Feed price quotes

Definition

A feed price quote is a price for a feed commodity, from a vendor, broker or market report, on stated terms. Two quotes for “the same” feed are only comparable once the terms are on the same basis.

The terms to read on every quote:

FOB vs delivered. FOB (free on board) at a named point (a plant, elevator or rail yard) means the buyer pays freight from that point. Delivered means freight to the farm is included. An FOB price is always lower than the delivered cost.
Unit. Usually $/ton (short ton, 2,000 lb). Grains may be quoted in $/bushel (corn = 56 lb/bu); some byproducts in $/cwt.
Moisture basis. As-fed (as-is) or DM. Wet feeds quoted as-fed must be converted to DM to compare. See as-fed vs dry matter.
Quality or grade. Hay quotes depend on grade (relative feed value or forage quality) and bale type; byproducts on protein and fat.
Freight and surcharges. Hauling may be charged per load, per ton, per loaded mile or per unit, plus fuel surcharges.
Timing. Spot (now), forward contract (delivery month), or a basis quote tied to futures (see futures and basis).

Ranges vs averages

Market reports (for example USDA AMS Market News hay reports) often give a price range and sometimes a weighted average:

The endpoints of a range are the lowest and highest reported trades. They are not averages, and neither is the typical price.
The midpoint of a range is not the reported average. A weighted average reflects volume, and can sit anywhere in the range.
Use the reported average when one is given; don’t compute a midpoint and call it the market price.

Landed cost

The cost to compare is the landed cost: what the feed costs on the farm, in the commodity bay, per ton of DM.

Landed $/as-fed ton = FOB $/ton + freight $/ton + surcharges $/ton
Freight $/ton (per mile) = rate $/loaded mile × miles / tons per load
Freight $/ton (per load) = $/load / tons per load
Landed $/DM ton = landed $/as-fed ton / (DM% / 100)

Then compare on nutrients delivered (e.g. $ per lb of protein or energy) when choosing between commodities.

How to pull it in DC305

Feed prices are not in DC305. They come from vendor quotes and invoices, brokers, and market reports. DC305 has no part in pricing feed. Feed costs reach herd metrics only through feeding software or ration cost, joined to DC305 cow counts and milk for feed cost per cwt.

Typical range

Herd context: US dairies buying commodities by the semi-load; prices vary by region, season and year, so no price levels are given here.

Freight is a large share of landed cost for low-value, bulky or wet feeds; for wet byproducts it can exceed the FOB price over long hauls.
Per-loaded-mile rates for semi-trailers are commonly a few dollars per mile; on a 25-ton load, each $1/mile over 100 miles adds $4/ton.

Spread within a reported hay range for one grade in one market can be $30–$80/ton or more.

Common mistakes

Comparing FOB to delivered. The FOB quote looks cheaper until freight is added.
Comparing as-fed prices for feeds of different DM. A cheap wet feed can cost more per DM ton than a dry one.
Using a range midpoint as the average. Endpoints and midpoints are not averages; use the reported weighted average.
Mixing units. $/ton vs $/cwt vs $/bushel, or short tons vs metric tonnes.
Forgetting surcharges. Fuel, per-load minimums, unloading and detention charges belong in landed cost.
Quote ≠ invoice. Track the price actually paid per ticket, using the scale ticket net weight.
Comparing commodities on price per ton instead of price per unit of the nutrient you are buying.