A slight decrease in feed cost nudged the milk-feed price ratio forward during January.
The USDA announced the January milk-feed ratio at 2.47. That’s an increase of 0.04 from the December ratio, which was revised down to 2.43. Because of the December revision, the small gain during January marks the first uptick in the ratio since October. However, the ratio is still 0.56 below a year ago.
The USDA calculates the milk-feed ratio by dividing the average feed price into the current milk price.
The January all-milk price used in the calculation was $11.80 per hundredweight. That is 10 cents less than the all-milk price used to calculate the December ratio, and $1.60 less than a year ago.
Likewise, the prices for corn, soybeans and alfalfa used in the January calculation decreased. The corn price dropped a nickel — to $2.27 per bushel — compared to the price used in the December calculation. The soybean price decreased 8 cents — to $5.38 per bushel. The price per ton of baled alfalfa hay decreased $2.40 — to $97.60 per ton.
The milk-feed ratio is expected to remain steady during the next few months. Conditions are favorable for milk production whenever the ratio exceeds 3.0.