Lower milk prices in December caused the milk-feed profitability ratio to drop.
According the “Agricultural Prices” report released Monday by the U.S. Department of Agriculture, the preliminary ratio in December was 1.65, down from November’s adjusted figure of 1.73.
The all-milk price used in determining the ratio for December dropped to $21.10 per hundredweight, compared to $22 in November.
Feed prices, meanwhile, were fairly stable from one month to the next. Corn was $7.01 per bushel in December, compared to $7.02 in November; soybeans were $14.70 compared to $14.30, and alfalfa hay was $217 a ton compared to $215 a month earlier.
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.