The milk-feed price ratio ends the year below 2.0. For December it will be 1.97, a 0.05-point loss versus November. The ratio also is 0.88 point less than a year ago when it was 2.85.
The USDA announced the December ratio in its Dec. 30 “Agricultural Prices” report. In the report, the agency also revised its preliminary November milk-feed ratio, dropping it from 2.13 to 2.02.
Further retraction to 1.97 for December is the result of a $1.20 drop in the all-milk price used by the USDA to calculate the ratio. The report lists the all-milk price at $15.90 per hundredweight. That also is down considerably from a year ago when the price was $21.50.
Meanwhile, feed prices used to calculate the ratio also declined. The USDA used a corn price of $4.05 per bushel to calculate the December ratio. That is 21 cents less than the November corn price. However, it is 28 cents higher than a year ago. The price of soybeans fell from $9.38 to $8.97 per bushel — a 41-cent loss. That also is $1.03 less than a year ago when it was $10. Meanwhile, baled alfalfa hay declined $8 to $155 per ton. One year ago it was $135 per ton.
A ratio of 1.97 means that a dairy producer can buy 1.97 pounds of feed for every pound of milk sold. Whenever the ratio meets or exceeds 3.0, it is considered profitable to buy feed and produce milk.
For more from the report, click here.