The USDA’s measure of producer profitability — the milk-feed price ratio — continues to reflect weak milk prices.
The USDA announced the February milk-feed ratio at 2.37 — a decrease of 0.04 from January, which was revised down 0.06 to 2.41. Because of the January revision, the February ratio marks the fourth month in a row that the ratio has headed south. The February ratio also is 0.63 below a year ago. Conditions are favorable for milk production whenever the ratio exceeds 3.0.
The USDA calculates the milk-feed ratio by dividing the average feed price into the current milk price.
The February all-milk price used in the calculation was $11.50 per hundredweight. That is 20 cents less than the all-milk price used to calculate the January ratio, and $1.60 less than a year ago.
On the other hand, the prices for corn and soybeans used in the February calculation received a modest boost. The corn price increased 2 cents — to $2.35 per bushel — compared to the price used in the January calculation. The soybean price increased a nickel — to $5.57 per bushel. However, the price per ton of baled alfalfa hay decreased $1.20 — to $96.40 per ton.
A combination of low milk-feed ratios and weak milk prices has historically resulted in decreased cow numbers, and consequently, a slowdown in milk production, says Bob Cropp, dairy economist and professor emeritus at the University of Wisconsin. However, with neither of these changes evident in the January “Milk Production” report, released Feb. 14, you will have to wait a few more months for any improvement in milk prices.