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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 # 148
August 4, 1999
INCREASING THE FEED!
As Ed Vollborn suggested a couple of weeks ago, when faced with a drought, we, as livestock producers have two choices - either reduce the need (for feed) or increase the feed. As you listen to most any livestock economist or look at the numbers for yourself, I think you can see that the current situation warrants a real hard look at ways to increase the feed. With cow numbers getting as low as they are nationally, cow and calf values will remain strong for at least the next few years. If you sell a sound, productive mamma cow now, what will it cost to replace her next spring when the grass returns? I support the idea of moving the unsound, open, or aged cows now before they consume any more feed or heavy movement begins to pressure cow prices. Aside from that, let's look at 10 thoughts that OSU Extension's Ed Vollborn and NRCS' Bob Hendershot have put together for 'increasing the feed' until spring grass returns:
TEN HINTS TO GET YOU STARTED:
NOW -
1. Implement controlled grazing to improve utilization of what you have available.
2. Lease or purchase unharvested or under-utilized forage in the community.
3. Supplement poor quality forage material with shelled corn, cubes, pelleted soy hulls, etc. to extend filler material.
FOR 30-90 DAYS FROM NOW -
4. Topdress good grass sod with 40-60 units of nitrogen following significant rainfall. If weather is with us, this has the best economic potential.
5. Plant some fallow acreage to turnips. Stagger planting date and variety to follow grazing plan. Example: Plant 60 day variety in the first site to be grazed; Plant 90 day variety in later grazing locations. Caution! Brassicas need significant moisture for germination and early growth.
6. Consider use of crop aftermath. Take half - leave half is a good way to graze corn stalks. This allows you to eat the best and use the rest for conservation and soil quality.
FOR 90 DAYS & BEYOND -
7. Consider rye, triticale or wheat to produce high quality forage during the late fall and early spring. Under ideal conditions, forage rye planted early August in southern Ohio could be grazed in November and again in mid-March. Wheat and triticale are typically planted a little later and would struggle to produce fall grazing but would be expected to produce a lot of higher quality material in the spring. Instead of choosing one or the other, it may be best to stagger plant some of each.
8. Harvest low yield corn fields for silage. Although it is tempting to chop immature corn, a lot of problems can be reduced by just waiting until the normal time. In the case of earless corn, the nutritional value of the forage will not be greatly affected by maturity. Above ground piles 'silage camps', carefully packed and fed soon after the completion of fermentation can generate a lot of inexpensive feed.
9. Drought damaged fescue pastures offer direct sunlight to the soil. This is ideal for frost seeding of clovers and Lespedesa. Take this opportunity to dilute toxic fescue.
10. Explore something new on a small scale. Example: Forage kale has the ability to stay green all winter if mild. Can it be inter-seeded into a marginal meadow and be successful?
Take a long hard look at ways that will allow you to retain ownership of productive cows and
calves - they may be profitable!
BEEF: COW HERD STILL SHRINKING - WINTER IN MID $60'S - Brian Roe, Ag. Economics, OSU Extension
Despite more slaughter and higher beef production than last summer, July's $63-65 fed cattle prices were higher than last July's prices. Why? Higher than expected wholesale demand helped keep prices in the low- to mid-$60's for most of July, and USDA estimates that prices will stay in the low-to mid-$60's for the rest of the year.
Prices in the mid-$60's have persisted despite the fact that USDA's Cattle on Feed Report shows that the number of cattle placed on feedlots during June and the inventory of animals on feedlots as of July 1 were well above last year's numbers and well above the five year average. Marketings of fed cattle were also well above average during June, which suggests that all these animals are fattening rapidly and moving to slaughter without bogging down prices too much. Prices are not decreasing because cattle slaughter weights have not risen too much -- June slaughter weights are above the five year average, but are steady with last year's weights. However, if for some reason dressed slaughter weights should rise above the seasonal average, prices could hover around $60.
USDA's Cattle Inventory report gives some insight into the long-range picture. Beef cow, replacement heifer and calf crop numbers continue to decline. 1999 cow slaughter has slowed somewhat compared to 1997 and 1998, but 1999 heifer slaughter is the highest ever recorded. This suggests that herd reductions are likely to continue through January of 2001 with beef production likely to decline from now until at least 2002. As more heifers are retained during the next two years to rebuild the thinning cow herd, feeder cattle should become more scarce and expensive during 2000. Beef prices will increase, but any farm-level price increases may be tempered by large supplies of competing meats, weak export markets and high slaughter weights.
Cattle Forecasts - Brian Roe
| Beef Production | Fed Cattle Price/cwt. | Price/cwt. % change | |
| 1st qtr. 1999 | + 3 percent | $62.43 | + 1 percent |
| 2nd qtr. 1999 | + 3 percent | $65.00 | + 1 percent |
| 3rd qtr. 1999 | + 1 percent | $62-64 | + 7 percent |
| 4th qtr. 1999 | - 3 percent | $64-68 | + 10 percent |
| 1999 average | + 1 percent | $63-65 | + 3 percent |
| 1st qtr. 2000 | - 7 percent | $67-73 | + 12 percent |
POTATO LEAFHOPPER ON ALFALFA - Hal Willson, OSU Entomologist
As we enter the month of August, potato leafhopper (PLH) populations continue to be very active
and should be monitored to determine whether treatment of the third cutting is warranted or not.
In general, PLH activity tends to decline at this time of the year as the development of the
immature nymphs tends to taper off. However, above normal temperatures combined with dry
weather continues to maintain PLH activity this year. Sweep-net collections in our plots last
week were averaging 4 to 5 PLH adults per sweep (plus some nymphs) on 10 inch high alfalfa.
Such a level of PLH activity is about five fold the economic threshold, and symptoms of hopper
burn were becoming evident.
DETERMINING MOISTURE CONTENT OF WHOLE PLANT CORN - Mark Sulc and Maurice Eastridge, OSU Extension
The proper time to harvest corn for silage is an important decision because whole plant dry matter (DM) content varies with maturity and it influences fermentation. Ensiling corn that is too wet produces poor fermentation, seepage losses, and lowered animal intake. Ensiling corn that is too dry increases the risk of heat damage and molding. Below is the optimal DM content for ensiling corn in different structures:
It is very difficult to visually judge the DM content of whole plant corn, especially under stress conditions like much of the state has been experiencing this year. Appearances can be very deceiving. The kernel milkline has been used to estimate the proper time to harvest corn silage. In our region, when the kernel milkline is in the UPPER 1/4 of the kernel, the crop is often very near the optimal time to harvest. BUT UNDER STRESS CONDITIONS, THE KERNEL MILKLINE METHOD CAN BE VERY MISLEADING. And this method cannot be used when the corn is so stressed that ear development is not normal or non-existent. Below are several alternatives for determining the moisture content of corn before ensiling.
The easiest alternative is to check with your feed service representative, because many offer the service of determining corn silage moisture. If this service is not available, then use the steps described below:
1) Collect a representative sample from the field and seal in a plastic bag. The most accurate method is to chop a partial load and collect a subsample. If you can feed the greenchop, this is a good option (Be aware of the potential for high concentrations of nitrates - see DG111). Otherwise, collect two representative plants from the field and chop into pieces. DO NOT SUBSAMPLE from this, include the entire 2 plants in the sample. Better accuracy will be achieved if several 2-plant samples are collected from different parts of the field. Testing several samples is a good option especially for those having their own commercial moisture tester.
2) Follow the directions given with the commercial moisture tester for determining DM percentage. A microwave can be used if you have chopped a partial load and collected a subsample, otherwise the sample will be too bulky to be used in a microwave. Directions for using a microwave can be found on Ohioline at: http://www.ag.ohio-state.edu/~ohioline/agf-fact/0004.html or request a copy of AGF-004 from any county extension office.
3) If you do not have access to a moisture tester, send the sample to a lab. Most labs can give next day service (once they receive the sample) if you request a call back with the results. To minimize cost and to obtain additional nutritional information, the NIR method can be requested for measuring DM, NDF, and CP.
You should encounter no problems with fermentation of corn that is low in grain content,
provided that it is ensiled at the proper DM content as shown in the table above.
The weather forecasts are turning dry as the high temperatures move out of the Midwest and the grain and oilseed markets are showing strong gains. I see this as a significant forward pricing opportunity. With December corn challenging the June 7 high around $2.40, I would be inclined to move up to at least 60 percent-70 percent forward priced on expected production for this year. I would be even more aggressive if we see a rally up to the $2.51 high back on March 30.
This market is probably overreacting to weather. Some private estimates are moving the estimates of the corn crop down to the 9.3 billion bushel area, and ending stocks estimates are dropping from something up toward 2 billion bushels for next year back down toward 1.3 to 1.4 billion. But that is still a big crop and a huge set of ending stocks. Part of this is coming because short traders are covering those positions, and that is adding to the upside momentum. I don't see, fundamentally speaking, a justification to take out that $2.51 area on the December, and if it does, it is just a matter of forward pricing more on rallies up toward the next levels of resistance which occur in the mid-$2.60s.
I see essentially the same picture on soybeans with the November contract recording excellent gains. This market is threatening to take out the $4.84 high on the November that was recorded a few days back on a weather-related rally. If we can clear this resistance and see a solid close above it, the next resistance comes across the $5.22 high back on April 22 and then the $5.28 high on March 31. Any rally back into the $5.20s on the November soybeans I see as an excellent forward pricing opportunity. Like corn, I don't think we are going to see enough weather damage to significantly change the largely bearish fundamental picture.
Users of corn, soybeans, and soybean meal can use the same upside pricing objectives as an opportunity to take profits on long hedges. I think we will see this market back off once the weather moves toward a more nearly normal forecast, which is the likely scenario. Any rallies to the resistance planes that I have identified for corn and for soybeans should identify the same timing opportunities to look at taking profits on long hedges on soybean meal and any of the other feedstuffs that are important inputs to livestock, dairy, and poultry programs.
Wheat showed an especially strong rally on Monday with the strength in corn and soybeans, and I have been suggesting for some time that this market is ready for a rally. I am showing the December Chicago wheat chart this week and documenting the head-and-shoulders bottom that we have on this chart and suggesting that it would not be surprising to see a rally up into the $3 and better area. We may back off a bit as we are starting to see in Tuesday's trading actions with a report on Monday that conditions on the spring wheat crop are surprisingly good. And we have to recognize that much of the momentum behind this wheat market this week has come from corn and soybeans. Longer term, I expect this market to more nearly sustain its rallies and be able to move up on it's own initiative. The fundamental picture is not sufficiently bleak in wheat that the marketplace will continue to demand pricing on cash soft red winter wheat that is down toward and sometimes under the $2 level. I like the idea of holding hedged wheat in storage and have been suggesting that in the absence of storage, I thought this market would reward a long position in futures or buying a call option. I think we have to be careful here not to be too greedy. This December is not likely to have much upside on this thrust above the $3 level. I wouldn't be surprised if we see better prices later, especially if we get anything approaching sustained problems in weather with the corn and soybean crops.
In the cattle markets, it is the old waiting game so far this week. Cattle did move in substantial numbers late last week at $65, and in some instances a little higher. This week, most of the bids from packers are $63-$64, and the asking prices from cattle feeders are $66-$67, some as high as $68. It will take some evidence of strength and volume of movement in the beef market to bring still higher prices, but I wouldn't be surprised to see cattle sell at either $64 or $65 later this week. In hogs, the cash markets are higher, but we have a long way to go to turn the price picture around in this complex in spite of the gains on Monday in the futures complex. We need to see sustained evidence of lower slaughter levels and better cash prices to turn this market to the upside in any significant way.
I like the idea of short hedges in the August and fall feeder cattle futures. When that August rallied toward the recent highs around $77.80-$77.90, I had turned a bit more aggressive in this market. We saw a rally to $77.85 late last week, offering a hedging opportunity. I would definitely hold these positions. This market has some downside risk if in fact there is substantial weather-related damage in corn and higher corn prices. The fed cattle complex continues to be driven by what is going on in boxed beef, and we did see a strong move up in the December contract on Monday, closing at $66.55. Any short hedges in the December market that have been placed up in the $67-$68 range are still the right positions. I don't expect much more than the $67 level, if we can get that, in the near term in the December live cattle futures, so I would hold short hedges in this market and all the contracts. I look for this market to rally and maybe give some additional forward pricing opportunities if you need some catch-up hedging, and then correct to the downside again. Then we will see whether or not fundamentals are sufficiently favorable to allow a sustained rally as we move toward the end of August and into the fall months.
In hogs, as suggested, it is a long way from where we are to respectable forward pricing
opportunities. The limit-up move on Monday was encouraging and probably indicative mostly of
the substantial amount of short covering in this market. It takes another $4 up on the December
lean hog futures, for example, to get up toward the $47-$48 level, and that is just getting in the
top half of the huge chart gap that was left after the last report. I would watch this market and
continue to watch it try to do some base building and give some sustained support on which it
can give us a rally that moves us to prices that merit short hedges. Without question, if I were in
the processing business in the pork sector, I would have wanted to have long hedges established
in this market. I think we did move too far to the downside and overreact to what was admittedly
one of the most unexpectedly bearish reports we have had in several years.
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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.
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