Trying to guess the corn market in the months ahead was among the topics when the financial management team for the Hoard's Dairyman Farm met yesterday. The good news was that our cows just finished eating up the $4.69 per bushel corn that we had contracted for over a year ago. When corn was between $6 and $7, booking corn at $4.69 seemed like a good idea. And, of course, it might have been. Now, we are feeding some banked corn which will improve our cash flow picture by about $10,000 per month.
That still leaves us looking ahead beyond this fall to what our corn and other feed needs will be for the next five quarters. In the past few days, corn futures have been on a roller coaster. Corn futures prices for May and July at the CBOT dropped 5 to 6 cents Tuesday following Monday's crop progress report. By April 25, about half of the corn was planted in the 18 states that grow about 92 percent of the corn. The five-year average is 22 percent planted. Never before has so much corn been planted so early.
Just about the time you think it might be good to lock in some corn, the market shifts the other way. Yesterday, China confirmed a rumored corn purchase of 115,000 metric tons, and the market responded accordingly. Corn futures ended up sharply.
We didn't make any decisions on booking corn (energy) needs at our meeting. But we did work on the information we needed to have in place when it comes time to take some action.
Through the feed management software we use, we have a running inventory of supplies for our various feeds. Working with our feed man, Matt Kooiman of Vita Plus, we will make sure our inventory numbers feel right. Then we will begin to project what our hay silage and corn silage needs are for the next 15 months. Knowing our corn silage needs will give us an idea of how many of our corn acres will be going for silage and how many acres will be left to combine. Then we will have an idea about how much corn and other energy feeds we will need and can begin to look at locking in some supplies.
We also will be looking at our cost of growing and storing corn silage and hay silage on a per-ton and per-acre basis. Will have seed, fertilizer, herbicide/pesticide, and custom field cost by crop. Without knowing that, we are putting much in the dark on what purchased ingredients are worth to us.
Finally, forage is a big part of the feed supply puzzle, of course. We have an abundance of hay silage in bags because we were not able to enlarge our herd as much as we wanted, and we had a good hay year. In fact, we have been selling hay silage to a couple of dairies in the area. And, while we are behind normal for moisture so far this year, the hay looks good, and first cutting will come early . . . perhaps as soon as May 20 is our guess.
In another month or so, we will blog about what position we have taken on energy and protein feeds . . . if any.