Fiber digestion levels a tool for pricing corn silage

HILBERT
Last-minute negotiations on pricing corn to be harvested as silage could be guided by a relatively
new in-vitro laboratory analysis for measuring the digestion of the fiber in the feed, according to
information presented at the Calumet County corn silage drydown day on Sept. 23 at Schneider
Farms.
During a presentation at the event, Fox Valley Technical College adult education instructor Jeremy
Hanson shared the results of total tract neutral detergent fiber digestibility (TTNDFD) tests
conducted at Rock River Labs in Watertown. The TTNDFD tool was developed by University of
Wisconsin-Madison dairy scientist David Combs.
Samples of two hybrids of corn obtained from the Paul and Adam Faust farm near Chilton for a
drydown day a week earlier were used for the tests. As an additional criterion, samples were taken
at six- and 16-inch cutting heights on the corn stalks.
Hanson noted that the analysis, which also provides numerous other items pertaining to the feed
value, costs $26 with the results being reported within two days. The costs of the four samples were
covered by Latham Seeds, for which Adam Faust is a sales representative.
TTNDFD test results
What stood out among the numbers, at least in terms of identifying a pricing criterion based on feed
values, was the difference in TTNDFD between the six- and 16-inch cutting heights, Hanson pointed
out. The corn planted both in late May and on June 6 was several percentage points higher in
TTNDFD when the cutting height was 16 inches compared to that at 6 inches.
For the two cuts at 6 inches, the reported TTNDFD percentages were 40.52 and 44.31 compared to
the 48.41 and 49.22 for the corn cut at 16 inches. The Rock River report also lists digestions
percentages for standardized 24-, 30-, and 48-hour periods that the feed is in a cow's rumen along
with the 60-day and four-year averages for all the corn silage samples tested at its facility.
Other differences which were evident in the analysis were the higher percentages of protein and
starch in the 16-inch cuts. Calculations of the potential for milk production per ton of silage
indicated 3,627 and 3,132 pounds for the six-inch cuts and 3,389 and 3,121 pounds for the 16-inch
cuts -- numbers not consistent with the projected higher level of fiber digestion obtained by having
less of the bottom portion of corn stalks in the silage.
Pricing criteria
Whatever the numbers from such quick turnaround tests prove to be, Hanson noted that they could
be used by buyers and sellers of corn silage to set a per ton price for the feed. Students who have
attended recent classes were aware of prices ranging from $20-$29 per ton for this year's crop -- a
significant drop from recent years, he observed.
A standard pricing practice for corn silage involves multiplying the Chicago Broad of Trade (CBOT)
futures price from a period chosen by the price negotiators by a factor of 7.2 bushels of grain corn
per ton and adding $5-$6 per ton for the value of the stover, Hanson remarked. If a recent CBOT
average of $3.40 per bushel ($3.25 for December futures in trading on Sept. 23) were used, this
would set the price at $29 per ton for corn silage at 65 percent moisture, he said.
Deficit returns for growers
At such prices for corn silage or in the local cash market for corn grain, some growers who are
selling their 2014 crop are aware that they are not likely to earn a profit on the enterprise for this
year, Hanson stated. He pointed out that the financial picture is not quite as dire for soybeans and
winter wheat.
Using costs of production obtained from several sources and cropping costs from the 2013
Wisconsin custom rate guide, Hanson tabulated a likely per acre production cost of $508 per acre
for corn grown in the area this year. He acknowledged that production costs always vary somewhat
from farm to farm.
At a per acre yield of 150 bushels of grain corn per acre and $3 bushel cash price in the local
market, growers would lose $58 per acre by growing corn this year, not even considering the
potential for some drying costs, Hanson indicated. For the cost of production numbers he used, a
break-even enterprise for this year would require a yield of 169 bushels per acre with a selling price
of $3.40 per bushel, he noted.
Within the costs of production, Hanson used such per acre numbers as $95 for seed, $104 for starter
and urea fertilizer, and $150 for land (rental or ownership). Other cost items were tillage, planting,
herbicide, application fees, harvesting, and crop insurance.
Pricing alternatives
Corn growers who are not yet locked into a type of harvest or a selling price for their 2014 crop
should consider selling it for corn silage or high-moisture shelled corn, Hanson suggested. He noted
that buyers such as large dairies which have plenty of storage space might be interested in stocking
enough corn silage and high-moisture shelled corn for feeding needs well beyond one year.
Another option for sellers of corn grain is to keep a close watch on the local basis that affects the
price at their area elevators, Hanson indicated. From a historical perspective, he pointed out that
favorable basis is most likely in January, March, or April.
In the longer term, growers might want to learn about the put options and forward pricing
opportunities, which could have offered them some price protection on this year's crop, Hanson
observed.
Other crop balance sheets
The bottom line numbers look better for both soybeans and winter wheat grown in 2014, Hanson
observed. For soybeans, he attributed a 45 bushel per acre yield with a selling price of $8.75 per
bushel for total revenue of $393.75 per acre.
This would cover production costs, including $150 per acre for land, and provide a net profit of $18
per acre, Hanson indicated. Based on that crop budget, a break-even yield on soybeans would be an
average yield of 42.9 bushels per acre at an average selling price of $8.35 per bushel, he noted.
Based on the same criteria, winter wheat should have provided a grower with a net profit of $88 per
acre this year, Hanson reported. He calculated this for a yield of 70 bushels per acre at cash selling
price of $4.35 per bushel along with straw valued at $90 per acre.
The crop budget for winter wheat suggested a production cost of nearly $352 per acre. Break-even
numbers for the crop would have been a yield of 50 bushels per acre at a selling price of $3.10 per
bushel.
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