A 50-cent loss in the all-milk price coupled with higher feed prices lowered the October milk-feed price ratio to 3.05. According to the USDA’s announcement of feed-price ratios on Oct. 31, that is a loss of 0.12 points versus the revised September ratio of 3.17. It also breaks the ratio’s three-month stint at 3.17. Despite the loss, the October ratio is still 0.52 points higher than a year ago when it was 2.53.
The USDA used an all-milk price of $21.20 to calculate the October ratio. Although that is a dip of 50 cents versus September, it is still $7.60 higher than a year ago.
The USDA raised feed prices, except for corn, which was unchanged at $3.29 per bushel. Baled alfalfa hay increased $2 versus September, which put it at $137 per ton. One year ago, corn was $2.55 per bushel and alfalfa hay was $113.
Meanwhile, the price of soybeans increased 40 cents to $8.58 per bushel. That is $3.06 more 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. Therefore, with a 3.05 ratio in October, a dairy producer could buy 3.05 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.