ATLANTIC — Fresh snow covered the ground as Zak Kennedy walked through biting February wind to check on cattle.
“We go through a lot of feed this time of year,” he said.
Kennedy farms and feeds cattle with his wife, Emily, and brother, Mitch, near here in Cass County. When the weather turns cold, cattle are burning the calories to put on weight and maintain body temperature.
Thankfully, corn and corn co-products are cheap and easy to find, Kennedy said. The family farms about 1,300 acres, growing corn, beans and hay, and they use all the farm-grown corn in the feedlot they own and the two they lease.
They also use dry distillers and modified distillers as part of the ration. The family feeds out its own cattle and also custom feeds for others.
Hay, however, is another story this year.
“You can find it, but it’s not cheap right now,” Kennedy said. “A lot of the hay around here has been sold to areas who had some drought conditions, so quality hay is short and hard to find.”
He said prices are in the $100 range per big round bale, or about $150 per ton.
“Cattle prices don’t support that, but you need to have it,” Kennedy said. “They released the CRP ground last year around here, but it’s pretty low quality. I like to buy what we are going to need in the summer, when it’s more plentiful and less expensive, but sometimes you run short.”
After another bumper crop, corn and soybeans should remain inexpensive feed ingredients, said Lee Schulz, Extension livestock marketing economist at Iowa State University.
“Right now, corn and corn co-products are really a low-cost option in rations, as is soybean meal,” he said. “Producers really have the opportunity to keep feed costs low.”
Schulz said both cattle and hog marketings are very current, meaning extra weight is not being packed onto the carcasses. Packers are aggressively seeking animals, and retailers are pushing red meat in their promotions.
“We are flush with red meat supplies,” he said.
Cattle producers should be concerned with hay supplies, Schulz said. He said prices have climbed higher than in recent years, primarily because of hay shortages in dry areas.
As the winter progresses, the supply of quality hay will likely tighten.
He said despite cheaper grain prices, locking in some feed needs might be wise.
“What you want to do is put a price ceiling on the grain, so maybe use call options or some other strategy,” Schulz said. “Typically we see a price rally in the spring, so if there are prices available and you are comfortable with them, it might not be a bad idea to lock them in.”
He added hog margins are good at the moment, while cattle margins are a little tighter. Schulz said the opportunity is there for hog producers to lock in profits through most of 2018.
Kennedy said he uses options as part of his risk management strategy, adding the family has the capacity to store additional corn.
“Typically, we go through about 100,000 bushels of corn per year,” he said. “We use 1,000 cornstalk bales, and some of that for bedding, then probably 1,000 bales of hay for the feedlot and another 200 for our cows.”
Additionally, the operation chops between 2,500 and 3,000 tons of corn silage. Rye used in cover crops is also chopped and fed, Kennedy said.
“We try to be as efficient as possible when it comes to feed use,” he said. “We watch costs pretty carefully.”