Milk-feed ratio still below 3.0

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The milk-feed price ratio continued to hover below 3.0 during July. According to the USDA’s “Agricultural Prices” report released July 29, the July ratio came in at 2.90 – a mere 0.01-point gain from the revised June ratio of 2.89. That also is 0.05 points less than the July 2004 ratio of 2.95.

The revision to the June ratio was due to a 10-cent decrease in the all-milk price and a 14-cent decrease and 2-cent increase in the price of a bushel of soybeans and corn, respectively.

During July, the slight increase in the ratio was the result of a 30-cent gain in the all-milk price – putting it at $14.80 per hundredweight. In addition, corn prices were up 12 cents per bushel to hit $2.15. Soybean prices advanced 26 cents to reach $6.84 per bushel. Although corn and soybean prices advanced on a month-to-month basis, they are still lower than a year ago when corn was $2.51 per bushel and beans were $8.46 per bushel.

Baled alfalfa hay declined $3 to $109 per ton during July. That also is $10.60 more per ton 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. That means that during July, a dairy producer could buy 2.90 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.

USDA



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