According to the “Agricultural Prices” report from USDA on Thursday, the preliminary milk-feed ratio for February is 1.54, down from January’s 1.57.
It’s the third straight month that the ratio has dropped, indicating decreased profitability.
The all-milk price used in calculating the ratio dropped from $19.90 in January to $19.40 in February. Meanwhile, feed costs stayed pretty much the same ― corn dropped 7 cents from January to $6.89 per bushel in February; alfalfa hay rose $1 to $218 per ton in February, and soybeans dropped 10 cents to $14.20 per bushel in February.
Some people question the validity of the milk-feed ratio. 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.