Hampered by low milk prices and rising feed cost, the milk-feed price ratio — the USDA’s measure of producer profitability — dropped to 2.38 during July. That represents a decline of 0.18 points from the revised June ratio of 2.56. The monthly estimate also is down 1.22 points compared to year-ago levels.

The USDA calculates the value by dividing the average feed price into the current milk price.

The July all-milk price used in the calculation was $11.20 per hundredweight —$5.00 less than a year ago.

Conversely, the price for both corn and soybeans used in the calculation increased. The USDA used a per-bushel price of $2.07 for corn and $5.50 for soybeans in its calculation — an increase of 20 cents and 71 cents, respectively, compared to year-ago prices. On a month-to-month basis, corn and soybeans climbed 10 cents and 62 cents, respectively.

However, the price per ton of baled alfalfa hay decreased $3.00 — to $102 per ton — compared to July 2001. There was no price change for alfalfa on a month-to-month basis.

Conditions are favorable for milk production whenever the ratio exceeds 3.0.

USDA