Blood meal prices are at their lowest since the USDA started reporting prices for the feedstuff in 2014.
While the decrease in blood meal prices may be due to producers taking it out of their rations, Mark Linzmeier of MarginSmart, who noticed the record-setting prices and wrote about them in his Weekly MarginSmart Notes newsletter, thinks increased meat rendering is causing the decrease.
“The best explanation I have is there has been a little bit of a buildup in the blood meal supply because both beef and pork slaughter have been higher year-to-date,” Linzmeier said.
In Linzmeier’s Oct. 23 newsletter, he noted the decrease in blood meal prices. For several years, he has been tracking the USDA-reported feedstuff numbers and sending out market news updates.
Linzmeier reported that through last week the number of fed cattle slaughtered was up 5.8 percent and the number of cows slaughtered was 7.1 percent higher from last year-to-date.
“To kind of put some numbers around this, the cow slaughter for both dairy and beef year-to-date was approximately 4,400,000. That means over 300,000 more cows have been slaughtered this year over last year,” Linzmeier says. “Also, there is almost 1.5 million head more beef steers and heifers that have been slaughtered this year.”
The slaughter increase for beef and pork could be what is putting downward pressure on the prices for blood meal, as well as meat and bone meal.
As of Oct. 17, 2017, the reported USDA price for blood meal in the central U.S. was $587.50 per ton. Linzmeier cautioned, however, that blood meal prices tend to be very volatile and can move up or down quickly.
“We have seen times where it can change 100 dollars to 200 dollars a ton in a matter of a week or two, or in just the matter of a month to six weeks, it could change 300 dollars or 400 dollars,” Linzmeier says. “So, the comments that I am talking about are right now, as of this week. If all of a sudden two weeks from now those prices are significantly different, then it is certainly possible because I have seen it happen before.”
Because of the unpredictability in price, it can be difficult for dairy producers to forward contract blood meal for a long period of time.
“Because of the volatility, you probably can’t lock in any long-term pricing for blood meal as low as the price is today. But, to the extent that one could do something, I suggest dairy producers consider that,” Linzmeier says.
Although the prices may be lower on the USDA report, Linzmeier says it could take a little while for those lower prices to be worked into a local feed supplier’s pricing.
“If a feed mill had just purchased a semi-load a couple weeks ago, then as the price comes down, they are going to keep that same price until they buy a new, lower priced load,” Linzmeier says. 
Weekly MarginSmart Notes from Linzmeier is a newsletter sent out to keep producers, nutritionists and industry allies up-to-date on diverse topics such as market news, upcoming events and getting the most out of the company’s margin projection software, MarginSmart.
-
Audrey Schmitz
- Editor
- Progressive Dairyman
- Email Audrey Schmitz
