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

Dr. Normand St-Pierre, Extension Dairy Management Specialist, Department of Animal Sciences, The Ohio State University

The Good Side: Milk Prices

As I write this column in late June, the Class III futures have just closed at $21.36/cwt for June and $21.72/cwt for July.  Last month, the Class III milk settled at $22.57/cwt, an increase of $4.05 over May of last year.  For the balance of 2014, the Class III futures are averaging $21.31/cwt.  On the feed side, corn has come down from a peak this spring with the Chicago Mercantile Exchange July futures now at about $4.43/bu, with no noticeable changes all the way to next December.  Soybean meal futures for July are currently trading around $461/ton, steadily dropping to $395/ton by next December.  Using prevailing cash prices for feeds, we estimate that the feed costs to produce a hundredweight of milk in Ohio are in the $10.00 to $10.50/cwt range.  This leaves milk margin over feed costs somewhere between $12.00 and $14.00/cwt, resulting in net margins between $5.00 and $6.00/cwt.  At this rate, a black and white cow producing 22,000 lb/year would net between $1000 and $1200 for the average Ohio dairy producer, or 2.5 to 3 times what is considered an average year. 

The Not so Good Side: Nutrient Prices

As usual in this column, I used the software SESAME™ that we developed at Ohio State to price the important nutrients in dairy rations to estimate break-even prices of all major commodities traded in Ohio and to identify feedstuffs that currently are significantly underpriced as of March 17, 2014.  Price estimates of net energy lactation (NEL, $/Mcal), metabolizable protein (MP, $/lb – MP is the sum of the digestible microbial protein and digestible rumen-undegradable protein of a feed), non-effective NDF (ne-NDF, $/lb), and effective NDF (e-NDF, $/lb) are reported in Table 1. Compared to its historical 6-year average of about 10¢/Mcal, NEL is still priced above average at 12.9¢/Mcal.  This is important because a cow producing 70 lb/day of milk requires in the neighborhood of 33 Mcal/day of NEL.  Thus, although corn prices are considerably less than at this time last year, pricing of the energy in feeds is still above the 6-year average, but not by as much as what it was last year.  For MP, its current price (65.4¢/lb) is more than 2 times greater than its 6-year average (28¢/lb).  Thus, we are currently in a period of slightly above average energy prices, but considerably above average protein prices.  The cost of ne-NDF is currently discounted by the markets (i.e., feeds with a significant content of non-effective NDF are priced at a discount), and the discount of -17.7¢/lb is much above the 6-year average (-9¢/lb).  It is summer time, a period when high fiber byproducts are typically a bargain.  Meanwhile, unit cost of e-NDF is more than 3 times its 6-year average, being priced at 10.6¢/lb compared to the 6-year average (3.3¢/lb).  Fortunately, a dairy cow requires only 10 to 11 lb of effective NDF, so the daily cost of providing this nutrient is about $1.13/cow/day (i.e., 10.5 lb × $0.106/lb).  So from a historical basis (i.e., using averages from the last 6 years as the bases of comparison), feeds and their nutrients are expansive but not as much as last year.

Table 1.  Prices of dairy nutrients for Ohio dairy farms,
mid-June 2014.
Table 1

Economic Value of Feeds

Results of the Sesame analysis for central Ohio in mid June are presented in Table 2. Detailed results for all 27 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 price.  One must remember that Sesame compares all commodities at one point in time, mid June in this case.  Thus, the results do not imply that the bargain feeds are cheap on a historical basis.

Table 2.  Actual, breakeven (predicted) and 75% confidence limits of 27 feed commodities used on Ohio dairy farms, mid-June 2014.
Table 2

For convenience, Table 3 summarizes the economic classification of feeds according to their outcome in the Sesame analysis.

Table 3. Partitioning of feedstuffs, Ohio, mid-June 2014.


At Breakeven


Alfalfa hay – 40% NDF
Bakery byproducts
Corn, ground, shelled
Corn silage
Distillers dried grains
Feather meal
Gluten feed
Soybean meal – expeller
Wheat middlings

41% Cottonseed meal
Gluten meal
Meat meal

Beet pulp
Blood meal
Brewers grains, wet
Canola meal
Citrus pulp
Cottonseed, whole
Soybean hulls
44% soybean meal
48% soybean meal
Roasted soybeans
Wheat bran

As usual, 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 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.


A few people have asked that I publish the results using the 5 nutrient groups (i.e., replace metabolizable protein by rumen degradable protein and digestible rumen undegradable protein).  A table containing these results is provided herewith.

Table 4. Prices of dairy nutrients using the 5-nutrient solution
for Ohio dairy farms, mid-June 2014.
Table 4