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Pricing Corn Silage -- Fall 2018

John Hanchar, Farm Business Management
Northwest New York Dairy, Livestock & Field Crops

September 10, 2018
Pricing Corn Silage -- Fall 2018

Determining Corn Silage Price

A farm business owner can examine how much corn silage he/she would be willing to supply to a market at a given price.  Analysis of the farm business' cost structure for corn silage production combined with consideration of other factors help to define the supply relationship.  A seller can develop a target based upon the above, but actual market conditions provide no guarantee that a buyer will purchase quantities desired at a price that achieves the producer's cost target.  

Some farm business owners might approach the problem of determining corn silage price from a value in production, or input demand perspective.  Amounts of corn grain and corn stover in a ton of corn silage, relevant prices, and corn silage's place in the milk production process are key variables.  A buyer can develop a price target based upon the above, but actual market conditions provide no guarantee that a producer will sell the quantity desired at a price that matches the buyer's willingness to pay.

Although factors in price determination, the two approaches described above in isolation, don't completely determine price and quantity.  Supply and demand relationships work simultaneously in markets to determine price and quantity.  Empirical price analysis brings supply and demand relationships together to determine price.

Corn Silage Price Analysis

Empirical price analysis suggests that corn silage price is a function of corn silage quantities, alfalfa hay price, the price received by farmers for milk sold, and corn grain price.  The ordinary least squares regression model here expresses corn silage price as a linear function of the above variables.  The analysis is somewhat rough, elementary.  However, readers of the original August 2012 Ag Focus article describing this work, and readers of annual update articles note that the analysis and estimates help farm business owners price corn silage.

Corn Silage Price Estimates - Fall 2018

The ordinary least squares regression model reported in August 2012, updated here to reflect additional data available to date and changes in other underlying factors, produced corn silage price estimates for NY.  Below, estimated corn silage price is a function of alfalfa hay price and corn grain price with other factors (corn silage production and milk price) fixed at expected levels.  Expected corn silage quantity is set at 8,311 tons, the average for the period 2007 through 2016.

  • estimated corn silage price ($/ton) = -0.1445 + (0.1730 x price of alfalfa hay ($/ton)) + (3.3828 x price of corn grain ($/bushel))

Suppose

  • NY alfalfa hay price is $161 per ton, the three month average of the period May, June, July 2018. (USDA/NASS.  Agricultural Prices. Washington, DC:  National Agricultural Statistics Service.  July 30 and August 29, 2018 releases), and
  • corn grain price is $4.00 per bushel (Western NY Energy.  "Corn Bids." August 14, 2018.  Approximate value based upon reported bids for fall 2018.)

Using the estimating equation and the above prices for alfalfa hay and corn grain, estimated corn silage price is about $41 per ton.  Compare this to last fall's estimate of about $54 per ton.  Suppose alfalfa hay price is $175 per ton, the annual average for the period 2007 through 2016, and expected corn grain price is 4.00 dollars per bushel, then estimated corn silage price would be $44 per ton.  Buyers and sellers use an estimate as a base, typically, adjusting for quality and, or costs for harvest, hauling and storage based upon the situation, for example, when pricing standing corn for silage. 

Corn silage price estimates combined with understanding of relevant supply and demand factors from the individual farm business owner's perspective, including local conditions, for example, growing conditions, can aid decision making regarding corn silage price.

 




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Upcoming Events

MENTAL HEALTH FIRST AID

January 17, 2019
8:30 A.M. - 5:00 P.M. $25 includes lunch and a manual
WARSAW, NY

Mental Health First Aid teaches you how to identify, understand and respond to signs of mental illnesses and substance use disorders.  This 8-hour training gives you the skills you need to reach out and provide initial support to someone who may be developing a mental health or substance use problem and help connect them to appropriate care.  Register online here:  https://reg.cce.cornell.edu/MentalHealthFirstAidTraining_10508 or email lma96@cornell.edu.
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NYBPA Winter Management Meeting- "Dairy cross bred calf - opportunity for the dairy & beef industry"

January 18, 2019
9:45 a.m. Welcome - 5:00 p.m. Adjournment
East Syracuse, NY

On January 18, 2018 in Syracuse, the New York Beef Producer's Association is presenting a day-long session on the cross bred dairy calf. Speakers will include farmers and extension professionals with experience in this field. The keynote speaker will be from Wulf Genetics working with Genex to supply beef bulls of various breeds to use on Jersey and Holstein cows. To date they have raised and finished over 50,000 cross bred calves. Plan to spend the day and learn about how this enterprise may fit in your dairy operation to provide another source of cash flow. For more information, please contact Brenda Bippert, NYBPA Executive Secretary, nybeefproducers@aol.com, (716) 902-4305, or http://www.nybpa.org/abwc.htm
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Labor Road Show II - Canandaigua

January 31, 2019
9:00 am - 4:00 pm
Canandaigua, NY

If you have employees, then you need to be at the New York Labor Road Show II. Experts from farms, private industry and the university will focus on critical topics that affect all farm employers including: employee housing, onboarding, sexual harassment prevention, employee engagement , safety, wage and hour laws, and worker care.
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Announcements

2019 Pesticide Training & Re-certification Series Wednesdays in Feb 2019

Anyone interested in obtaining a pesticide certification and meets the DEC requirements, OR, current applicators seeking pesticide re-certification credits should attend.  2.5 re-cert core credits will be available for each class.
Wednesdays 2/6, 2/13, 2/20, 2/27 from 7-9 p.m., EXAM  is Wed., March 6 from 6:30- 11 pm.  CCE Ontario, 480 N Main St., Canandaigua.  Cost $175 includes manual and all classes.  Exam fee $100.  Re-certificaton is $25/class.  Register:  585-394-3977 x 427 or x 436, or email nea8cornell.edu or rw43@cornell.edu.  Website www.cceontario.org.


Three Free Digester Workshops offered through CCE St. Lawrence Co.

CCE of St. Lawrence County is offering three FREE workshops showcasing the research results from our feasibility study of anaerobic digester technology on small farms. The research was conducted by our partners at Clarkson University using the anaerobic digester at the Extension Learning Farm, which is fed both manure from a dairy operation and vegetable waste from our commercial kitchen. The digester heats a small green house that starts our seedling plants. We have a small scale vegetable-only digester as well. The research and program targets small dairies under 200 head, livestock producers, horticulture producers and anyone interested in alternative energy.

Program will be held on December 5, January 7, and March 6. A catered meal is provided at each program. Participants within the North Country Region will be given a $25 stipend to help cover travel costs, those from outside the region will be given $50. To receive the stipend, participants will need to complete a pre/post-test survey.

More information and registration information can be found here: http://stlawrence.cce.cornell.edu/events/2018/12/05/exploring-digester-technology


New Guidance for Mortality Disposal Issued

NYS Department of Ag and Markets has posted guidelines on disposal of livestock carcasses, in response to reports that some rendering companies have halted pickups from farms.

https://nwnyteam.cce.cornell.edu/submission.php?id=761&crumb=dairy|1

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