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Questions and comments may be directed to the BEEF Team or Stan Smith, Editor
Previous issues of the BEEF Cattle letter
Issue # 149
August 11, 1999
* The BEEF Cattle letter will not be published next week - visit us at the Ohio State Fair *
WHAT's AHEAD?
The most recent USDA Cattle Report estimated the July 1, 1999, inventory of all cattle and calves in the United States at 106.8 million head, down 1 percent from 1998. This is the fourth year of lower inventory levels, an indication that liquidation is continuing in the beef industry. The 1999 estimate is 5.5 percent below the recent peak of 113 million head on July 1, 1995. The number of beef cows and milk cows were both 1 percent below 1998 and 2 percent below 1997. Beef replacement heifers were 4 percent lower than 1998 and 9 percent below 1997, while milk replacement heifers were up 3 percent from 1998 and 1997. All cattle and calves on feed for slaughter are up 4 percent from 1998 and 5 percent from 1997. Maybe the most meaningful number from a long term planning aspect is the 1999 calf crop estimate. The recent estimate of 38.3 million head is down 1 percent from 1998 and 2 percent from 1997 and if realized, would be the smallest calf crop since 1952!
What's it all mean? It would certainly appear that demand for brood cows and ultimately, their calves, may soon exceed the supply. How should we respond considering the current feed and water situation? Dr. Steve DeBruin probably put it best at our 'Drought Strategies' meeting last week, "Don't let a short term problem alter your long term plans. It will rain again, and corn is still cheap, and even if your bins are empty, feed should be available again in a month or so." Even if it costs 75 cents a day to buy feed for a cow, and you buy it for 6 weeks, we're only talking about $30 per cow to keep an animal that may be just entering her most profitable years.
Be especially sure to review the next two articles, plus the 'special' Outlook article from Wayne
Purcell for more thoughts on these topics.
OPTIONS FOR CATTLE PRODUCERS DURING A SUMMER DROUGHT - Francis L. Fluharty and Steven C. Loerch, The Ohio State University
Much of the Eastern U.S. is experiencing severe drought conditions. This is causing many cattle producers to feed next winter's hay supply and sell light weight calves at a discounted price. Researchers at The Ohio State University have several years of data and experience with managing early-weaning calves as well as alternative ways to feed the cow herd.
From 100 to 205 days of age, calves that are fed high-concentrate diets convert 3.5 to 4 pounds of feed to a pound of gain. With the current low price of corn, there is no reason to sell light weight calves at a loss. With corn at $2.00 per bushel and protein supplement at $200-250 per ton, the feed cost per pound of gain should be around $.25-.30/lb.
Research at Wooster has shown that early-weaned steers can be fed from 100 days of age until slaughter weight of 1150-1200 pounds at an average age of 340-360 days. In OSU studies, steers have had a feed efficiency overall of 5.0-5.5 lb feed/lb gain, with approximately 85% of cattle grading choice. If cattle producers want to see examples of early-weaned calves, they can visit the Southern Branch Research Farm in Ripley, Ohio or the O.A.R.D.C. Beef Feedlot in Wooster, Ohio. For those people interested in visiting the Southern Branch, John Grimes, OSU Extension, Highland County (937)393-1918 is the project leader for the early-weaning study at the Southern Branch, and Phil Dotson is the manager of Southern Branch. For information concerning diets for early-weaned calves, contact Francis Fluharty or Steve Loerch.
Feeding recommendations for early-weaned calves are as follows:
Start 300-400 lb calves on 4 pounds/head of corn/supplement mix. Commercial protein supplements that contain minerals are the best option to feed with whole-shelled corn. For the first 14 days, the diet should be 16-18% protein to take into account low feed intake. After the calves are consuming close to 2% of their body weight, the protein concentration can be decreased to 14-16% protein.
Give calves hay at 1.0 to 1.5 pounds/head/day, and then top dress the concentrate mix. If hay is not available, pelleted soybean hulls or alfalfa pellets can be used as a source of fiber.
If calves do not eat the mix, weigh back the uneaten concentrate into a large bucket (we use 30 gallon trash cans). If the uneaten feed looks pretty similar to the original mix (no sorting), it can be re-mixed with new concentrate mix so that there is little feed wasted, but be sure that you take into account the pounds of uneaten feed that you are re-feeding.
Don't increase intake by more than 1 pound of concentrate/head/day, even if the feed is cleaned up in a couple of hours. Also, don't feed more than 2 pounds of hay/head/day. The concentrate feed is what allows rapid gains (not hay), but the cattle must be adjusted to the diet slowly.
Keep a feed record book with the daily amounts of concentrate offered, hay offered, concentrate refused, and hay refused. This is the only way to actually know intake. Once the calves are on feed, expect little or no refused feed. In a properly managed feed bunk, the calves should clean up the feed in approximately 18-24 hours.
From 100 to 205 days of age, calves will consume approximately 2.0-2.5% of their body weight in dry feed daily. Following the normal weaning time (205 days of age), calves should be fed typical finishing diets containing approximately 85% concentrate and 12.5-14.0% protein, and intake will fall to around 2.0% of body weight on a dry matter basis. During the entire feeding period, gains should be approximately 3.0-3.5 lb/day.
An aggressive implant strategy works well for early-weaned calves to assure that animals don't finish at light weights. In OSU studies, steers implanted with an estrogen containing implant at 130 days of age followed by androgen containing implants at 200 and 270 days of age reached .50 inches of backfat at 1160 pounds. The carcasses were acceptable, with 85% grading low choice or higher, 35% of the carcasses in the upper 2/3 of choice, and an average carcass weight of 720 pounds.
Feeding the cow herd:
Rather than buying expensive hay to feed to the cow herd, consider limit-feeding corn and a commercial supplement with limited amounts of hay. Corn grain is the least expensive harvested feed per unit of digestible energy available to cattle producers in Ohio. Hay has only about half the energy value (calories) as corn grain. When corn is priced at $2.00/bu, it is worth $71/ton. This makes the breakeven price for hay on an energy basis about $36/ton. Research at OSU has found that a 1300 pound cow's requirements can be met by feeding 12 pounds of whole-shelled corn, 2 pounds of commercial supplement, and 3-4 pounds of hay. This results in a feed cost of $.75-.85 per day. In contrast, if hay costs $100 per ton (.05/lb) and a 1300 pound cow eats 30 pounds per day, the cost of hay alone is $1.50. If there is enough pasture to provide roughage to the cow, there is no need for feeding purchased hay, and the cost of feeding concentrate to the cow falls to $.60-.65 per day. If the calves are early-weaned, the amount of corn fed to the cow can be dropped to 8-10 pounds per day, because the cow is no longer in lactation and doesn't require as much energy. Contact Steve Loerch for further information concerning diets for the cow herd.
Recommendations for starting cows on corn:
1. Take 3-4 days adjusting up the corn and decreasing hay to the 3-4 lb level.
2. Feed intake is being limited, so make sure that cows have enough space so that all cows can eat at once.
3. The protein and mineral supplement should be similar to that used for feedlot cattle fed a high grain diet.
4. Feed corn whole. Our research has shown that whole corn works better than ground corn
when daily hay intake is limited to less than 5 pounds.
The Market Advisor August 5, 1999
Harlan Hughes, Extension Livestock Marketing Specialist, North Dakota State University (701) 231-7380
What's The Value Of A Bred Heifer This Fall? Part III
A bred heifer today is worth all of her future annual net incomes, including her future cull value, discounted back to today's dollars. Conceptually, this is easy to do and microcomputers make the calculations relatively simple. What's difficult is gathering all the needed information.
This is the third in a series of Market Advisor columns that present a process ranchers and beef farmers might use to evaluate the economic value of breeding stock--in this case, the economic value of a bred heifer at the fall 1999 pregnancy check. (The purpose of this series is to get beef farmers and ranchers thinking about expanding their beef herds now in order to take advantage of the stronger beef calf prices projected down the road. A copy of my paper titled 'Determining The Economic Value Of A Bred Heifer' is available free from my secretary, Paulann, at (701) 231-7393, or on the Web at www.ag.ndsu.nodak.edu/cow/handouts/handout.htm.)
In general, heifers held back in low-price times produce calves during times of high prices, and heifers held back during high-price times produce calves during times of low prices. My analysis suggests that the optimum time for heifer retention in the current cattle cycle is rapidly coming to an end. My analysis further suggests that once the spot cash market price goes up for feeder calves, it is too late to profitably hold back heifer calves.
The two previous Market Advisors projected that a bred heifer purchased for $783 this fall is projected to earn an 8 percent return on the $783 investment. This specific economic value is based on a specific herd operating in the turn-around and early expansion phase of the cattle cycle. This column will focus on adjusting the economic values for alternative numbers of calves during a heifer's lifetime.
While the projected $783 economic value of a bred heifer assumes that she will produce seven consecutive calves in her lifetime, North Dakota's Cow Herd Analysis and Performance System (CHAPS) database indicates that a significant number of 3-, 4-, and 5-year-old cows are culled. As a result, many females do not stay in a herd to produce seven consecutive calves. Once breeding cows get to be 6 years old, they tend to stay in the herd for several more years. Let's look at the economic impact of early culling of a bred heifer.
Note that the projected net cash income for the next seven years peaks in the year 2002, comes down slowly in the years 2003 and 2004, and drops dramatically for years 2005 and 2006. Cull cow prices are also projected to peak in 2002 and to hit the next cyclical low in 2006. Cows culled before 2006 are projected to bring more money. Finally, the time value of money has a major impact -- the further into the future, the larger the discount.
The most critical age to breed back is age 2 -- which means calving as a 3-year old. What, then, is the economic impact of a 3-year-old not having a calf? What if this open 3-year -old breeds back and calves as a 4-year-old and continues calving through the rest of her productive life? Let's assume that she produced one calf as a 2-year-old in year 2000, was open in 2001, returns to producing consecutive calves in 2002 though 2006.
As a result of not having a calf as a 3-year-old, the annual net cash flow for the second year is a negative $286, which represents the cash cost of keeping her around for that year so that she can breed back as a 3-year-old to calve again as a 4-year-old. The calculated net present value for a heifer not calving as a 3-year-old but having the rest of her lifetime calves is $432. The opportunity cost of this open heifer is a reduction of $351 ($783- $432) in net present value for a bred heifer missing her second calf. Why such a big difference?
During her open year, this heifer is assumed to cost $280 (the average total costs of females in that herd, feed, overhead, debt service etc.) to keep her around a full year instead of her projected net earnings of $123 net cash income as a 3-year-old. The discounted present value in today's dollars of this $403 ($280+ $123) future income is $351. This $351 dollar difference illustrates the economic importance of getting 3-year-old heifers re-bred.
The calculated net present value of a heifer having one calf and then being culled and sold as open at pregnancy check time is $475. My analysis suggests that selling the open 3-year old as a cull cow is more profitable than keeping her and having her calf as a 4- to 9-year-old. This decision to cull or keep, however, depends on where one is in the beef price cycle and changes with the beef price cycle. The decision also depends on the cost of her replacement heifer.
Let's now assume that this heifer calves consecutively but her number of lifetime calves is less than seven. The calculated economic value of a bred heifer that produces six consecutive calves from 2000 through 2005 is $779--only $4 less than one having seven consecutive calves. Remember that changing annual salvage value of cull cows has some impact on this. Even a bred heifer that produces five consecutive calves (years 2000 through 2004) has a net present value of $761--down only $22 from seven consecutive calves. A bred heifer that has four consecutive calves (years 2000 through 2003) has a net present value of $716--down $64. For three consecutive calves (2000 through 2002), her value went to $673. For two consecutive calves (2000 through 2001), her value is $587. A heifer that has one calf (year 2000) and is culling at next year's pregnancy check had a net present value of $475.
Remember that these relative economic values are specific to the starting year in the beef price cycle. The key here hinges on this question: Are calf prices high early or late in the bred heifer's life time? This discussion focuses on the situation where calf prices are high early in a heifer's productive lifetime.
How sensitive are these calculated economic values to changes in the input numbers?
A 10 percent increase in all incomes raised the economic value of the bred heifer 10 percent. A 25 percent increase in cull cow income raised the economic value by 7 percent. A 1 percent increase in the discount rate reduced the economic value by 4.2 percent.
My final conclusion is that profitable heifer management strategies must take the cattle cycle and
the resulting beef price cycle into account. My calculated economic values for bred heifers have
already peaked in the current beef price cycle. Timing of heifer retention is critical.
WHOLE SOYBEAN PLANTS FOR CATTLE - Bill Weiss, Dept of Animal Sciences,
OARDC/OSU
Because of drought conditions, soybeans in some areas of the state will not be harvested for
seeds. Whole plant soybeans can be excellent forage for cattle. Under normal growing
conditions, soybeans with little pod development can have about 18% crude protein and 40 to
45% neutral detergent fiber. In other words, whole soybean plants are similar to good quality
alfalfa in nutritional value. Soybeans can make good silage if two conditions are met.
1. If seeds are well-developed do not chop for silage (too much oil). If seeds did not develop or
are small, silage is an option if dry matter content is ok.
2. Prior to chopping beans for silage, check dry matter content. If the plant contains less than
45% dry matter (at least 55% moisture), the plants should ferment fine in upright and bag silos
and will usually ferment ok in bunker silos. If the plant contains more than 50% dry matter (less
than 50% moisture, fermentation quality will probably be poor in bunker silos. When dry matter
is much higher than 55%, fermentation will be poor in all types of silos except sealed structures.
If plants do not contain enough moisture for fermentation, water can be added but it takes a lot of
water to change the dry matter content. To increase the moisture content of 1 ton of material by 4
percentage units (for example 55 to 51% dry matter), you have to add about 190 lbs of water (24
gallons per ton).
Whole plant soybeans can be harvested for hay but generally the nutritional value is much lower
than soybean silage. Leaf shatter is severe when soybeans are baled so protein is much lower and
fiber much higher in soybean hay.
One precaution regarding whole plant soybeans for livestock feed is herbicide use. Check the
label to see if the herbicide is cleared for this use. (See the following article.)
USING SOYBEANS FOR SILAGE AND HAY, HERBICIDE CONSIDERATIONS - Jeff
M. Stachler, OSU Extension Associate, Weed Science
Dry weather has led to interest in areas of Ohio in using soybeans for silage or hay.
Unfortunately, most soybean herbicide labels specify that treated soybeans should not be fed to
animals as silage or hay. For soil-applied herbicides, only some of the older products, including
Sencor, Lasso, Prowl, and Dual, permit these uses of treated soybeans. Among postemergence
herbicides, only Basagran and FirstRate labels specify that soybean silage or hay can be fed. The
Roundup Ultra label for Roundup Ready soybeans allows soybean silage or hay to be harvested,
but is not clearly stated. Soybeans can not be harvested for silage or hay if Roundup Ultra is
applied as a harvest aid. Poast and Poast Plus labels allow feeding of soybeans as hay, but not as
silage.
NITRATE POISONING FROM COOL SEASON GRASSES - Clif Little, OSU Extension,
Guernsey County
Recently we have read much on concerns with nitrate poisoning in corn silage. What about cool
season grasses? While we are going to experience many problems associated with the summer
drought, nitrate poisoning from cool season perennials is probably low on the list of worries.
A much greater risk from nitrate poisoning exists in summer annual weeds and summer annual
grasses, such as: sorghum-sudan hybrids, Johnson grass, millet, corn, etc. The nitrogen
requirement for these crops is high compared to cool season grasses which would seldom exceed
125 lb. at actual N/A per year, split applied. However, nitrate poisoning is possible in cool
season grasses. On our recent trip to Ireland, researchers indicated this did occur occasionally in
their situation of applying 400 units of nitrogen/A annually to perennial ryegrass.
The nitrogen applied this spring to cool season grasses was utilized for us in May and early June.
Since July we have experienced very little plant growth. By August, 70% of the annual growth
of orchardgrass is over (without stockpiling).
In analyzed samples and replications of fertilizer treatments at EORDC, regardless of whether I
put on 0 or 125 lb. of nitrogen per acre in the spring (May), 35 days after the first cutting in June
there was no difference in forage quality or yield when comparing 0 or 125 lb. of N/A spring
applied. The fall cutting was also the same, whether I put on 0 or 125 lb. on nitrogen in the
spring.
I suspect cool season grasses utilize nitrogen and take up large quantities in their peek periods of
growth. As you know, cool season grasses can go from a vegetative state to a reproductive state
in as little as 30 days, thus growth and need for nitrogen occurs in short windows.
If we were to experience nitrate poisoning in cool season perennial grasses, I would think it
would occur in May - June or Sept. - Oct. These are traditional periods of nitrogen fertilization
and large quantities of nitrate nitrogen would exist in soil solution and be available for absorption
by the plants. If rapid absorption occurred (ideal growing conditions) followed by drought or
several days of cloudy weather, the potential for nitrate poisoning would be greater, yet still
unlikely.
The danger of nitrate poisoning to livestock occurs as nitrate is taken up by the plant, converted
to nitrite and then not converted to amino acids and proteins. So it is nitrite which binds to the
red blood cell better than oxygen, thus we see the classic symptoms in animals, such as: labored
breathing, colorless urine, brown coloring of mucous membranes, etc.
Nitrate absorption by plants can occur at night and conversion to amino acids depends on
sunlight. Therefore, nitrate levels will sometimes drop when plants are exposed to several days
of sunny weather. Forage cut as hay (non-fermented) will and can have higher nitrate levels than
silages. This may be of importance when sorghum-sudan grasses are baled as hay.
ODA TO OFFER FREE NITRATE TESTING
We received word late last week that ODA is now offering free nitrate testing for 'corn silage
products' due to the drought. OSU Extension offices should have submittal forms by now or,
contact ODA directly at 1-800-282-1955 for information on submitting silage samples for nitrate
testing.
CAN YOU ADD ANYTHING TO DROUGHT CORN FOR SILAGE? - Steve Boyles, OSU
Ext. Beef Specialist
The question has come up about adding anything to drought stress corn for corn silage. You do
not want to add ammonia, urea, or other forms of NPN. The addition of another readily available
form of nitrogen may reduce the amount of nitrates broken down during fermentation.
Another reason for not adding nitrogen is that based on my experience in the Dakota's in 88 and
89, drought silage was actually higher in protein. Think about it. You have little or less corn and
cob development and therefore have less carbohydrates but a great deal of the protein is in the
leaves. The same thing happens with drought stressed barley and oats. The protein is higher
because there is less carbohydrates in the kernel to dilute the protein.
If you have some "real dangerous" corn for silage you might consider extending the time of
fermentation. Adding 5 to 10 pounds of ground limestone per tone of ensilage material to buffer
the acid produced during fermentation and extend the fermentation time. However, extending
the fermentation time may increase dry matter losses.
From human health standpoint, plants high in nitrates and/or prussic acid will produce more than
normal quantities of LETHAL SILO GAS! Run the blower for at least 10 minutes to ventilate.
A LONGER RUN ECONOMIC OUTLOOK IN LIVESTOCK
All commodity prices look low this year. The livestock sector is no exception. Slaughter hog
prices were pushed below $10 per hundredweight late in 1998 as hog numbers coming to
slaughter exceeded slaughter capacity. Those prices were improving--and are better--but the
price recovery was totally destroyed by a June 25 Hogs and Pigs report that was the biggest
surprise we have seen in many years--a bearish surprise. It makes me question, again, why we do
not have more frequent and more detailed reports.
Calf prices are not disastrous like hog prices, but prices are below the levels many cattlemen
expected as an upswing in the cattle price cycle approaches. Some producers with lots of equity
can get along with calf prices in the $70s, but some cannot. There is always a need to get costs
down, but big gains in efficiency that cut costs are not easy and take money for new technology.
There is concern on the part of many cow-calf operators.
The long-term feeder cattle chart chronicles all this. The 1996 price dip was an aberration
brought on by record high corn prices. It is not likely to be repeated but it did cost producers lots
of money as some calf prices dropped below $50. The more general pattern in the chart shows
the important longer-term issues. Prices are trending down, not returning to the $90s of 1990-91
when fed cattle prices had reached the $80s. This summer, the fed cattle market is in the
mid-$60s, and calf and feeder cattle prices are lower because of those fed cattle prices. Fed cattle
prices are down because, since 1980, the demand for beef decreased each year through 1997. In
years past, a cyclical decrease in beef supplies could push fed cattle (and feeder cattle) prices up
to attractive levels, but the cumulative demand decreases eventually destroyed that possibility. I
estimate, for example, that if we had the 1999 level of beef production and were still at the same
demand level we were operating on as recently as 1990, fed cattle prices would be in the $85-$88
area. The continuing demand problems are being passed directly down to producers, and the
marketplace continues to run producers out as it seeks to decrease production potential and
supply to match a dismally low demand. You can find help on this at:
http://www.aaec.vt.edu/rilp under publications. Start with the 'Primer on Beef Demand' and you
will want to look at 'The Source of Better Prices for Cattle Producers'. There is a "white paper"
we did at the request of the NCBA leadership that you might want to go through, especially if
you serve on any state or national committees.
Pork demand did not get hit as hard and the problems did not last as long, but demand is still a
major issue. Product improvement has come quicker in pork, but it has come with an integrated
and contract-driven sector that abandoned the price-driven system in order to get to the
much-needed quality control. This hurts producers' access to the market and it has, in this cycle,
helped keep production up in spite of the dismal prices. Longer term, however, the changed pork
sector has made more progress toward a consumer-friendly product offering than has the beef
sector and is in a better position to compete for market share and to sustain growth.
Looking ahead, hog prices will not move back up into the $40s ($60s lean hog futures) until we
have seen more forced liquidation, and that means more producers out of business. Cheap corn
will keep some hanging in too long. My best guess for the timing of a $40 and better market is
the summer of 2000. This market will correct to the upside in the short run, however, and I
would lift short hedges placed prior to the report across the recent lows and look for chances to
forward price into 2000 above out-of-pocket costs. The best strategy in hogs is to go to a
survival mode through much of next year and to protect the financial viability of the firm.
The cattle market will offer decent prices. I have been suggesting short hedges with the late
summer and fall feeder cattle futures in the high $70s. Next spring, the cycle will bring still
better prices, especially if corn stays cheap. Look for calf prices back above $90 next February
and March and 700-800 lb. quality steers should challenge $80, perhaps better. The long slide in
beef demand appears to be bottoming out, and the cow-calf operator should cash flow and make
money across the next two-three years. But the market is risky, weather uncertainty could push
corn prices up, and we have a tendency to hold cattle in the feedlots too long. When feeder cattle
futures offer good profits, especially when they are rallying back up toward prior contract highs, I
would forward price just under the highs and lock up profits.
Decisions are also being made on herd size and heifer retention, and the banks will be very
interested in these plans. There are no miracles to be had, but I am seeing evidence in late 1998
and early 1999 that the long-standing decrease in beef demand may be coming to an end. If
producers and producer groups will increase their support of the check-off programs aimed at
new, tasty, consistent, and convenient products, we may be able to turn the corner. The big
packers are starting to make investments in new consumer-friendly product offerings, and I am
much encouraged by that. We have a chance, if we push the product development programs, to
get the demand picture turned around and that is a necessary condition to increased market share
and a chance to be profitable at the producer level.
Visit the OSU Beef Team calendar of meetings and upcoming events
BEEF Cattle is a weekly publication of Ohio State University Extension in Fairfield County and the OSU Beef Team.
Contributors include members of the Beef Team and other beef cattle specialists and economists from across the U.S.
Fairfield County Agriculture and Natural Resources
