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

Source: Ohio State University Extension, 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 June and July were $24.34 and $24.47/cwt, respectively. Class III milk closing price for June was $24.33/cwt, with protein and butterfat prices at $3.42 and $3.33/lb, respectively. The component price for protein is unchanged from the May issue, with butterfat price increasing as we approach Autumn. For this issue, the Class III future for August is $20.67/cwt, continuing to further decrease in September to $20.21/cwt.

Nutrient prices

It can be helpful to compare the prices in Table 1 to the 5-year averages. Since the May issue, the price of metabolizable protein (MP) has decreased by about 13%, alongside a slight increase in the price of net energy for lactation (NE_L). The current price of NE_L and MP are about 75 and 12% higher than the 5-year averages ($0.08/Mcal and $0.41/lb, respectively), and physically effective neutral detergent fiber (pe-NDF) is about 5% lower than the 5-year average ($0.09/lb). These nutrient costs are reflective of recent trends in ingredient costs, largely following swings in the cost of protein and energy ingredients.

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 July issue, the income over nutrient cost (IONC) for cows milking 70 and 85 lb/day is about $15.70 and $16.28/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, July 22, 2022.

Economic Value of Feeds

Results of the Sesame analysis for central Ohio on July 22, 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 in this issue.

Table 3. Partitioning of feedstuffs in Ohio, July 22, 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.