Milk-feed price ratio hasn't been this high since March 2011

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Things are getting better!

For the first time in 31 months, the milk-feed price ratio has settled above 2.0

According to the “Agricultural Prices” report from USDA, released Thursday afternoon, the preliminary ratio for October is 2.09 ― up significantly from 1.88 in September.

It's the highest the ratio has been since March 2011 when it reached 2.14.

The improvement comes as a result of lower feed prices. The corn price used to calculate the ratio fell from $5.40 per bushel in September to $4.49 in October. Soybeans fell in price from $13.30 per bushel to $12.60 over the same time period.

The milk price, meanwhile, rose slightly from $20.10 per hundredweight in September to $20.30 in October.

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 2.09 ratio in October, a dairy producer could buy 2.09 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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California  |  November, 04, 2013 at 10:04 PM

Terrific News, finally, too bad the cows are gone and the debt remains, we kept saying it was going to get better. It would have been nice to be able to at least pay the bank after a lifetime of work for my dad. Good thing we had all that productive dialogue going on with our representatives and coop leaders and that they magically were able to make the corn market come down for us. Oh yeah, it wasn't them, never mind, form another committee, appoint some more people to study a problem. Hello? Anybody see me? There's a bunch of us with our mangled feet sticking out from under the bus.

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