Nutrient Prices - Seasonal Increases, High Returns

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

Markets of both primary feeds (grains and oilseeds) and by-product feeds (e.g., corn gluten feed and distillers dried grains) have been very steady since the Presidential election. Thus, the implicit prices of nutrients have changed little since November (Table 1). The average cost of energy is slightly higher due to the seasonal rise in the price of fat sources. Rumen degradable protein (RDP) can be sourced through some commodities at much discounted prices. Thus, unless there are other compelling reasons, this is not a time to feed rations with tight margins of safety for RDP. The fiber sub-groups are at about their historical averages.

Table 1. Estimates of nutrient unit costs.^1,2

¹NE_L = Net energy for lactation, RDP = rumen degradable protein, RUP = rumen undegradable protein, and NDF = neutral detergent fiber.
²Estimates are for $/lb, except for energy which is at $/Mcal.

Details on break-even prices of commodities and forages of various qualities as calculated by the software Sesame v3.01 are provided in Tables 2 and 3. Recall that for forages, the column labeled "corrected" uses the correction factors developed by Dr. Bill Weiss at O.A.R.D.C. in Wooster and are probably the best break-even figures to use for forages.

Table 2. Estimated break-even prices of commodities - OH.

Table 3. Break-even prices of forages - OH (mg = mostly grass).

As usual in this column, we calculated the costs of feeding these nutrients for a 1350 lb cow producing 75 lb/day of milk at 3.6% fat, 3.1% protein, and 5.9% other solids. Component prices used in Table 4 are those paid in Federal Order 33 for the month preceding each column. The cost of providing the nutrients to support this milk production is slightly up ($0.20/cow/day) compared to November 2004, but considerably less ($0.59/cow/day) than the same costs a year ago. This, combined with much above average prices for milk fat, protein, and other milk solids, results in a very high figure for income over nutrient costs (IONC; the historical average is approximately $6.50/cow/day in Ohio). In fact, the IONC for January 2005 is nearly twice the estimate for January 2004. These historical high margins should help our producers recover from the devastating milk prices that they experienced in 2003 and part of 2004.

Table 4. Nutrient costs, milk gross income, and income over nutrient costs - Ohio.¹

¹Costs and income for a cow producing 75 lb/day of milk, with 3.6% fat, 3.0% protein, and 5.9% other solids.
²NE_L = Net energy for lactation, RDP = rumen degradable protein, RUP = rumen undegradable protein, ne-NDF = noneffective neutral detergent fiber, and e-NDF = effective neutral effective fiber.