Buckeye Dairy News: Volume 5 Issue 5

  1. Milk Production Growth Slows - What's Up for Milk Prices?

    As we pass the midpoint of the 2003 calendar year, it is time to take stock of where we are milk price-wise and where we are likely to go in the next 17 months. In this column, I will review the August 2003 USDA Milk Production Report, look at the relationship of butter and cheese inventories to high and low milk prices, and finally stick my neck out and provide a forecast for the remainder of 2003 and for 2004.

    August 2003 USDA milk production report disappoints the market

    Over the last 10 trading days the Chicago Mercantile Exchange (CME) cash cheese market has idled time away with not nary an up-tick nor a down-tick in either the block or barrel price. Why? The market has been eagerly awaiting the release of the USDA Milk Production Report for a read of the July production numbers. With it would come one of two possibilities: 1) the current run-up in the cheese price on the CME is only the beginning of a sustained period of higher cheese prices and hence, higher milk prices, or 2) the lack of momentum over the last two weeks in the CME cheese market is an indication that the run-up has made its course and this is about as high as it will go.

    Well, the report is out and it is now old news. The much anticipated 1.5 to 2.0% drop in July milk production in California was not evident, with CA milk production off only -0.6% from July 2002. This was based on a reported increase in cow numbers and flat production per cow over the upward revised June 2003 USDA numbers.

    Despite the heat, Idaho turned in an 8% increase in production over July 2002. This was accomplished with slightly fewer cows and a stunning 40-pound per cow increase in productivity over last month's numbers. Texas turned in a 7.2% milk production increase and New Mexico managed a 3.5% increase.

    Here in the lake states, Wisconsin milk production was up 2.9% and Minnesota up 0.7%. Ohio turned in a respectable 3.3% increase in milk production and Michigan 4.4%, while New York (-2.4%) and Pennsylvania (-4.4%) lost ground. The southeastern states continue to slide with Florida losing 7.5%, Kentucky 8.7%, and Virginia 9.2% over July 2002.

    The numbers coming out of this report do not lend significant strength to the current CME cash cheese market. However, much of the damage from the heat in the west may not be observed until the August numbers are released in the September report. Others I have talked to expressed the view that the cheese market continues to be tight in the west and this will only be exacerbated by the resumption of the schools across the country. Overall, I expect that this report will not substantially deflate the current futures market for the coming months but will certainly not push it higher. If you are not paying attention to the prices offered on the CME Class III contract, you certainly should be or perhaps you have a rich uncle.

    Continuing good news on dairy cow slaughter

    The latest weekly numbers from the U.S.D.A. Federal Inspected Livestock Slaughter - Dairy Cattle report indicates that dairy cow slaughter continues to run ahead of last year at this time.

    Let's look at what is ahead for market prices

    Until we get a better balance between the inventory of dairy products and commercial disappearance, you should look for the current wholesale price levels of Grade AA butter and Cheddar cheese to remain lethargic for the remainder of 2003. The 2003 forecast, June through December, for dairy commodity prices (butter, nonfat dry milk, cheese, and whey), given by quarter, is shown in Table 1. These forecast prices translate into the average milk check value shown in Table 2. The producer differential and the gross milk check price are applicable to producers in the Mideast Federal Milk Marketing Order 33, Cleveland base zone.

    Table 1. Forecast dairy commodity wholesale prices ($/lb).

    Forecast for Planning Year
    Grade AA Butter
    Nonfat Dry Milk
    Cheddar Cheese
    Whey Protein
    2002 Annual Average
    2003 Quarter I
    2003 Quarter II est.
    2003 Quarter III est.
    2003 Quarter IV est.
    2003 Annual Average Forecast

    Table 2. Forecast dairy commodity wholesale prices ($/LB).

    Forecast for Planning Year
    Grade AA Butter
    Nonfat Dry Milk
    Cheddar Cheese
    Whey Protein
    2004 Quarter I forecast
    2004 Quarter II forecast
    2004 Quarter III forecast
    2004 Quarter IV forecast
    2004 Annual Average Forecast

    Component pay prices

    Milk component pay prices, given the forecast 2003 dairy product prices, will be quite moderate, which will be good news for processors of dairy products facing weak consumer demand and not so good news for dairy producers. Tables 3 and 4 list my 2003-2004 component pay prices. With the rapid rise in the cheese price, we have seen the producer price differential turn negative. This happens because the rise in the cheese price pushes the Class III price for July above the Class I price, and it does not pay for Class III users to pool on the Federal Order. By not pooling, Class III utilization drops dramatically (this is the class that is not pooled) and Class I reported use climbs dramatically. The result is that the Producer Price Differential (PPD) calculation turns in a negative amount. For July, this was -10 cents. October should return to a more normal value for the PPD.

    Table 3. Forecast milk component pay prices and Class III price for 2003.


    Grade AA Milk Fat

    Other Solids
    Nonfat Solids
    Class III
    MILC Payment*
    2002 Annual Average
    Forecast for 2003
    Quarter I
    Quarter II est.
    Quarter III est.
    Quarter IV est.
    Annual Average

    *MILC = Milk Income Loss Compensation

    Table 4. Forecast milk component pay prices and Class III price for 2004.


    Grade AA Milk Fat

    Other Solids
    Nonfat Solids
    Class III
    MILC Payment*
    Forecast for 2004
    Quarter I forecast
    Quarter II forecast
    Quarter III forecast
    Quarter IV forecast
    Annual Average

    *MILC = Milk Income Loss Compensation

    A look ahead at class prices

    Table 5 lists my 2003-2004 forecasts for Federal Order 33 and a comparison to the 1999 - 2002 prices. For annual averages in 2003, I have Federal Order 33 Class I milk at $12.35/cwt; Class II at $10.70/cwt; Class III at $10.21/cwt; and Class IV at $9.93/cwt.

    Table 5. Forecast class prices 2003 with comparisons for 1999 through 2002.

    Calendar Year
    Class I
    Class II
    Class III
    Class IV
    2003 (estimated)
    2004 (estimated)

    Projected Milk Income Loss Compensation (MILC) payment rates

    Now that we have the complete suite of price forecasts for Fiscal Year (FY) 2003, we can calculate the implied payment rates under the MILC program. In doing this, keep in mind that these are only estimates of the actual rates and will change as new market and production information becomes available. The actual and projected FY2003 rates and the forecast rates for FY2004 are shown in Table 6. Remember MILC payment rates decline as the Class III and/or Class IV advanced mover prices increase. The notable point here is the September 2003 payment rate. If the announced National Agricultural Statistics Service advanced cheddar price approaches the $1.55/LB mark, the MILC payment will approach zero as the Class I mover will exceed $13.69/cwt, given my forecasts at that cheese price point. A higher MILC payment rate is not what is desired as it lifts only some boats, while across the board strength in all milk prices raises all of the dairy boats.

    Table 6. The FY2003 forecast Milk Income Loss Compensation (MILC) payment rate ($/cwt) by month.

    FY2003 MILC Payment Rate (Actual **)
    FY2004 MILC Payment Rate (Forecast)
    Oct '02 / '03
    $1.5930 **
    $1.3905 **
    $1.3950 **
    Jan '03 / '04
    $1.4085 **
    $1.557 **
    $1.746 **
    $1.8225 **
    $1.791 **
    $1.7775 **
    $1.7640 **


  2. Cost of Nutrients in Feedstuffs

    Dr. Normand St-Pierre, Dairy Specialist, Ohio State University

    The good news is that milk prices will show a substantial recovery this Fall. For how long is anybody's guess at this time. The bad news is that feed prices are high in historical terms and the markets are showing no sign of dropping anytime soon. Yet, there are many opportunities for dairy producers to significantly reduce feed cost without impacting negatively the health or production of their cows. Some byproducts are well-priced and are worth considering.

    As of late summer, unit costs of rumen degradable protein (RDP) and non-effective NDF (ne-NDF) are down 2.9 and 1.6 units per pound, respectively. The cost per unit of net energy lactation remains very high, approaching 8.5 cents per megacalorie. Effective NDF (e-NDF) is also very pricey, at 8.5 cents per pound.

    Table 1. Estimates of nutrient unit costs.

    Nutrient name
    NEL - 3X (2001 NRC)
    Digestible RUP
    Non-effective NDF (ne-NDF)

    - A blank means that the nutrient unit cost is likely equal to zero.
    - ~ means that the nutrient cost may be close to zero.
    - * means that the nutrient cost is unlikely to be equal to zero.
    - **means that the nutrient cost is most likely not equal to zero.

    A good look at the ingredients used on your farm may reveal cost saving opportunities. Currently, the following feed ingredients are priced well-below what they are worth: bakery byproduct meal, ground shelled corn, corn silage, distillers dried grains, hydrolyzed feather meal (with strong reservation due to the considerable range in quality), hominy, roasted soybeans, wheat bran, and wheat middlings. There are also some feedstuffs that are overpriced: beet pulp, canola meal, porcine meat meal, molasses, soybean hulls, 44% and 48% soybean meal, blood meal, and fishmeal. Blood meal is actually priced correctly when the value of lysine (an important amino acid) is factored in our evaluation. Fishmeal, however, is still considerably overpriced ($150 to $200/ton) even when methionine and lysine are factored in the evaluation. These lists should serve as guidelines. It may be justified to use an ingredient from the overpriced list to fit the specific conditions of a herd. In general, nutritionists should try to maximize the use of discounted feedstuffs and minimize the use of overpriced ones. As always, a properly balanced ration, based on sound nutrition must be used. But, the individual components (feedstuffs) making the ration can be changed (increased, decreased, or substituted) without impacting animal performance. What was a bargain a year ago (e.g. soyhulls) may no longer be a bargain.

    Table 2. Calibration set.

    Actual ($/ton)
    Predicted ($/ton)
    Lower limit ($/ton)
    Upper limit ($/ton)
    Alfalfa Hay, OH Buckeye D
    Bakery Byproduct Meal
    Beet Sugar Pulp, dried
    Brewers Grains, dried
    Brewers Grains, wet
    Canola Meal, mech. extracted
    Citrus Pulp, dried
    Corn Grain, ground dry
    Corn Silage, 32-38% DM
    Cottonseed, whole w lint
    Distillers Dried Grains, w sol
    Feathers Hydrolyzed Meal
    Gluten Feed, dry
    Gluten Meal, dry
    Meat Meal, rendered
    Molasses, sugarcane
    Soybean Hulls
    Soybean Meal, expellers
    Soybean Meal, solvent 44% CP
    Soybean Meal, solvent 48% CP
    Soybean Seeds, whole roasted
    Wheat Bran
    Wheat Middlings

    Table 3. Appraisal set.

    Actual [$/ton]
    Predicted [$/ton]
    Blood Meal, ring dried
    Fish Menhaden Meal, mechanized

    The estimates were derived using the software SESAME Version 2.05 written at The Ohio State University. For additional information, please refer to Buckeye Dairy News Volume 5, Issue 2, March 2003.

  3. Update on Corn Silage Harvesting Practices

    Dr. Bill Weiss, Dairy Specialist, Ohio State University

    As corn silage harvest approaches, important decisions must be made regarding silage harvest. The quality of the silage made this fall will have an impact on the herd for the next 12 months.

    When to chop. The decision to chop should be based on the dry matter (DM) concentration of the corn plants. Corn silage that is excessively wet can reduce intake when fed to dairy cows and can produce effluent (seepage) during storage. Silage that is too dry has poorer digestibility and can heat in the silo and feed bunk. The ideal DM concentration for corn silage is between 30 and 38% (bunkers should be at the low end of this range, bags in the mid portion of the range, and upright silos at the upper end of this range). Although kernel milk line is related with DM concentration of corn plants, milk line is not accurate enough to make harvesting decisions. Based on a study from Ohio, average DM concentration of corn plants was 35% (range was approximately 30 to 40%) at one-quarter milk line (milkline one-fourth of the way down from the tip to the base of the kernel) and 39% (range was approximately 35 to 45%) at one-half milk line stage. Planting time and hybrid affected the relationship between milk line stage and DM concentration. A sample of corn plants from the field should be chopped and analyzed for DM using either a microwave or Koster tester before filling the silo. Monitoring DM should begin at the full dent stage.

    Kernel Processing. Kernel processing allows corn silage to be chopped coarsely without decreasing digestibility of the kernel (i.e., starch). The goal of processing is to damage or break most (more than 90%) of the kernels. If more than a few whole kernels are found after chopping, the processing rolls were not set close enough. Most studies have reported increased starch digestibility by dairy cows when fed kernel processed corn silage; however, digestibility of DM (an estimate of the energy value of the diet) is often not affected by kernel processing. Likewise, averaged across studies, milk production is not greatly increased by kernel processing, but some individual studies have reported large increases in milk production. Hybrid appears to be one factor affecting the response to kernel processing. Unfortunately, at this time, we do not know which hybrids are likely to respond to kernel processing.

    Inoculation. Conventional corn silage inoculants provide specific lactic acid producing bacteria. Inoculated corn silage usually has a higher lactic acid concentration and lower fermentation losses than uninoculated corn silage. Milk production is seldom affected greatly by corn silage inoculation. On average, the use of lactic acid producing inoculants on corn silage probably has a slightly positive return on investment. A newer type of inoculant (Lactobacillus buchneri) promotes increased acetic acid concentrations in silage. Acetic acid is inhibitory to many yeasts and mold, and silage inoculated with L. buchneri is much more stable when exposed to air than untreated silage. This should reduce storage losses and prolong bunk-life of TMR containing inoculated silage. Limited research has found no effects on intake or milk production when cows were fed corn silage inoculated with L. buchneri. If silage feed out rate will be slow (less than about 6 inches/day) and/or the silage will be fed in the summer, L. buchneri could be quite useful.

  4. Getting the Last Cutting of Alfalfa

    Dr. Mark Sulc, Forage Specialist, Ohio State University

    Early September is ideal for taking that last yearly cutting of alfalfa. The timing of this last cutting can be very important to the long-term health of the stand. In this article, we will review what is known about fall cutting management of alfalfa.

    Alfalfa should not be cut during the 5 to 6 week period before a killing frost. During this critical period, cold resistance and energy reserves for winter survival are built up. A killing frost for alfalfa occurs when temperatures drop to 25oF or less for several hours. So the period from mid-September through October is the critical fall rest period in our region. Harvesting during this period disrupts accumulation of energy reserves and development of cold hardiness.

    Producers often harvest alfalfa during the critical fall period despite the increased risk of winter injury. This year rainy weather has delayed cutting schedules throughout the growing season, pushing back the time when the crop will be ready for a last harvest. The tonnage expected from a fall cutting and the need for the forage should be high before considering a cutting during the critical fall period. 

    When harvesting alfalfa during the critical fall period, several factors can moderate the risk of winter injury:

    • Young, healthy stands are less susceptible to winter injury from fall harvesting than older stands. On the other hand, more future production potential is lost if a younger stand is injured from fall cutting.
    • Forages in well-drained soils will be at lower risk of injury than those with marginal drainage. Fall cutting should not be attempted on soils prone to heaving! Removal of the top growth cover increases the potential for heaving injury.
    • Length of harvest interval during the growing season is often more important than the actual date of fall cutting. Making a 3rd cutting during the fall is less risky than making a 4th cutting in the fall, because a 3-cut schedule allows longer intervals for plant recovery between cuttings compared with a 4-cut schedule. Likewise, a growth interval of 45 days BEFORE a fall harvest will reduce the risk of injury compared with a pre-harvest growth interval of 30 days. The longer growth period allows more energy buildup before the fall harvest, lessening the amount of energy reserves needing to be built up after harvest.
    • Fields with optimal soil fertility levels (pH, P, and K) are at less risk than where fertility levels are lower.
    • Disease resistant and winter hardy varieties lessen the risk of injury from fall cutting.
    • Alfalfa that was protected from potato leafhopper injury during the summer will be at lower risk than where leafhoppers caused severe injury. Any stress (like wet soils) that weakened the crop during the year can increase the risk of damage from fall cutting. This is the case in many of our alfalfa fields this year.
    • Cutting AFTER a killing frost (25oF for several hours) in late October or early November can be an option for well-drained soils. Leave a 6-inch stubble after late fall cutting. Cutting this late in the year prevents regrowth that burns up energy reserves; however, late removal of plant cover increases the risk of frost heaving! Fall cutting should not be practiced on soils prone to heaving.
  5. Environmental Stewardship - Minimizing Risk and Being Prepared

    Dr. Maurice Eastridge, Dairy Specialist, Ohio State University 

    We live in a world full of risks -it's just a factor of life. Yet, a general mindset seems to have settled among us that we demand a risk-free society. Of course, we know that this is not possible. Risk is defined as the "possibility of loss or injury" and is associated with uncertain outcomes. We can purchase insurance for almost any risk. Purchasing insurance just transfers the financial burden of a loss, should it occur, to another party. Insurance can neither replace life nor fully compensate for pain, suffering, and quality of life. So, it is very important for all of to be active in controlling risks, thereby reducing the potential for loss or injury. Controlling environmental risks on dairy farms should address the following:

    Manure storage facilities:

    Designed to provide adequate containment (i.e. not leaking)
    Provide sufficient capacity
    Provide adequate ventilation when appropriate

    Land application of manure:

    Apply proper amount for conditions
    Identify and implement needed setbacks
    Control drainage systems

    Silage storage:

    Control seepage
    Provide adequate ventilation when appropriate

    Control all potential sources of runoff

    With all of the best efforts, accidents to occur and then rapid efforts are needed for response to the loss or injury. Therefore, all farm owners need to have in place an Emergency Action Plan. If there is a fire, we fully expect the fire department to respond immediately, to be well trained, and to have a plan that all of the department's staff knows "like the back of their hand". On the farm, an Emergency Action Plan also is very critical. An emergency action plan to avoid environmental risks relative to manure storage and handling on livestock farms should contain at least four items (Iowa State University): 1) a plan of action to prevent the release of manure or prevent environmental contamination, 2) a detailed map of the site and application fields 3) a list of contact names and numbers included with the plan and posted near the phone, and 4) a clean-up plan. In addition to developing an Emergency Action Plan to address manure management, the plan should also address any medical emergency, potential weather-related emergencies; electrical, plumbing, or other mechanical failures; animal health emergencies, including biosecurity; and milk hauling and processors contacts. Items to consider in developing a plan of action to an emergency are: 1) assess the situation, know what factors are at risk (human health, animal welfare, the environment, or livestock structures), 2) reduce risk through implementation of the planned steps, 3) contact appropriate authorities to report emergencies or accidents, and 4) assess damages.

    The motto of the Boy Scouts of America is "be prepared". We learn a lot as a child, whether in the sand box, from parents, youth organizations, etc. These lessons still apply throughout life - we need to be prepared to reduce risks and to respond to emergencies when they do occur. If you don't have an Emergency Action Plan, don't plan to do the Plan (because you may never get around to doing it) - why not start on it now.

  6. Bus Trip to Northeast Regional Professional Dairy Heifer Growers Association Conference

    Ms. Amanda Hargett, State Dairy Extension Associate, Ohio State University

    Do you want to learn new information and/or improve the management of your heifers? This trip is NOT just for professional heifer growers. There is information for all who are interested in improving their management of young dairy stock. Elanco Animal Health is arranging to sponsor a bus trip to the Northeast Regional Professional Dairy Heifer Growers Association Conference, October 28-29, in Batavia, NY. If you are interested in attending, please contact Amanda Hargett at 614-688-3143 or hargett.5@osu.edu by September 26, 2003. The tentative plan is to leave on October 27 and return very late on October 29 after the tours. Pickup locations will be determined later depending on where those who are interested in attending are located. For information on the meeting, please visit the Professional Dairy Heifer Growers Association website at: http://www.pdhga.org. Click on "Future Meetings" and go to Northeast Regional meeting for an agenda and registration flyer.