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Blood meal, soy adding to dairy ration protein costs

Progressive Dairyman Editor Dave Natzke Published on 09 May 2018

While corn, soybeans and alfalfa hay prices have garnered substantial attention as feed costs rise, prices of other ingredients in dairy rations are increasing too. One such ingredient is blood meal, which is adding to feeding costs as producers struggle with low milk prices and higher break-even levels.

There’s no consensus on a single factor leading to an increase in blood meal prices. Instead, there are a number of factors creating a snowballing effect, said Stephen Blezinger, management and nutritional consultant with Reveille Livestock Concepts. The basics of demand and supply come into play.

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More cows, and greater attention on balancing rations for metabolizable protein and specific amino acids, are part of the demand equation, Blezinger said. The U.S. dairy herd has now been above 9.35 million cows for 16 consecutive months. In addition to greater numbers, optimizing dairy genetics mandates better cow nutrition.

“Dairies are feeding better because they have to,” Blezinger said. “To take advantage of better genetics, we have to do more things right. Animal proteins and other bypass meals are good sources of metabolizable protein and amino acids. We’re feeding a little bit more of all these products, and when you spread it across an entire industry, we’re using more than we thought.”

Blood meal prices have been economical for some time, and low prices to end 2017 likely fueled increased demand, which is now pulling prices higher, said Patrick French, RP Feed Components, East Troy, Wisconsin. Additionally, part of the increase is seasonal: Blood meal prices tend to rise to their peak in summer.

Adding to demand this time of year, reliance on ryegrass and emerging summer pastures – especially in the South – provide diminishing protein quality, requiring some additional supplementation, Blezinger said.

In addition to domestic demand, increased exports may be playing a role, tied to increasing demand prices for soy proteins.

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The U.S. blood meal supply may be softening. Although U.S. first-quarter 2018 red meat production and cattle slaughter was up from the same period in 2017, March cattle slaughter was down about 2 percent from March 2017.

Recent price rise is dramatic

During April, a feed ingredient price list obtained by Progressive Dairyman showed the price of blood meal rose from about $860 per ton (42.9 cents per pound) to $1,111 per ton (55.56 cents per pound), a 30 percent increase.

Prices reported by the USDA Ag Marketing Service’s weekly National Feedstuffs Market Review showed prices for ruminant and porcine blood meal are rising. As of May 2, ruminant and porcine blood meal was up $50 ton in the central U.S., averaging about $1,000 per ton. At $900 per ton, the price in the Texas Panhandle was also $50 per ton higher. Ruminant blood meal delivered to the San Joaquin Valley was $225 higher, at $1,075 per ton.

French said he’s seen blood meal costs increasing $150 per ton since Jan. 1, and prices are now in a range of $950 to $1,100 per ton.

One contact reported blood meal prices moving into the $1,200-plus per ton level, greatly increasing overall protein costs.

According to Mark Linzmeier, CEO of MarginSmart, the escalating blood meal prices are impacting overall protein costs in dairy rations. For example, if a ration protein mix contains 5 percent blood meal, and the price has gone up $500 in recent months, that will increase the overall protein price by $25 per ton. For a dairy producer feeding 8 pounds of protein per head per day, that equates to an increase of 10 cents per head per day due to the run-up in blood meal prices.

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Linzmeier also noted that, since blood meal prices tend to be very volatile, it is one feed ingredient that is very difficult to contract in advance. Just as prices can escalate quickly, there are times when prices can drop rather quickly as well, he said.

Soy prices higher

Increasing blood meal prices are not occurring in a vacuum. Costs for other sources of protein are also moving higher. The cost for soybean protein (whole soybeans and soybean meal) has gone up significantly, driven by poor growing conditions in Argentina, the world’s largest exporter of soybean meal.

According to University of Illinois agricultural economist Todd Hubbs, current forecasts of Argentine production reflect the poor growing season and sit at 1.47 billion bushels for the 2018 crop year, down 654 million bushels from last year’s production. Writing in farmdoc’s “Weekly Outlook: Soybean Crush Continues Strength,” Hubbs said the “potential for an additional 80 million-bushel decline in production is a distinct possibility. Soybean crush projections for Argentina fell 1.95 million tons to 45.4 million tons, and continued issues associated with soybean crushing in the region may lower this number over the next few months.”

Prices for heat-treated soybean meal products have increased 10 percent in the past two to four weeks, and blood meal prices move in sympathy with those products.

Some dairy nutritionists say they believe dairy producers will see much higher protein prices in the next few months, especially if soy-based protein sources are pressured higher. Blood meal prices then move up in sync with soy protein prices.

Blezinger said his contacts tell him blood meal prices could escalate “another couple hundred dollars [per ton] in the next week or so.”

Products such as blood meal, fish meal, meat and bone have long been known for their ability to supply rumen-undegraded protein and, more recently, metabolizable protein and critical amino acids. As a good source of lysine (8 to 9 percent of crude protein), blood meal helps meet a dairy herd’s amino acid needs, even though product consistency and variability can be called into question.

Most nutritionists suggest an inclusion rate of about 1 percent on a dry matter basis, of about 0.5 to 1 pound per cow per day. Feeding upwards of 3 to 4 percent (dry matter basis) can affect palatability and reduce feed intake, said Alex Tebbe, graduate research associate in dairy cattle nutrition and management at Ohio State University.  end mark

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