Cottonseed Merchandisers Reporting Slow Return To Forward Contracts Among Dairy Producers In Upper Midwest

As quickly as cash disappeared from dairy farms in 2009, so too did forward contracts for feed. But a turnaround is likely for whole fuzzy cottonseed, according to senior cottonseed merchandiser Becky Butzler of Cottonseed LLC, La Crosse, Wis.

Strategically situated on the Mississippi River, Cottonseed LLC received its final shipment of “old crop” cottonseed by barge originating from Alabama this week, and is cautiously pursuing new contracts with cash-strapped dairy producers throughout the Upper Midwest.

“In the past few months, we’ve been seeing cottonseed go back into the ration,” she says. “Many producers had stopped buying cottonseed, even if feeding it was the best thing to do on paper.”

Of those who continued to buy and feed cottonseed throughout the downturn, most turned to the spot market, she says. “When milk prices lost pace with rising feed cost, we saw more hand-to-mouth purchasing. As forward milk prices get more attractive, we’ll see those contracts pick back up. Cottonseed is one of those products farmers want to keep in the ration.”

While cottonseed currently demands $225/ton delivered to farms in the La Crosse area, compared to $380/ton last year, many producers remain “gun shy,” Butzler notes.

Steady supply
According to Tom Wedegaertner, director, cottonseed research and marketing, Cotton Incorporated, the 2009 cottonseed supply available for feed will remain about even with that of last year: about 2 million tons of cottonseed after the crush, and “enough to feed about 4 million dairy cows.”

USDA’s September 12 prospective plantings report for 2009-2010 forecasts total cottonseed production to reach 4.5 million tons this year, compared to 4.3 million tons in 2008 – a 4.6% increase despite 33,000 fewer acres. Cotton acreage fell to 9.14 million acres from 9.47 million last year.

“Reduced acreage, primarily due to increased corn and soybean plantings, has been the big story in the cotton industry for the past couple of years,” Wedegaertner notes. “Higher yields and lower levels of crop abandonment will make up for some of the losses and boost the cottonseed supply.

Competing with dairies for that finite supply of cottonseed, however, are oil mills throughout the South, which produce cottonseed oil for the food industry. “Currently, the mills may be a better place, financially, to buy cottonseed,” he says.

Three-in-one feed is cost-effective
According to Dr. Paul Chandler, retired nutritionist and regular Dairyline contributor, cottonseed must be priced competitively, but “in most cases, whole fuzzy seed is still the most cost effective way to provide nutritional support for fiber, protein and fat.

“Cottonseed is a unique feed ingredient that is difficult to mimic because it is a triple nutrient supplier,” he says. “It supplies protein, extra energy from its oil, and fibers that are both immediately available, and more resistant and longer lasting. Other feed ingredients can supply one or two of these three important features, but very few that can provide all three in a single package.”

“If you commit yourself to the business of milking cows, there is not a ‘least-cost’ scenario,” he says. “You’ve got to keep the milk flow up on a daily basis. Cottonseed does just that.”

Cottonseed is a byproduct of the cotton ginning process, and an excellent source of fiber, protein and energy. Typical rations include up to 15 percent cottonseed on a dry matter basis. For more information on cottonseed, visit www.cottoninc.com.

Cotton Incorporated, funded by U.S. growers of upland cotton and importers of cotton and cotton textile products, is the research and marketing company representing upland cotton. The Program is designed and operated to improve the demand for and profitability of cotton.