Roughage Opportunity Knocks For Cattle Producers

Depending on the nutritional test of local and producer-grown hay, there may be an opportunity for cow/calf producers and backgrounders to pencil in lower winter feeding costs this year said the Livestock Marketing Information Center in its Livestock Monitor.

 

PRODUCTION INCREASES

 

A combination of fairly stable hay production, two years of relatively mild winter conditions, and favorable conditions for spring and summer grazing lowered the need of livestock producers to purchase hay.

The projected total supply of alfalfa and grass hays for the 2016-17 marketing year, which ends April 30, was 164.7 million short tons, 5.8 million, or 3.65%, from 158.9 million in the 2015-16 crop year, according to USDA data.

However, usage was expected to increase 7.4 million tons, or 5.53%, to 141.2 million from 133.8 million.

The season average price for all hay during the 2016-17 crop year was forecast at $131.90 a ton, down $19.10 a ton, or 12.6%, from $151.00 in 2015-16.

 

LOWER PRICES A BOON FOR CATTLE PRODUCERS

 

Alfalfa hay prices, and to some extent, grass hay prices, have tracked considerably below their year ago levels for the majority of calendar year 2016, the LMIC said.

Although, unfortunate for hay producers, those relatively lower feed costs have been a welcome situation for cattle producers who have dealt with extremely tight margins this year.

According to the monthly Agricultural Prices report published by USDA-NASS, the national average price for alfalfa hay in October was $135 a short ton, $20, or 12.9%, below the year-ago average price and $50, or 27.0%, below the past five-year average.

The average price for other hay (mostly grass type hays) was $121 a ton, even with year-ago levels.  (It is important to remember this is a national average price, and hay prices are rather variable between regions and quality grades.)

 

OPPORTUNITY KNOCKS

 

From a cattle or small ruminant producer standpoint, some opportunity could be found in purchasing relatively lower quality/lower cost hay and using a protein supplement for their winter-feeding program, the LMIC said.

Protein supplements that could be evaluated include soybean meal, dried distillers grains and cottonseed hulls, depending on the region of the US.  Many producers have a choice between more than one protein feedstuff.

Recent weekly prices for soybean meal in Central Illinois were $325 a short ton, slightly higher than the $302 a year ago, but still significantly below the recent five-year average of $387, the LMIC said.

Weekly DDG prices out of Chicago were $115 a ton, down $13, or 10.2%, from $128 a year ago.

According to the USDA-NASS monthly Ag Prices report, in October cottonseed prices averaged $197 a ton, down $38, or 16.2% from $235 a year ago.

 

CASH CATTLE MARKETS QUIET

 

After selling in the Superior auction last week at an average of $112.48 per cwt, in a range of $112.75 to $114.25 in the south and at $110 to $113.25 in the north, cash action got underway at $113.25 to $115.50 on a live basis.  Dressed-basis trading was reported at mostly $175.

The previous week cattle sold at mostly $112 per cwt live and $170 dressed.

The USDA’s choice cutout Monday was $1.67 per cwt higher at $191.39, while select was up $0.53 at $173.23.  The choice/select spread widened to $18.16 from $17.02 with 93 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Friday was $131.24 per cwt, up $0.20.  This compares with Monday’s Jan settlement at $124.32, down $0.27.