Corn Silage Price Goes Up

Jim Linn and Mary Raeth-Knight

February 2007

Every year there seems to be a new challenge or situation affecting our dairy cow feeding plans. This year is no exception with the emphasis on corn for ethanol. Everyone is aware what shifting corn into ethanol production has done to the price of corn grain. The unknown is how big of a ripple effect will there be on corn silage production and the price dairy producers will pay for corn silage? In addition to a trade-off of corn silage acres into corn grain, there likely will be less total acres of forage grown as more land is diverted into corn and soybeans.

The question of what corn silage will be worth this year has been asked several times over the past two months here in Minnesota. At the end of January, I was in Colorado speaking at a conference and the same question was on the minds of their dairy producers and nutritionists. This is not a new question, but almost a perennial question. However, the corn for ethanol competition has added a new dimension to the question.

Before reading on, a disclaimer needs to be made. No one pricing method fits all situations; there are many ways and options to price corn silage. The only thing any pricing formula can do is provide a starting point for discussion between a buyer and seller. The best price will be what the buyer and seller agree to.

Starch and Fiber Valuation. Starch for energy and NDF for fiber are the two most important nutritional components in corn silage. One option this coming year is to increase corn silage feeding and decrease corn grain in the ration. With this strategy, the value of fiber from corn silage needs to be considered in pricing, as increasing corn silage in the ration for starch will displace some of the other forage fed. To put a value on corn silage, we calculated the value of fiber in corn silage based on straw, and the grain value based on corn grain prices (shown below). Surprisingly, my friends in Colorado had arrived at a very similar approach.

In both Minnesota and Colorado, we concluded that good corn silage would be worth between $40 and $50 per ton of 35% dry matter (DM) silage in storage. This would include all harvesting costs as the corn and straw prices are post-harvest prices. This price also assumed corn prices were not going to change from the current $4.00 to $4.50 per bushel. This new corn silage price is 1½ to 2 times higher than it was a year ago. We would encourage all dairy producers to work with their nutritionist and start projecting out what feeds will be in the ration and at what cost this year. Now is the time to start looking at options and alternatives before the planting season begins.

For those interested, below are the steps we used to calculate a corn silage price based on corn grain and straw. Hay could substitute for straw price if one chose to do so.

First Step – Assumptions. Based on corn silage research from Wisconsin, the relationship between corn grain yield and 35% DM corn silage yield is about 0.14. Example: 150 bushels of corn per acre yields about 21 tons (150 bushels times 0.14) of corn silage per acre at 35% DM.

Second Step – Grain Value. If corn delivered to the farm costs $4.00 per bushel, then at 150 bushels per acre yield, the value of the grain in this corn silage is $600.00.

Third Step – Forage Value. Assume corn silage on a DM basis is 50% grain and 50% forage (stalks), and corn stalks are similar in nutrient value and fiber to straw. At 150-bushel corn yield, there is 7.35 tons (21 tons times 35% DM) of silage DM per acre and half of this is stalks or 3.7 tons of stover DM or straw equivalent per acre. The most recent Sauk Centre hay auction sold straw for about $100.00 per ton of DM. Thus, the value of the corn stalk is $370.00 (3.7 tons times $100.00 per ton) per acre.

Fourth Step – Corn Silage Price. The price per acre of corn silage at 35% DM would be $600.00 in grain value plus $370.00 in fiber value for a total of $970.00 per acre. At 21 tons of 35% DM silage, this is $46.19 per ton ($970.00 divided by 21 tons) in storage as both the grain and straw prices are post-harvest prices.

The Old Quick and Easy Formula. This method bases corn silage price solely on grain content and assumes a grain yield equivalent of 150 bushels per acre. Based on Wisconsin research, at 150-bushel corn yield, the average ton of 35% DM silage contains 7.14 bushels of corn. No value is given to the forage portion of the silage. The formula is 7.14 times the bushel price of corn equals the value of a ton of silage at 35% DM. If corn is $4.00 per bushel, corn silage without harvesting and storage costs is worth $28.57 per ton.