The milk-feed price ratio retracted in October, according to the USDA’s announcement of feed-price ratios on Oct. 31. The October milk-feed ratio is 2.42, down 0.16 points versus the September ratio of 2.58. The ratio also is exactly one point less than a year ago.
In October, the all-milk price used to calculate the ratio advanced 40 cents to $13.30 per hundredweight. However, that is still $2.30 less than a year ago.
Feed cost also increased during October. The corn price climbed 52 cents to $2.72 per bushel. Soybeans increased 22 cents to $5.46 per bushel. However, the price of baled alfalfa hay remained unchanged at $112 per ton. One year ago, the prices of corn, baled alfalfa hay and soybeans stood at $1.82, $105 and $5.67, respectively.
The USDA issued a minor revision to the September ratio, increasing it a mere 0.01 points to 2.58. The September all-milk, corn and soybean prices also were revised. The September all-milk price increased 30 cents, putting it at $12.90 per hundredweight. On the feed side of the equation, corn saw a 9-cent gain and soybeans saw a 12-cent gain, which put them at $2.20 and $5.24, respectively.
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 2.42 ratio in October, a dairy producer could buy 2.42 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.