The milk-feed price ratio moved 0.07 points lower in January, according to the USDA’s announcement of feed-price ratios on Jan. 31. That puts the ratio at 2.34. One year ago the ratio was 3.17.
The all-milk price used to calculate the January ratio advanced, but so did feed prices. Milk was priced at $14.40 per hundredweight, a gain of 30 cents versus December. However, that’s a dime shy of the all-milk price used in January 2006.
The corn price used to calculate the ratio climbed 22 cents to $3.23 per bushel. Soybeans increased 24 cents to $6.42 per bushel. Baled alfalfa hay advanced $3 to $115 per ton. Feed was certainly cheaper one year ago. The prices for corn and soybeans were $2.00 and $5.87, respectively. Baled alfalfa hay was $96.40 per ton.
The USDA issued a revision to the December milk-feed ratio, decreasing it from 2.42 to 2.41. The December all-milk price inched down a dime to $14.10. December corn remained unchanged at $3.01, but soybeans increased 4 cents to $6.18. Baled alfalfa hay was unchanged at $112 per ton.
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 2.34 ratio in January, a dairy producer could buy 2.34 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.