Further decline in the all-milk price, coupled with rising feed cost, led the way to yet another decline in the milk-feed ratio. The May milk-feed ratio was announced at 2.33, a drop of 0.13 points compared to April and 0.6 points less than a year ago.
According to the USDA’s “Agricultural Prices” report released May 31, the May all-milk price was reported as $12 per hundredweight. That’s 10 cents less per hundredweight than April and $2.70 less than a year ago.
Meanwhile, May feed prices increased. Corn climbed 6 cents per bushel to reach $2.17. Baled alfalfa was up $8 to hit $118 per ton. Soybeans increased 10 cents to $5.62 per bushel. One year ago, the prices of corn, baled alfalfa hay and soybeans stood at $1.98, $116 and $6.21, respectively.
The April milk-feed ratio also was revised. The ratio was originally reported as 2.47. The May report lowered it only 0.01 points to 2.46. The April all-milk price, as well as corn, baled alfalfa hay and soybean prices were unchanged.
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 2.33 ratio in May, a dairy producer could buy 2.33 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.