porcupine wire on ledges and rails where birds roost will reduce roosting. Thinning tree branches around buildings can remove perch sites and reduce a source of wind protection, which may force the birds to move to another site. Combinations of noise (AM/FM radio, wind chimes, firecrackers, banging pots and pans, etc.) and visual stimuli (colored flags, reflective tape, rotating blank CD’s, revolving lights, balloons, replicas of hawks and owls, etc.) used persistently can evict birds. Control measures should be initiated and modified at various times throughout the year.
The ODNR Division of Wildlife provides a list of commercially approved nuisance wild animal control operators in your respective Ohio county. The Ohio list has over 400 commercial nuisance animal control operators, some of which may be licensed to manage bird control on commercial livestock farms. The Division also has information on options for prevention of nuisance birds.
Methane Mitigation Strategies for Dairy Farms
Dr. Maurice L. Eastridge, Professor and Extension Dairy Specialist, Department of Animal Sciences, The Ohio State University
Greenhouse gas (GHG) production and climate change are constantly before us in the news, political agendas, and environmental sustainability discussions. The three primary GHG are carbon dioxide, methane (CH4), and nitrous dioxide. It has been estimated that agriculture contributes about 10% to the total GHG production in the US. Based on life cycle assessment (LCA), reduction in CH4 production from enteric fermentation and manure provides the greatest opportunity for reducing GHG production from the dairy industry.
In the December 2022 issue of the Journal of Dairy Science, Karen Beauchemin from Agriculture and Agri-Food Canada, Lethbridge, Alberta, and co-authors published an article on the “Current Enteric Methane Mitigation Options” for ruminant livestock. In the article, the following options were discussed:
- Increased animal productivity: Increased output per unit of input can lead to reduced CH4 per unit of product. This efficiency has been achieved through improved feeding practices, animal management, improved animal health and comfort, genetic advancement, and better reproductive performance.
- Selection of low-methane producing animals: Individual differences in CH4 production exist among animals within the same herd and with the same feeding management, but heritabilities of CH4 production are low to moderate in dairy cattle. The use of this strategy to lower CH4 production is challenging because of the difficulty in measuring methane production or developing practical proxies for prediction of CH4 production, and the possible existence of undesirable associations between CH4 production and animal productivity.
- Diet reformulation: a) It is well established that level, source, and processing feeds can affect CH4 production by changes in rate of feed passage from the rumen, digestibility, and impact microbial populations; however, the result is not always positive, especially when viewed in context of a LCA. Thus, further research should focus on evaluating total GHG emissions using an LCA for individual farms and geographical regions. b) Dietary lipid supplementation has been shown to decrease CH4 production by the replacement of starch and direct impacts on the microbial population. However, the impact on CH4 and the animal’s performance varies with level and source of fat supplementation. Further research is needed to identify cost-effective fat sources fed at the appropriate level that would reduce CH4 emissions without impairing feed digestibility and animal production.
- Forage system: Forage production systems are highly variable and dependent upon farm conditions (e.g., soil type and fertility, water, and climate) and management practices. These factors affect forage yield and nutritive value, carbon storage in soils, animal performance, manure excretion, and ultimately, GHG emissions. Therefore, in all cases, a change in forage management to decrease enteric CH4 emissions needs to be assessed using regionally specific farm-level LCA that account for changes in forage and animal productivity, as well as emissions and sinks from all components of the farming system, including soil carbon.
- Increasing forage digestibility usually increases DMI and improves animal performance, which decreases CH4 yield and intensity. Furthermore, ruminant production systems fill the unique niche of consuming high-fiber, low-digestible feeds and crop residues and co-products not suitable for highly productive animals.
- Perennial forages fixate N, thus lower requirements for N fertilizer, may sequester more soil carbon than grasses, are lower in fiber than grasses, some legumes contain secondary compounds that reduce methane production, and the higher CP than with grasses reduces purchased protein supplements; therefore, a LCA is necessary with different management systems and geographical areas.
- Use of high-starch forages, such as corn silage and small-grain cereals, can increase starch and decrease fiber concentration of diets and thus reduce CH4 production. The greatest potential for high-starch forages to reduce total GHG emissions may take place when replacing another annual forage crop, but a LCA is necessary to take into account soil carbon changes.
- High-sugar cultivars of perennial ryegrass have elevated non-fiber carbohydrate concentrations at the expense of CP and/or NDF and this could result in a reduction of CH4 production. Because digestibility and DMI may be increased and varying yields occurs with different cultivars, additional animal studies and a LCA are needed.
- Grazing systems vary with climate, plant species, soil types, and livestock, and include season-long continuous grazing, rest-rotation grazing, deferred rotational grazing, and intensively managed grazing. Several of these management practices and the chemical composition of some of the forages can impact CH4 intensity.
- The effect of ensiling forage on CH4 production is expected to be highly variable depending upon the resulting forage quality and ensiling practices. Processing of forage by grinding and pelleting reduces particle size, which increases ruminal passage rate, decreases organic matter degradation in the rumen, and shifts fermentation toward propionate production with less CH4 production. However, forage preservation and processing increase the use of fuel for machinery and associated emissions compared with grazing fresh herbage. Before recommending a change in forage preservation or processing for CH4 mitigation, additional inputs required, effects on animal productivity, and whole-farm GHG emissions need to be considered.
- Action on the ruminal fermentation:
- Ionophores, such as monensin, appears to have limited impact on CH4 production, but its improvement in feed efficiency decreases GHG emissions from feed production and per unit of output.
- 3-Nitrooxypropanol (3-NOP) fed in small amounts can reduce CH4 production, but the impacts on milk production and composition have been variable. The greatest hurdles for the widespread adoption of 3-NOP or other chemical inhibitors that may be discovered in the future are the additional feeding cost from their inclusion in animal diets, if no consistent benefits in productivity are obtained, and the difficulty of delivering the required dose to grazing ruminants in extensive production systems in a format that works over extended periods.
- Macroalgae (seaweeds) have highly variable chemical composition, depending upon species, time of collection, and growth environment, and they can contain bioactive components that inhibit methanogenesis. Use of macroalgae as an antimethanogenic strategy may be feasible, but mechanisms for delivery to animals that do not reduce the efficacy of the bioactive compounds need to be designed.
- Alternative electron acceptors are organic (e.g., fumarate, malate) and inorganic (e.g., nitrate) compounds that draw electrons away from methanogenesis and incorporate them into alternative pathways. In general, the effects of fumarate and malate on animal productivity have been inconsistent and are limited by cost because of the relatively high levels of inclusion needed and the relatively small effects on CH4. Although nitrate has been shown to reduce CH4 production and intensity, it can only be used in production systems where feed intake is closely managed due to the risks of acute toxicity.
- Essential oils (e.g., oregano, thyme, garlic oil, and others) are complex mixtures of volatile lipophilic secondary metabolites that are responsible for a plant's characteristic flavor and fragrance and may exert antimicrobial activities against bacteria and fungi, including CH4 production. Given the variably of responses and the many different sources of essential oils, additional research is needed before firm recommendations can be made.
- Tannins and saponins are secondary plant compounds in some forages, e.g., legumes, that may reduce CH4 production. However, given the diversity of management systems with such feedstuffs, additional research in needed in how these compounds could be used to reduce CH4 production without negative consequences.
- Direct-fed microbials (e.g., yeasts, fungi, and lactic acid producing bacteria) are live microorganisms that when ingested can modify rumen fermentation. Although some coculture and mixed culture experiments have generated proof-of-concept that direct-fed microbials can reduce CH4 emissions, these results have seldom been confirmed with research in animals.
Early stage mitigation strategies are constantly under consideration. The global effort to curb CH4 emissions is driving significant investment and innovation by the private and public sectors. Recent advances in characterizing the rumen microbiome, genome sequencing of rumen methanogens, and an in-depth analysis of the enzymatic pathways involved in methanogenesis are leading to new CH4 mitigation approaches. Most of the research to date has focused on mitigation of CH4 from ruminants in confinement systems, but technologies to reduce emissions from grazing animals would have the largest effect on reducing emissions from global ruminant livestock. Some of the early mitigation strategies being researched include immunization against methanogens, early-life interventions to modify the microbiota in a manner that decreases CH4 emissions later in life, feeding enzymes with activity against methanogen cell walls, elimination of ruminal protozoa, and using a device that attaches to animals to collect CH4 and oxidize it.
Research continues on various approaches for reducing CH4 production, capturing CH4 on the farm, and effectively utilizing the captured CH4. All of the aspects discussed in this article have potential interest to farmers as they strive to reduce the carbon footprint of dairy production and gain financially from carbon credits.