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

Mr. Alex Tebbe, Graduate Research Associate, Department of Animal Sciences, The Ohio State University

Milk Prices

In the last issue of Buckeye Dairy News, the September Class III price closed at $16.63/cwt and then was projected to drop a mere 3¢/cwt in October. The Class III price for October actually closed much lower than expected at $14.82/cwt. The advanced Class III price for November is projected to remain relatively unchanged from October at $14.78/cwt and then rise over $2/cwt. to $16.88/cwt for the month of December. 

These current prices will average around $14.50/cwt for the 2016 year. The future, however, is looking bright for the year to come, despite the political and economic changes on-going in the US and the rest of the world.

Nutrient Prices

Nutrient prices continue to be low when looking at the 5-year averages. According to our price estimates of net energy lactation (NEL, $/Mcal) and metabolizable protein (MP, $/lb; MP is the sum of the digestible microbial protein and digestible rumen-undegradable protein of a feed), the year of 2016 is 3¢/Mcal and 2¢/lb, respectively, lower than since 2011 (13¢/Mcal and 43¢/lb, respectively).

As in previous issues, these feed ingredients were appraised using the software program SESAME™ developed by Dr. St-Pierre at The Ohio State University to price the important nutrients in dairy rations, to estimate break-even prices of all commodities traded in Ohio, and to identify feedstuffs that currently are significantly underpriced as of November 28, 2016. 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.  For MP, its current price ($0.37/lb) has decreased slightly from September’s issue ($0.52/lb) in response to a high yielding 2016 harvest. The cost of NEL, e-NDF, and ne-NDF are nearly identical to last month at 11¢/lb, 5¢/lb, and -13¢/lb (i.e. feeds with a significant content of non-effective NDF are priced at a discount), respectively.

To estimate the cost of production at these nutrient levels, I used the Cow-Jones Index with a cow milking 70 lb/day at 3.7% fat and 3.1% protein eating 50 lb/day of DM. In this model, the average income over nutrient costs (IONC) for September’s issue were estimated at $9.49/cwt and $9.94/cwt for a cow milking 85lb/day and eating 56 lb of DM. These IONC were calculated under the combination of low nutrient prices and decent milk prices and should be highly profitable. Milk price has decreased slightly since, and in this issue, our 70lb/day and 85lb/day cows are estimated to be making less at $8.05/cwt and $8.46/cwt., respectively, which still should be profitable.

Table 1. Prices of dairy nutrients for Ohio dairy farms, November 28, 2016.

Economic Value of Feeds

Results of the Sesame analysis for central Ohio on November 28, 2016 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 price. One must remember that Sesame compares all commodities at one point in time, mid November 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, November 28, 2016. 

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 or in other words moved a column to the right since the last issue are red. Conversely, feedstuffs that have moved to the left (i.e., decreased in price) are green.

Table 3. Partitioning of feedstuffs, Ohio, November 28, 2016.


At Breakeven


Bakery byproducts

Alfalfa hay – 40% NDF

Beet pulp

Corn, ground, dry

Canola meal

Blood meal

Corn silage

Gluten meal

41% Cottonseed meal

Distillers dried grains

Soybean meal - expeller

Citrus pulp

Feather meal

48% Soybean meal

Fish meal

Gluten feed

Whole cottonseed




Soybean hulls

Meat meal

Wheat bran

44% Soybean meal

Wheat middlings


Whole, roasted soybeans

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 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 NEL and MP content.


For those of you who use the 5-nutrient group values (i.e., replace metabolizable protein by rumen degradable protein and digestible rumen undegradable protein), see Table 4.

Table 4. Prices of dairy nutrients using the 5-nutrient solution for Ohio dairy farms, November 28, 2016.