Dairy profitability slides backwards

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Just when it looked like things were getting better — milk prices going up and feed prices coming down — things have taken a turn for the worse.

The all-milk price fell to $15.90 per hundredweight in February, according to the USDA’s “Agricultural Prices” report on Friday. That is 20 cents lower than January’s all-milk price of $16.10.

The prospect for higher milk prices grows dimmer with further retreats in the cheese price. On Tuesday, cheese blocks closed at $1.34 per pound on the Chicago Mercantile Exchange. In mid-December, the block price stood at $1.70.

The milk-feed profitability ratio in February ended up at 2.38, signaling a downward trend from December when the ratio stood at 2.42. In January, the ratio was first reported at 2.45, but later revised to 2.31.

The milk-feed ratio had improved for six consecutive months from July through December, before reversing course.

The current ratio of 2.38 means that a dairy producer can buy 2.38 pounds of feed for every pound of milk sold. Whenever the ratio meets or exceeds 3.0, it is considered profitable to buy feed and produce milk.

The corn price used the calculate February’s ratio was $3.45 per bushel, down 21 cents from January. The price of baled alfalfa hay dropped slightly to $111 per ton from $113 per ton in January. Soybeans dropped 39 cents per bushel to $9.40.

Source: USDA “Agricultural Prices” report


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