Fast Changing Feed Markets Bring Opportunities

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

The abrupt swing in the protein market, compounded with the bovine spongiform encephalopathy (BSE) case in Washington, has brought substantial changes in commodity prices. In these instances, some producers prefer to keep purchasing the same feed components, arguing that consistency in a feeding program is conducive to higher milk production. Although there is little doubt that ration variability affects performance, one should not confound variability (changes in nutrient density) with ingredient substitution (changing the source of nutrients). Using good nutrition practices, substantial savings in feed cost can be achieved by exploring the feed market for sources of nutrients. As usual in this column, we used the software SESAME to compare 28 feed commodities available in Ohio and partition them into three sub-groups: bargain feedstuffs, break-even feedstuffs, and overpriced feedstuffs. To do so, we priced the five most important nutrients from an economic standpoint in dairy diets: net energy lactation (NE_L), rumen degradable protein (RDP), digestible rumen-undegradable protein (D-RUP), effective neutral detergent fiber (e-NDF), and non-effective neutral detergent fiber (ne-NDF).

Compared to November 2003, prices of nutrients show (Table 1):

1) No change in the price of energy, which remains at a level modestly high from a historical basis,

2) A 50% drop in the cost of RDP, now being moderately high,

3) A significant increase of approximately $0.06/lb for D-RUP (representing an approximate increase of $0.12 to $0.15/cow/day in nutrient costs),

4) No change in the cost for ne-NDF, which is about priced at its historical average, and

5) A modest increase of $0.01/lb for e-NDF, which is priced a bit above its historical average.

In Tables 2 and 3, we report the results for all 26 feed commodities. The lower and upper limits mark the 75% confidence range for the predicted (break-even) prices. In short, feed ingredients can be grouped as follows in January 2004:

These results do not mean that you can formulate a balanced diet using only feeds in the bargains column. Feeds in that column offer savings opportunity, and their use should be maximized while respecting nutritional constraints, as well as other restrictions such as storage space, inventory turnover, etc.

Table 1. Estimates of nutrient unit costs.

- 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.

Table 2. Calibration set.

Table 3. Appraisal set.

These 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.