A higher milk price and lower feed prices once again propelled the milk-feed price ratio higher. The ratio advanced to 3.44 for October, according to the USDA’s “Agricultural Prices” report released Oct. 31. That is 0.18 points higher than the revised September ratio and 0.17 points higher than a year ago.
The revised September ratio is 3.26 – a decrease of 0.1 points versus the ratio reported at the end of September. The downward revision is the result of a 20-cent increase in the all-milk price coupled with a 17-cent and 36-cent increase in the prices of corn and soybeans, respectively. The price of baled alfalfa hay was unchanged.
Despite the increase in September corn and soybean prices, feed prices retracted during October. The corn price fell 16 cents per bushel – to $1.74. That also is 40 cents less than a year ago. The soybean price fell 33 cents to $5.44 per bushel. That also is 12 cents less than October 2004. Baled alfalfa hay fell $1 – to $106 per ton. However, that is still $6 more per ton than a year ago.
The all-milk used to calculate the ratio increased 10 cents – to $15.40 per hundredweight. However, that is 20 cents less than a year ago.
The milk-feed ratio represents the pounds of 16-percent mixed dairy feed equal in value to 1 pound of whole milk. Therefore, with a 3.44 ratio in October, a dairy producer could buy 3.44 pounds of feed for every 1 pound of milk sold.
Whenever the ratio meets or exceeds 3.0, it is considered profitable to buy feed and produce milk.