When is the Best Time to Market Cull Cows?

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

Here are a few things that we know. The price of milk is dropping. It rains as soon as you start the first cut of hay. Feed prices keep changing. All of these events create headaches and opportunities. In this column, we concentrate on the opportunities offered from changes in commodity markets.

Springtime generally brings substantial changes in the relative price of feedstuffs. This year is no exception. There have been significant changes in the relative prices of many commodities lately. Now is a good time to re-evaluate your purchasing strategy. To help you with the process, we evaluated current commodity markets in Central Ohio using the software SESAME (available at www.sesamesoft.com). The appraisal would be slightly different for other Ohio regions, but not markedly so.

Compared to January 2005, prices of nutrients (Table 1) show:

1) An increase of 1.3¢ per Mcal of net energy lactation,
2) A drop of 4.1¢ per pound of degradable protein,
3) An increase of 4.1¢ per pound of undegradable protein,
4) A drop of 3.4¢ per pound of non-effective NDF, and
5) A drop of 0.6¢ per pound of effective NDF.

Therefore, as a general rule, it is currently wise to reduce the safety margins of dairy rations for net energy and undegradable protein. Meanwhile, the markets are willing to pay you for increasing your usage of rumen degradable protein and non-effective NDF. In practical terms, this means that there are some high fiber by-products that are currently real bargains. These are identified in Table 2.

In Tables 2 and 3, we report the results for 27 feed commodities traded or available in Central Ohio. Table 2 conveniently groups commodities into three groups: bargains, at breakeven, and overpriced. If all the ingredients in your rations are from the overpriced column, it is time to visit with your nutritionist. Details of commodity pricing is shown in Table 3. In this table, the column labeled "actual" is the price for tractor trailer loads (TTL) FOB Central Ohio. The "predicted" column is the calculated breakeven price per ton; lastly, the "lower limit" and "upper limit" are the 75% confidence range for the breakeven price.

Nutrient prices can be used to calculate a benchmark for feed costs. All these years of research have resulted in relatively precise nutrient requirements for milk production. Results of the calculations using the National Research Council (2001) requirements are presented in Table 4. The cost of feeding for a milk yield of 75 lb/day has gone up by 9¢/cow/day since January but is considerably less ($1.05/cow/day) than it was a year ago. Milk prices, although still decent from a historical perspective, are not as strong as they were a year ago, or even what they were last January. Consequently, income-over-feed costs (IOFC) has dropped $2.09/cow/day from last year, and $1.26/cow/day from January 2005. Historically, however, this benchmark averages $5.50 to 6.00/cow/day. Thus, IOFC is still strong relatively speaking and good profits should still be the norm for Ohio dairy operations.

Table 1. Prices of nutrients, central Ohio.

Table 2. Groupings of commodities, Central Ohio, May 2005.

Table 3. Commodity assessment, Central Ohio, May 2005.

Table 4. Nutrient costs and income over nutrient costs, Central Ohio.¹

¹Costs and income for a 1400 LB cow producing 75 LB/day of milk, with 3.6% fat, 3.1% protein, and 5.9% other solids. Component prices are for Federal Order 33, April 2005.
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.