by: Wes Ishmael

“Hay prices this year will again be record high and all regions of the U.S. have set increases compared to 2011,” say analysts with the Livestock Marketing Information Center (LMIC).

LMIC analysts explain the states experiencing the stoutest average price increases are those on the western side of the 2012 severe drought zone. For perspective, they point out hay in North Dakota remains the least expensive, but at a $90/ton average through the last 10 months, that's 43 percent higher than in 2011.

“Expect prices to remain high through the winter,” LMIC analysts say. “…This year will likely be a much more difficult year than last year in terms of finding hay. Not only has the drought had a much larger impact area, but winter weather conditions last year were very mild so hay disappearance was much smaller in 2011 than normal. National hay stocks are expected to be very low in the spring, and could be the smallest ever.”

Mom Nature isn't promising much relief, either.

Forecasters with the National Oceanic and Atmospheric Administration (NOAA) Climate Prediction Center say a wavering El Niño, expected to have developed by now, makes this year's winter outlook less certain than previous years.

“This is one of the most challenging outlooks we've produced in recent years because El Niño decided not to show up as expected,” says Mike Halpert, deputy director of NOAA's Climate Prediction Center. “In fact, it stalled out last month, leaving neutral conditions in place in the tropical Pacific.”

When El Niño is present, warmer ocean water in the equatorial Pacific shifts the patterns of tropical rainfall that in turn influence the strength and position of the jet stream and storms over the Pacific Ocean and United States. This climate pattern gives seasonal forecasters confidence in how the U.S. winter will unfold. An El Niño watch remains in effect because there's still a window for it to emerge.

In their annual Winter Outlook, NOAA forecasters say the western half of the continental U.S. and central and northern Alaska could be in for a warmer-than-average winter, while most of Florida might be colder-than-normal December through February. Unfortunately, the forecast suggests little relief this winter to areas ravaged by the drought.

According to the 2012 U.S. Winter Outlook (December through February) odds favor:

• Warmer-than-average temperatures in much of Texas, northward through the Central and Northern Plains and westward across the Southwest, the Northern Rockies, and eastern Washington, Oregon and California, as well as the northern two-thirds of Alaska.

• Cooler-than-average temperatures in Hawaii and in most of Florida, excluding the panhandle.

• Drier-than-average conditions in Hawaii, the Pacific Northwest and Northern California, including Idaho, western Montana, and portions of Wyoming, Utah and most of Nevada.

• Drier-than-average conditions in the upper Midwest, including Minnesota, Wisconsin, Iowa and northern Missouri and eastern parts of North and South Dakota, Nebraska, Kansas, and western Illinois.

• Wetter-than-average conditions across the Gulf Coast states from the northern half of Florida to eastern Texas.

Reducing Hay Cost

The most logical approach to taking a bite out of steep hay costs is not having to feed it to begin with. Second on the list is making sure what is fed isn't wasted.

Research conducted by Dave Lalman, extension beef cattle specialist and others at Oklahoma State University (OSU) indicates that using a cone-style feeder or modified cone feeder with a sheeted bottom should reduce hay waste to approximately five percent to six percent of the original bale weight.

“We found that open bottom hay feeders can waste as much as 21 percent of the original bale weight,” Lalman says. “Unfortunately, one of the most common types of hay feeders on Oklahoma livestock operations is the open bottom round bale feeder.”

The OSU study examined four bale feeder designs: a conventional open bottom steel ring, a sheeted bottom steel ring, a polyethylene pipe right and a modified cone feeder with a sheeted bottom.

OSU researchers discovered that differences in hay feeder design do not restrict dry matter intake by the cattle, but can significantly affect the amount of feed wasted and subsequently the amount of hay fed.

“Feed cost is the single largest variable influencing profitability of a cow-calf enterprise,” Lalman said. “Costs associated with nutrition have been shown to contribute between 40 percent and 60 percent of the annual budget of a typical cow-calf operation.”

In a fall issue of OSU's Master Cattlemen newsletter, Lalman explains, “…

assuming hay valued at only $120 per ton and a 120-day feeding period, the difference in the value of one feeding season's hay waste between the open bottom steel ring feeder and the modified cone feeder is $468.72. Few cow/calf operations will be able to absorb the cost of 21 percent hay waste when hay is extremely valuable.”

As for extending hay supplies, Lalman points out that feeding Rumensin® (the only inonophore labeled for mature beef cows) in supplements can shave hay costs further (a word of caution: Rumensin is toxic to horses).

According to a recent OSU study, cows receiving 200 mg of Rumensin daily gained an additional 0.5 lbs. per head per day and nearly one half a unit of body condition score during 58 days. Lalman explains that the forage digestibility was improved dramatically, resulting in the improved cow performance.

“One could look at the addition of Rumensin in the supplement as having increased the net energy value of this low quality hay diet by about 15 percent,” Lalman says. “In other words, less of the same diet (hay) would need to be fed to get the same performance. In our region, the cost of Rumensin is about $0.02 per cow per day. I don't know any other way to get that much improvement in forage utilization at such a low cost. There is a reason why the cattle feeding industry has been using this feed technology so extensively for so long, and a substantial improvement in feed efficiency is that reason. The same technology and benefits are available to the cow/calf industry, although it is highly underutilized.”

Calf Prices Poised to Move Higher Next Year

Along with defraying input costs, market fundamentals suggest calf prices could move higher next year. Keep in mind that even with last summer's sharp price pull-back on calf and feeder prices, 2012 averages will be record-high.

“In early 2013, calf and yearling prices will not reach 2012's lofty levels,” say analysts with the Livestock Marketing Information Center. “Feedlots simply cannot afford to pay last year's prices. If the 2013 growing season is normal for both crops and pastures, calf and yearling prices will likely return to posting year-on-year gains in the second half of the year. Rather normal weather could take 2013's fourth quarter calf market $5-$15/cwt. above this year's.” Those analysts expect calf and feeder prices to remain near recent levels for the remainder of the year.

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