Milk prices are approaching break-even territory for many dairy producers.
On Friday, the U.S. Department of Agriculture pegged the January all-milk price at $16.50 per hundredweight — up $3.20 from the same month a year ago.
The USDA used the figure to compute an increasingly favorable milk-feed ratio of 2.45. A year ago, the ratio stood at 1.60.
The current ratio of 2.45 means that a dairy producer can buy 2.45 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.
Improvements in the January milk-feed ratio came about as a result of higher milk prices and generally lower feed costs.
The corn price used to calculate the ratio was $3.45 per bushel, down 14 cents from December. The price of baled alfalfa hay rose slightly to $113 per ton. Soybeans dropped 31 cents per bushel to $9.49.
Source: USDA “Agricultural Prices” report