Milk-feed profitability ratio drops again

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For the second straight month, the USDA’s milk-feed profitability ratio dropped.

According to the Agricultural Prices report released Thursday, the preliminary milk-feed ratio for January was 1.58, down from December’s adjusted figure of 1.66. However, it still remains above last July’s historic low of 1.34.

The all-milk price used in USDA’s calculations was down 90 cents from last month at $20.00 per hundredweight. 

Feed prices also weighed on the milk-feed ratio. Corn was $6.98 per bushel in January, compared to $6.87 in December. Alfalfa hay saw no change in pricing from last month’s report, remaining at $217 per ton. Soybean prices dropped by 20 cents to $14.10 per bushel.

Some people question the validity of the milk-feed ratio. See this story. But the USDA has been using the same formula for years, comparing the same commodities. Therefore, it can serve as a relative measure for comparing different points in time.

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