Despite high milk prices, the milk-feed profitability index for November is none too rosy.
According to the “Agricultural Prices” report released Wednesday afternoon, the preliminary milk-feed ratio for November was 1.80, down slightly from a revised ratio of 1.82 for October. It’s not until the ratio reaches 3.0 that it is considered profitable to buy feed and produce milk.
The all-milk price used in November’s calculation was $19.90 per hundredweight. But high feed costs kept a lid on profitability.
The USDA used the following feed prices to calculate the November ratio: corn, $6 per bushel; soybeans, $11.50 per bushel, and alfalfa hay, $198 per ton. The hay price may, in fact be an underestimation, since many dairy farmers have to pay $265 per ton or more for premium alfalfa hay with a relative feed value of 170 to 185.
Source: USDA “Agricultural Prices” report, Nov. 30, 2011