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Industry At A Glance: TDN Cost Of Hay Vs. Corn

In 2010, the relative costs between corn and grass hay on a cost per pound of TDN basis actually inversed from the long-standing typical relationship among the pair.  

Nevil Speer

March 7, 2013

2 Min Read
Industry At A Glance: TDN Cost Of Hay Vs. Corn

Rising beef cattle feed costs have been a growing challenge over the past several years to the producer segment of the U.S. beef industry (we discussed the absolute cost of alfalfa and grass hay in a previous “Industry At A Glance” post). Historically, corn has served as a relatively abundant and inexpensive source of energy – traditionally more favorable on a cost per pound of total digestible nutrients (TDN) perspective vs. hay. However, the relationship began to narrow with the commencement of the ethanol era and the increased competition for energy available through corn. During 2010, the relative costs between corn and grass hay actually inversed from the long-standing typical relationship among the pair.   

beef cattle feed prices, corn vs. hay

The takeaway from all this discussion is that many of our long-held perceptions regarding relative feed costs have changed in recent years. That requires increased vigilance when establishing strategies to manage beef cattle feed costs. Looking out to late 2013, the market is pricing in a significant break for corn prices. Meanwhile, there’s no way to forecast hay costs through futures markets; hence, the most reliable estimate is based on historical relationships. But it’s likely that hay stocks will remain especially tight going into next fall.

Where do you see hay costs headed? How are you managing feed costs and changing dynamics of the market? Are you implementing new strategies in 2013 that you’ve never tried before? Leave your thoughts in the comments section below.

 

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About the Author(s)

Nevil Speer

Nevil Speer serves as an industry consultant and is based in Bowling Green, KY.

Nevil Speer has extensive experience and involvement with the livestock and food industry including various service and consultation projects spanning such issues as market competition, business and economic implications of agroterrorism, animal identification, assessment of price risk and market volatility on the producer segment, and usage of antibiotics in animal agriculture.
 
Dr. Speer writes about many aspects regarding agriculture and the food industry with regular contribution to BEEF and Feedstuffs.  He’s also written several influential industry white papers dealing with issues such as changing business dynamics in the beef complex, producer decision-making, and country-of-origin labeling.
 
He serves as a member of the Board of Directors for the National Institute for Animal Agriculture.
 
Dr. Speer holds both a PhD in Animal Science and a Master’s degree in Business Administration.

Contact him at [email protected].

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