Milk Prices, Costs of Nutrients, Margins, and Comparison of Feedstuffs Prices

April F. White, Graduate Research Associate, Department of Animal Sciences, The Ohio State University

Milk Prices

In the last issue, the Class III futures for April and May were at $23.29/cwt and $23.50/cwt, respectively. Class III milk closed higher than predicted for May at $24.42/cwt, with protein and butterfat prices at $3.42/lb and $3.14/lb, respectively. The component price for protein is substantially increased over the March issue, exceeding the price per pound of butterfat. The improved component prices should help to offset increased feed costs due to changes in global feed ingredient markets. For this issue, the Class III future for June is $24.34/cwt, continuing with a slight increase in July to $24.47/cwt.

Nutrient Prices

It can be helpful to compare the prices in Table 1 to the 5-year averages. The current price of net energy for lactation (NE_L) and metabolizable protein (MP) are about 61 and 30% higher than the 5-year averages ($0.08/Mcal and $0.41/lb, respectively), and physically effective neutral detergent fiber (pe-NDF) is about 18% higher than the 5-year average ($0.09/lb). These nutrient costs are reflective of recent trends and the increased cost of protein sources continuing through the start of summer.

To estimate profitability at these nutrient prices, the Cow-Jones Index was used for average US cows weighing 1500 lb and producing milk with 3.9% fat and 3.2% protein. For the May issue, the income over nutrient cost (IONC) for cows milking 70 lb/day and 85 lb/day is about $15.72 and $16.33/cwt, respectively. As a word of caution, these estimates of IONC do not account for the cost of replacements or dry cows, or for profitability changes related to culling cows.

Table 1. Prices of dairy nutrients for Ohio dairy farms, May 26, 2022.

Economic Value of Feeds

Results of the Sesame analysis for central Ohio on May 26, 2022 are presented in Table 2. Detailed results for all 26 feed commodities are reported. The lower and upper limits mark the 75% confidence range for the predicted (break-even) prices. Feeds in the “Appraisal Set” were those for which we didn’t have a local price or were adjusted to reflect their true (“Corrected”) value in a lactating diet. One must remember that SESAME™ compares all commodities at one specific point in time. Thus, the results do not imply that the bargain feeds are cheap on a historical basis. Feeds for which a price was not reported were added to the appraisal set this issue.

For convenience, Table 3 summarizes the economic classification of feeds according to their outcome in the SESAME™ analysis. Feedstuffs that have gone up in price based on current nutrient values or in other words moved a column to the right since the last issue are in oversized text. Conversely, feedstuffs that have moved to the left (i.e., decreased in value) are undersized text. These shifts (i.e., feeds moving columns to the left or right) in price are only temporary changes relative to other feedstuffs within the last two months and do not reflect historical prices. Feeds added to the appraisal set were removed from this table.

Table 3. Partitioning of feedstuffs in Ohio, May 26, 2022.

As coined by Dr. St-Pierre, I must remind the readers that these results do not mean that you can formulate a balanced diet using only feeds in the “bargains” column. Feeds in the “bargains” column offer a savings opportunity, and their usage should be maximized within the limits of a properly balanced diet. In addition, prices within a commodity type can vary considerably because of quality differences as well as non-nutritional value added by some suppliers in the form of nutritional services, blending, terms of credit, etc. Also, there are reasons that a feed might be a very good fit in your feeding program while not appearing in the “bargains” column. For example, your nutritionist might be using some molasses in your rations for reasons other than its NE_L and MP contents.