After taking a step backward last month, the December milk-feed ratio has regained a little strength and taken a small step forward to 2.45. That’s an increase of 0.02 from the November ratio, which was revised up to 2.43. The December ratio however, is still 0.54 less than a year ago.
USDA’s revision to the November ratio was a welcome change. The November ratio was originally reported as 2.39 which was a drop of 0.08 from October and ended two months of incremental increases. With the revision, the drop in the ratio from October to November was cut in half to 0.04. The main reason for the change was a 10-cent per hundredweight increase in the revised all-milk price used in the calculation.
An increase in the all-milk price is the main fuel for the upward progress of the milk-feed ratio in December, too.
The USDA calculates the milk-feed ratio by dividing the average feed price into the current milk price.
The December all-milk price used in the calculation was $11.90 per hundredweight. That is just 10 cents less than the all-milk price used to calculate the November ratio, and $1.60 less than a year ago.
The price for corn and soybeans used in the December calculation each increased by 2 cents to reach $2.29 per bushel and $5.48 per bushel respectively. The price per ton of baled alfalfa hay declined by $1 to $100 per ton. All prices are in comparison to prices used in the November calculation.
Conditions are favorable for milk production whenever the ratio exceeds 3.0.