November 5, 2013
US October milk-feed price ratio up to 2.09
The US milk-feed ratio for October is 2.09, up significantly from 1.88 in September and for the first time in 31 months, it has settled above 2.0, according to the USDA's "Agricultural Prices" report.
It's the highest the ratio has been since March 2011 when it reached 2.14. The improvement comes as a result of lower feed prices. The corn price used to calculate the ratio fell from US$5.40/bushel in September to US$4.49 in October. Soy fell in price from US$13.30/bushel to US$12.60 over the same time period.
The milkprice, meanwhile, rose slightly from US$20.10/hundredweight in September to US$20.30 in October.
The milk-feed ratio is a rough measure of dairy profitability. It represents the pounds of 16-% mixed dairy feed equal in value to one pound of whole milk. Therefore, with a 2.09 ratio in October, a dairy producer could buy 2.09 pounds of feed for every one pound of milk sold.
The USDA has been using the milk-feed ratio formula for years, comparing the same commodities, despite some questions on its validity. Therefore, it can serve as a relative measure for comparing different points in time.