Dairy Dollars: Feed Prices, Nutrient Costs, and Milk Income

Source: Ohio State University Extension

Andie Majewski, Graduate Teaching Associate and Dr. Kirby Krogstad, Assistant Professor, Department of Animal Sciences, The Ohio State University

Feed is the largest cost of production on dairy farms. Because of this, it is critical to know the regional economic value of feeds and their predicted change in prices. Additionally, the costs of feedstuffs directly impact the producers feed nutrient prices and income over feed cost.

Figure 1. Actual and predicted cost of feedstuffs with 75% confidence interval (CI) of 21 feed commodities fed on Ohio Dairy Farms (November 18, 2024). Feedstuffs that are priced above the upper prediction price limit are overpriced (red bars). Feedstuffs that fall within the upper and lower limits of the predicted prices are breakeven feeds (gray bars). Feedstuffs that are priced below the lower prediction price limit are considered a bargain (green bars).

Economic Value of Feeds

Figure 1 displays the results for the 21 reported commodities for Ohio. These results were produced by SESAME^TM for the central Ohio region on November 18, 2024. In simple terms, Figure 1 represents the bargain feedstuffs (green), the overpriced feedstuffs (red), and the breakeven feedstuffs (gray). In November, corn-based feeds were generally a bargain, while other byproducts, such as canola meal and blood meal, were not. Remember, these prices and estimates are from a point in time and that their economic classification may change. While it is important to consider the costs of feedstuffs when formulating a ration, the prices are not the only thing that should be considered. Some of the “bargain” priced commodities may have a place in a dairy cattle ration; however, it is important to understand the investment opportunity that may arise by using “overpriced” feedstuffs.

The appraisal set (Table 1) predicts the prices for the commodities that did not have a current local price. These commodity prices were predicted by SESAME^TM and represent the commodity prices at one specific point in time and are therefore subject to change. These values may be used as a benchmark if you’re considering purchasing these ingredients for your dairy farm.

Table 1. Estimated Feedstuffs Prices Not Reported for Ohio, November 18, 2024.¹ 

¹CI= confidence Interval, NDF = neutral detergent fiber, CP = crude protein, and RFV = relative feed value.

Feed Nutrient Prices

The cost net energy for lactation (NE_L) decreased about 56% from our previous report in September (Table 2). Previously, the NE_L had progressively increased for the past 6 months of 2024. The cost of metabolizable protein (MP) increased by 8.6%, and the cost of physically effective fiber (e-NDF) increased by about 4.5%.

Table 2. Prices of Nutrients for Ohio Dairy Farms, November 18, 2024, Compared to September 24, 2024.

Milk and Milk Component Prices

In the month of November, the ending Class III milk price was $22.85 /cwt. November’s milk fat and protein prices were $3.09 and $3.32/lb, respectively. Fat decreased about $0.47/lb from September, while protein increased from its prior price of $2.18/lb in September. The Class III milk price is predicted to increase slightly in the next month to $23.09/cwt.

The profitability of milk production with the nutrient costs displayed in Table 2 is estimated using the Cow-Jones Index. The prediction formula uses a 1500 lb cow producing milk with 4.09% fat and 3.22% protein. This month, the income over nutrient cost (IONC) for cows milking 85 and 70 lb/day is about $18.61 and $18.17/cwt, respectively. Both estimates are expected to be profitable, despite not including factors such as replacement and cull cows in the herd. 

Table 3. Prices of milk and milk components, sourced from the Federal Marketing Order 33, for Ohio dairy farms, November 18, 2024, compared to September 24, 2024.