“There’s just no demand. We did barley March 10 at $320 per tonne, and in April through to July it traded at $328. That’s $7-$10 cheaper than corn,” Haley said, noting barley was currently at $315 in the Lethbridge area.

“I have barley in front of me that I can’t sell, just because they don’t need it,” he added.

In the meantime, farmers have been hanging onto barley rather than selling it, something Haley disagreed with.

“I think producers are making a huge mistake. They should be moving something,” he said, suggesting farmers need to check grain elevators for prices and tail-end exports.

“Where’s the risk to the buyer? Through the rest of the fall and the winter there’s virtually no risk,” Haley said.

“One aspect that’s working in barley’s favour here right now is the price of corn distillers dried grains with solubles (DDGS),” he noted.

DDGS, he said, were currently $435/tonne and most often make up 20 per cent of corn rations as they are a protein supplement — and barley contains more protein but less energy, while corn is the opposite way.

“If they switch back to barley or half corn and half barley, they can reduce [DDGS],” he said, expecting such is very likely to happen in a small amount from January to March.

“If corn DDGS continue to be priced at that value, as time goes on, we’ll see the end user really contemplate switching back to barley,” Haley said.

— Glen Hallick reports for MarketsFarm from Winnipeg.

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I will start with the statement that I am a great believer in the use of byproduct feeds to background cattle. In my experience, byproduct feeds offer the opportunity to meet nutritional needs at a lower cost than programs based on many of our conventional feeds (i.e. cereal silage and/or grains). The key to byproduct use, however, is knowledge of their nutritional content and variability, their digestibility characteristics and the potential for mycotoxin contamination.

Many of the byproduct feeds available to the cattle industry arise out of the oilseed, grain and pulse processing sectors. Examples include oat hulls, pea starch concentrate, corn-dried distillers grains with solubles (DDGS) and canola meal. Others arise out of the grain trade such as grain screenings, pea/lentil screenings, corn cracks and thin oats. Finally, we have the more traditional byproducts from grain harvest such as cereal and flax straw and wheat chaff. Availability is usually restricted to regions where specific crops are grown or where processing activity is located.

RELATED: Don’t focus solely on price when using raw screenings as winter feed

Typically, I group byproduct feeds into three categories. These include sources of protein (CP), energy, and bulk or filler feeds. While there is often overlap in categorizing in this fashion, it does help to identify where they fit the best in the ration.

Protein sources include but are not restricted to wheat and corn DDGS, canola and soybean meal. These are relatively concentrated sources of protein ranging from 30 per cent CP in corn DDGS to 48 per cent or more in soybean meal. In addition, these byproducts tend to be relatively good sources of energy. For example, wheat DDGS is similar to barley grain while corn DDGS is closer to corn grain in terms of net energy (NE) content. Soybean meal is similar in NE content to corn DDGS while canola meal with its higher fibre content is the lowest energy source in this class. The principles of supply and demand often dictate pricing. Wheat DDGS, for example, is often purchased at or below cereal grain prices when there is an excess of product on the market, but if there is a shortage, prices can approach that of canola meal. Soybean meal typically is the highest-valued protein source of this class due to its superior protein and energy content.

Byproducts classified as energy sources can encompass a wide variety of products that differ dramatically in NE content. For example, pea starch concentrate or corn cracks have an NE content similar to or higher than that of the common cereal grains. Of the various screening products available across the country, pulse screenings tend to offer the best combination of energy and protein. Raw grain screenings tend to test better on feed analysis than their actual value in the ration. This is because their energy and protein contents are often associated with their weed seed content. When fed unprocessed, these weed seeds tend to go right through the animal undigested. In contrast, processed grain screenings, as well as byproducts such as thin oats and pea hulls, work well as intermediate sources of energy and protein in backgrounding rations.

RELATED: Oat miller to steer clear of lambda-cy

The final category is that of products used to bulk up the ration. In many cases with backgrounding rations, it is difficult to get the energy level of the diet low enough to achieve desired gains. In such cases, one needs to dilute the energy content of the ration with high-fibre, low-energy feeds. Oat hulls, a byproduct of the oat-processing sector, are ideal for this purpose. Other bulky low-energy feeds include cereal straw, flax straw and baled corn stover.

There are two major challenges when trying to develop backgrounding programs based on byproduct feeds. The first is variation in nutrient content between loads and the second is the potential for mycotoxin contamination. Screenings arising from the cleaning of cereals, particularly wheat and rye, can be significant sources of ergot, while aflatoxin can affect stored corn grain and any byproducts arising from it. To overcome these challenges, I would strongly recommend you develop a system for representative sampling and feed testing of incoming loads. As well, if you suspect grain screening or other byproduct shipments may be contaminated, analyze them for mycotoxins before feeding.

Finally, I end this column with a sense of nostalgia, as it is the last one I am writing for Canadian Cattlemen magazine under the Nutrition banner. I would like to thank the editors (past and current) for giving me a national platform to advance the concepts of beef cattle nutrition, a subject near and dear to my heart. I also want to thank you, the readers of this magazine, for sticking with me all these years and for asking the “offbeat” questions that so often ended up as topics for this column.

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Starting calves is always a challenge as they are faced with several stressful events happening all at once. These include weaning, transportation, mixing at the market and/or feedlot, processing and getting used to a new environment. This stress, coupled with the viral and bacterial challenges that newly weaned calves face, results in calves with a challenged immune system coupled with a depressed appetite. Unfortunately, it can also result in high morbidity and mortality rates.

From a nutrition perspective, I believe the most important management step you can take with these animals is to get them eating at an appropriate level, as soon as possible. If we use a pen of 500-pound steer calves as a reference, healthy non-stressed calves should be consuming approximately 13 pounds of dry matter (DM) per day or 2.5 to 2.7 per cent of their body weight (DM basis). This translates to 20 pounds of total mixed ration (i.e. 13 lbs. of DM/.60) if the ration DM is 60 per cent.

Unfortunately, stressed or immune-challenged calves may only consume feed at one to 1.5 per cent of body weight or five to 7.5 pounds of DM in the case of the reference animals above. This level of DM intake (DMI) will barely cover maintenance nutrient needs. It is critical from both a performance and health perspective that we get these animals eating 2.5 per cent of body weight or better as soon as possible. Unfortunately, it is not always that simple. As the saying goes: “you can lead a horse to water, but you can’t make it drink!”

With stressed calves, particularly those that have been off feed for extended periods, rumen function is likely at a low ebb. New arrivals should have access to a feed source they recognize and one that is relatively fermentable in the rumen. I like to see such animals have access to long-stem grass or alfalfa/grass hay placed in hay feeders in receiving pens and if possible draped over feed bunks for the first three to five days the calves are in the feedlot. The reason is that calves will recognize this feed and start consuming it from day one. Quality should be such that it stimulates rumen fermentation and helps to fill up the calves while they are adjusting to a new environment.

In addition to long-stem hay, newly arrived calves should be fed the starter ration at 0.75 to 1.25 per cent of body weight or in the case of the above calves approximately four to six pounds of DM. From this point, calves can be moved up to two per cent of body weight or approximately 10 pounds of DM as fast as their appetite dictates. Once the calves have reached this level of intake it is a good idea to take a slower approach to further increases. One common approach is to limit further DMI increases to 10 per cent every second day (DM basis) until the calves are eating at 2.3 per cent of body weight and five per cent every second day thereafter until the calves are on full feed. Ideally, calves reach a DMI of 2.5 to 2.7 per cent of body weight within three weeks of arrival.

The starter ration is typically a combination of silage (i.e. corn or barley), grass or alfalfa/grass hay, grain and a protein/mineral/vitamin supplement. If hay is fed, it is typically limited to 10 to 15 per cent of the ration DM unless economics and/or supply dictates otherwise. The grain or concentrate portion of the starter is typically 35 to 40 per cent of the ration (DM basis). This level of grain helps to supplement energy intake of stressed calves with a depressed appetite. Protein supplementation can vary from commercial urea-free supplements to concentrated protein sources such as distillers dried grains with solubles or canola meal.

One question I often get is with regard to the use of oat grain for starting calves. My answer typically is “great;” calves go on to oat-based starter rations smoothly with minimal digestive upsets. An added benefit is that it does not require processing, particularly for lightweight calves. The flip side to the answer that often surprises cow-calf producers is that calves also go onto barley or corn grain relatively easily and that it is not necessary to start calves on oat grain.

Another question cattle feeders ask about is the use of various prebiotics and probiotics. These products usually comprise specific strains of live yeast or bacteria (i.e. probiotics) or yeast extracts and other bioactive compounds (prebiotics) that are designed to promote rumen and lower tract gastrointestinal health and immune function. There are a number of such products on the market, some backed by more research than others. As these products come with a price, it is a good idea to review the need for such products with your veterinarian/nutritionist before including them in your program.

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“Everybody is waiting on the corn situation to figure out where we’ll go,” said Suzanne Leclerc, owner of Market Master Ltd. in Edmonton. “Buyers are buying as short as possible, waiting for the corn trains to come.”

The U.S. corn harvest was 18 per cent complete as of Sept. 18, according to the latest data from the U.S. Department of Agriculture. Some of that corn has already been purchased by Canadian feeders to help supplement tight domestic supplies, but large shipments have yet to make their way north.

Leclerc said any logistical issues or delays bringing up corn could lead to some swings in domestic grain prices, depending on how large a shortfall needs to be covered.

Distillers dried grains (DDGS), the byproduct of producing ethanol, are another cheaper feed option likely to find their way into more Canadian rations this winter.

However, Leclerc noted, adjusting rations takes time and not every livestock feeder may want to use as much corn or DDGS as others.

“Everything is pure volatility,” Leclerc said of the general sense of uncertainty in the markets — although she added the feed market has never been as strong off the combine as it is this year.

“There’s a lot of opportunity right now and a lot of unknowns farther out.”

— Phil Franz-Warkentin reports for MarketsFarm from Winnipeg.

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Dried distillers grains with solubles (DDGs), the grain by-products which remain after starch has been fermented through the making of alcohol or ethanol, are taking up a larger portion of feed rations. While an animal’s diet entirely made up of DDGs is not recommended, they have nutritional benefits.

“(DDGs are) high in protein and fat, with the nutrient value of the corn kernel…increased by a factor of three. (They are) excellent feed for cattle and dairy cows, and has been increasingly used in hog and poultry rations, as well. It is a product that should be well familiar to nutritionists,” Sean Broderick, trading manager for CHS Inc. in Minneapolis, Minn. wrote in an email.

Feed barley and feed wheat in Western Canada have increased in price between C$2.70 and C$4.76 per bushel over the past year, according to Prairie Ag Hotwire data from Aug. 4. Because of rising prices, there has been greater demand for other feed sources including DDGs.

“We are seeing good demand from the Canadian markets that have traditionally relied on feeding barley, and are sourcing a lot of it from (Canadian Pacific Railway) located plants in southern Minnesota and northern Iowa,” Broderick wrote.

However, Canada is not the only country where DDGs are growing in popularity.

“Mexico is the biggest (United States) customer for DDGs since it can move efficiently by rail.  Southeast Asia has also been a big export customer, as they are able to utilize shipping containers filled with consumer goods destined for the U.S. market, which would otherwise be going back empty,” Broderick added.

Still, the market for DDGs in Canada is going strong.

“We have seen a significant uptick in Canadian demand for DDGs, and expect that to continue,” Broderick added.

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Cenovus said 93 per cent of shareholder votes were cast in favour of the merger at a special meeting, while Husky announced earlier in the day that the merger was approved with over 99.9 per cent of votes cast in favour at its meeting.

Some Cenovus investors were apprehensive about the deal as they believed that the addition of Husky’s refineries would hinder the company from taking advantage of rising oil prices.

The shareholder approval comes as a recent recovery in oil prices has helped energy shares, boosting the value of the all-stock transaction by about 60 per cent from its initial $3.8 billion valuation in October, when the deal was first announced.

Husky shareholders will get 0.7845 of a Cenovus share and 0.0651 of a Cenovus share purchase warrant in exchange for each Husky common share.

The deal is expected to close in the first quarter of 2021, after which Cenovus shareholders would own 61 per cent of the combined entity and Husky shareholders the rest. Hong Kong tycoon Li Ka-shing-controlled Hutchison Whampoa, Husky’s biggest shareholder, would hold a 15.7 per cent stake in the new company.

The deal stands to make Cenovus the biggest producer and seller of ethanol and dried distillers grains with solubles (DDGS) in Western Canada, as it gives the combined company control of Husky’s biofuel production plants at Lloydminster, Sask. and at Minnedosa, Man., about 45 km north of Brandon.

A Husky representative confirmed in October the biofuel plants will be part of the Cenovus deal.

Husky has previously said its biofuel plants make it the single largest consumer of feed-grade high-starch wheats in Western Canada. The Minnedosa plant today takes mainly corn but also contracts for feed wheat and rye, the company has said.

— Reporting for Reuters by Arunima Kumar in Bangalore; includes files from Glacier FarmMedia Network staff.

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The two Calgary companies on Sunday announced a friendly all-stock deal which would see Husky shareholders get 0.7845 of a Cenovus share — plus 0.0651 of a Cenovus share purchase warrant — for each Husky common share, giving Cenovus and Husky shareholders 61 and 39 per cent ownership of the combined firm respectively.

The deal is already approved by both companies’ boards and is expected to close in the first quarter of 2021, pending approvals from both sets of shareholders as well as federal regulators and Alberta’s Court of Queen’s Bench.

Cenovus Energy, which will keep its name after the merger, said Sunday the deal “will unlock market opportunities by uniting high-quality and low-cost oil sands and heavy oil assets with extensive midstream and downstream infrastructure.”

“The integration of Cenovus’ best-in-class in situ oil sands assets with Husky’s extensive North American upgrading, refining and transportation network and high netback offshore natural gas production, will create a low-cost competitor and support long-term value creation,” current Husky CEO Rob Peabody said in a release.

The deal will also make Cenovus the biggest producer and seller of ethanol and dried distillers grains with solubles (DDGS) in Western Canada, as it gives the combined company control of Husky’s biofuel production plants at Lloydminster, Sask. and at Minnedosa, Man., about 45 km north of Brandon.

Husky’s ethanol assets were not specifically mentioned in Sunday’s announcement. However, a Husky Energy representative confirmed via email Tuesday they will be part of the announced deal.

The Lloydminster plant was commissioned in 2006, while the Minnedosa plant, first put up in the early 1980s, underwent a major expansion in 2008. Each of the two plants today has throughput capacity to produce 150 million litres of ethanol and 130,000 tonnes of DDGS per year, taking up to 375,000 tonnes of feed grain.

The two plants have made Husky the single largest consumer of feed-grade high-starch wheats in Western Canada, the company has said previously, noting the Minnedosa plant today takes mainly corn but also contracts for feed wheat and rye.

Husky markets its DDGS through the feed processing arm of U.S. ag and chemical firm Wilbur-Ellis as a high-protein, non-animal-based supplement for cattle feedlots and dairy, hog and poultry operations.

Cenovus and Husky on Sunday said their combined oil and natural gas production will amount to 750,000 barrels of oil equivalent per day, while their total North American upgrading and refining capacity would be about 660,000 barrels per day.

The two companies expect to reach about $600 million in annual corporate and operating synergies and $600 million in “annual capital allocation” synergies, most of those in their first year as a combined company, and “independent of commodity prices.”

Their expected savings would drive their combined corporate breakeven “well below levels that either company could achieve on its own,” Alex Pourbaix, Cenovus’ current and future CEO, said Sunday on a conference call.

That breakeven level, he said, would be a West Texas Intermediate oil price of about US$36 per barrel in 2021 and down to around US$33 per barrel by 2023. — Glacier FarmMedia Network

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The company will invest some $400 million in the next two to three years at its 13 plants to make high-protein, corn-based animal feeds its new flagship product, relegating ethanol to a low-margin byproduct (all figures US$).

The plan upends the company’s years-long strategy of pumping out the fuel and selling off the remnants as distillers dried grains (DDGS) for cows and pigs.

“We will start to transform, with ethanol as a co- or byproduct,” Green Plains CEO Todd Becker said in a recent interview. “We think that is the only way to thrive long term in an industry like this.”

The strategy reflects a devastating ethanol market outlook as U.S. demand for motor fuels is projected to fall and the Trump administration waives biofuel blending requirements for more and more oil refiners.

But demand for high-protein animal feed remains strong. A large U.S. cattle and near-record hog herd are gobbling up feeds. And global demand for meat is surging as the deadly African swine fever culls herds in China, Southeast Asia and parts of Europe.

“We believe this will be our main commodity, main revenue stream and main profit stream,” Becker said. “The ethanol today is an industry that is oversupplied and undisciplined.”

Green Plains’ ethanol revenue fell 19.8 per cent to $1.701 billion in 2019, its annual report released on Monday showed, the lowest since 2010. It will hold a call to discuss the report on Tuesday.

Green Plains will start production of its new feed in February at a plant in Shenandoah, Iowa, following a $35 million investment.

The feed produced there will contain 50 per cent protein, allowing it to charge a premium to the ethanol industry’s typical DDGS with around 30 per cent protein. The new feed, targeted at aquaculture producers and pet food companies, contains even more protein than soymeal.

Soymeal sells for about double the price of DDGs, according to the U.S. Grains Council.

Green Plains, which partnered with Novozymes A/S to boost the protein content of the feed through enzymes and microbial technologies, has already formed a joint venture with Optimal Fish Food to produce their aquaculture feed.

The feed, which could run as high as 60 per cent protein content in the coming years, is insulated from the political headwinds that have devastated the ethanol market, Becker said.

— Mark Weinraub is a Reuters commodities correspondent in Chicago.

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Wheat futures fell, recording a fifth straight lower close, as traders focused on plentiful world supplies.

Chicago Board of Trade May corn settled up 1-3/4 cents at $3.61-3/4 per bushel and May soybeans ended up 3-1/4 cents at $9.02 a bushel (all figures US$). CBOT May wheat finished down 1-1/2 cents at $4.58 a bushel.

Traders were monitoring the progress of a winter storm that was forecast to dump as much as 30 inches of wet, heavy snow on western Minnesota and southeast South Dakota, the National Weather Service said.

The storm was expected to exacerbate flooding along the Missouri River in areas where dozens of levees were breached in March. Farmers in the region are struggling to prepare fields ahead of corn and soybean planting.

Support for prices also stemmed from optimism about U.S. trade talks with China. U.S. Treasury Secretary Steven Mnuchin said the two sides have basically settled on a mechanism to police any agreement, including new enforcement offices.

U.S. Agriculture Secretary Sonny Perdue said on Tuesday that talks with China about reducing Beijing’s tariff on U.S. ethanol products were “positive,” but cautioned the discussions were not over.

Meanwhile, China’s ministry of commerce is set to review its anti-dumping tariffs on imports from the U.S. of distillers grains (DDGS), an animal feed ingredient that is a byproduct of ethanol plants, according to a document issued by the China Alcoholic Drinks Association.

“CBOT corn and soybean futures found support from U.S. planting delay concerns, and on trade optimism that ongoing U.S.-China trade negotiations in Washington are making progress,” Dan Cekander, president of DC Analysis, wrote in a note to clients.

But reminders of plentiful U.S. grain supplies hung over the market, capping rallies. The U.S. Department of Agriculture this week raised its forecasts of 2018-19 global corn and wheat ending stocks more than most analysts expected.

CBOT May corn fell to a contract low on Tuesday, but commodity funds already hold a massive net short position in corn futures, a factor that may limit further declines.

In Europe, farming agency FranceAgriMer raised its forecast for French soft wheat exports outside the European Union this season for the third month in a row, underlining a recent acceleration in shipments from the EU’s biggest grain grower.

FranceAgriMer now expects non-EU soft wheat exports in the 2018-19 season at 9.7 million tonnes, up from the 9.5 million forecast last month and 19.5 per cent above last season’s volume.

— Julie Ingwersen is a Reuters commodities correspondent in Chicago; additional reporting by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris.

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However, that won’t mean an oversupply of the ethanol byproduct, as feed markets will adjust, according to a DDGS trader.

The U.S. Environmental Protection Agency (EPA) is moving forward with a proposal which would see an end to restrictions on selling E15 — gasoline containing 15 per cent ethanol — in the summer.

The higher-ethanol-content fuel currently faces sales restrictions from June through September in some areas due to concerns it adds to smog in warmer temperatures.

The U.S. ethanol and corn sectors both support the move to allowing E15 year round, as corn is the primary feedstock in the U.S.

“There won’t be an oversupply of DDGS,” said Sean Broderick, DDGS marketing manager with CHS Hedging. The same question had been asked for decades as the ethanol sector grew, with the market always adjusting, he said.

DDGS replaces both corn and soymeal in a ration, he noted, with increased supplies possibly leading to more DDGS in rations and less corn.

Canada imported about 660,000 tonnes of U.S. DDGS in 2018, according to Statistics Canada data, down slightly from the record of 694,000 tonnes the previous year.

Broderick said Canada was a steady market, with Canadian demand dependent on the quality of the Canadian grain crop.

Overall, the U.S. exported 11.8 million tonnes of DDGS in 2018, up by nearly eight per cent from the previous year, according to U.S. Census Bureau data.

China has been a major buyer in the past, but the trade dispute between the two countries has caused disruptions.

“The entire market is sitting on its hands waiting to see what happens, if anything, with China,” said Broderick.

Logistical issues across the Midwest, with a late winter and heavy snow in some areas, were also being watched closely.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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