Although it’s moving at a snail’s pace, the milk-feed price ratio improved in May. According to the USDA’s announcement of feed-price ratios on May 31, the ratio inched ahead 0.02 points to 2.52. One year ago the ratio was 2.32.
Although milk prices ramped up in May, feed prices were not to be outdone. That was particularly true for baled alfalfa hay, which posted a $16 increase in May. The price per ton was $144 in May compared to $128 in April. Baled alfalfa hay was $117 in May 2006.
The corn price used to calculate the May ratio increased 9 cents, which put it at $3.48 per bushel. The soybean price used in the calculation was $7.15, a gain of 27 cents per bushel. One year ago, the prices for corn and soybeans were $2.17 and $5.68, respectively.
Meanwhile, the all-milk price used to calculate the May ratio increased $1.20 to $17.80. One year ago, the all-milk price was $11.90.
The USDA revised the April milk-feed ratio, decreasing it from 2.54 to 2.50. It also tacked on gains to April corn and soybean prices, as well as the all-milk price used in the April calculation. Corn advanced 19 cents to $3.39. Soybeans increased from $6.81 to $6.88. The April all-milk price improved 20 cents to $16.60.
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 2.52 ratio in May, a dairy producer could buy 2.52 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.