August's all-milk price a record $22

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The all-milk price has hit a new record high. 

According to the USDA’s “Agricultural Prices” report on Wednesday, the all-milk price hit $22 per hundredweight in August, barely edging the previous record. July’s all-milk price was originally reported higher than that, but it was a preliminary number and USDA revised it down to $21.90 in the latest report.

Despite the record-high milk price in August, the milk-feed profitability ratio reported by USDA — 1.89 — was less than stellar. It is not until the ratio reaches 3.0 that it is considered profitable to buy feed and produce milk.

“Record-high milk prices are nice, but with the higher feed costs, profitability is still being limited,” says Greg Scheer, dairy analyst with Doane Advisory Services in St. Louis.

USDA used the following feed costs to calculate August’s milk-feed ratio: corn, $6.62 per bushel; soybeans, $12.90 per bushel, and alfalfa hay, $191 per ton. The hay price may, in fact, be an underestimation since many dairy farmers have to pay $250 to $325 per ton for premium alfalfa hay with a relative feed value of 170 to 185.

According to the Nutritionist e-Network, a sister publication of Dairy Herd Management, the price of fine-ground or steam-rolled corn used in dairy rations has gone up 65 to 80 percent in the last year, depending on what part of the country a producer is from. Premium alfalfa hay has gone up 50 to 70 percent.

If it weren’t for high feed costs, producers would be in pretty good shape.

Scheer says income over feed cost, using the same commodity feed numbers that USDA used in its report on Wednesday, is $10.36 per hundredweight, which is about $1.25 higher than the 10-year average.

 

 

 



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Philip Lewis    
Salem, New York  |  September, 01, 2011 at 09:22 AM

This is good news ... the dairy industry needs years of profitability in order to recover from years of evil pricing.


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