A higher all-milk price and lower corn, hay and soybean prices pushed the milk-feed price ratio to 3.36 for September. That is 0.3 points higher than the revised August ratio and 0.14 points more than the September 2004 ratio, according to the USDA’s “Agricultural Prices” report released Sept. 29.
The report also included a slight downward revision to the August ratio. The August ratio now stands at 3.06 – a decrease of 0.02 points versus the ratio reported during August. The revision was due to a 10-cent increase in the all-milk price and a 6-cent increase in the prices of both corn and soybeans.
During September, feed prices retracted while the all-milk price used to calculate the ratio continued to grow. The all-milk price advanced 30 cents to $15.10 per hundredweight. However, that is 40 cents less than a year ago.
Meanwhile, corn and soybean prices are lower on a month-to-month and yearly basis. The corn price fell 22 cents per bushel – to $1.73. That also is 47 cents less than a year ago. The soybean price fell 74 cents to $5.41 per bushel. That also is 42 cents less than September 2004.
Baled alfalfa hay tumbled $2 – to $107 per ton during September. However, that is still $9.50 more per ton 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 3.36 ratio in September, a dairy producer could buy 3.36 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.