A decline in the cost of feed during August nudged the milk-feed price ratio past the 3.0 mark. According to the USDA’s “Agricultural Prices” report released Aug. 31, the August ratio advanced to 3.08 – 0.15 points above the July ratio. That also is 0.15 points higher than a year ago.
In its report, the USDA also hiked the July ratio to 2.93 – an increase of 0.03 points versus the 2.9 figure reported during July. The revision was due to a 4-cent drop and a 19-cent drop in the price of a bushel of corn and soybeans, respectively.
During August, the all-milk price used to calculate the ratio slid 10 cents to $14.70 per hundredweight. That also is 20 cents less than a year ago.
Corn and soybean prices also fell during August. The corn price was down 22 cents per bushel – to $1.89. That also is 45 cents less than a year ago. The soybean price fell 56 cents to $6.09 per bushel. That also is 74 cents less than August 2004.
Baled alfalfa hay was unchanged at $109 per ton during August. However, that is $9.70 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. That means that during August, a dairy producer could buy 3.08 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.