Dairy profitability shows some improvement in April

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Arrow up It’s nothing to shout about, but the USDA’s milk-feed ratio did move in a positive direction in April.

According to the USDA’s “Agricultural Prices” report released on Tuesday, the preliminary milk-feed ratio for April is 1.56, up from 1.48 in March. This marks an upward swing after four straight months of decline. 

The all-milk price used in calculating the ratio also rose, climbing from $19.10 per hundredweight in March to $19.30 in April.

Lower feed prices also played a role in the improving milk-feed ratio. Corn prices dropped by 46 cents from March ― $7.13 per bushel to $6.67. The soybean price also fell, sinking 40 cents to $14.20 per bushel in April.

Alfalfa hay dropped by $4 to $215.

Read the report here.

The milk-feed ratio is a rough measure of dairy profitability. It represents the pounds of 16-percent mixed dairy feed equal in value to 1 pound of whole milk. Therefore, with a 1.56 ratio in April, a dairy producer could buy 1.56 pounds of feed for every 1 pound of milk sold.

Some people question how valid the USDA’s milk-feed ratio is. See this story. But the USDA has been using the same formula for years, comparing the same commodities. Therefore, it can serve as a relative measure for comparing different points in time.

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