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

In the last issue, the May Class III futures price was set at $14.44/cwt and forecasted to jump to $15.25/cwt in June. The May and June Class III prices actually closed slightly higher at $15.18 and $15.21/cwt, respectively. The Class III price future for July is slightly higher at $15.36/cwt. but is expected to take a large drop in August to $14.08/cwt.

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 many commodities traded in Ohio, and to identify feedstuffs that currently are underpriced as of July 25, 2018. 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.  

The current value of NEL and MP are nearly identical to May’s issue (9.0¢/Mcal and $0.40/lb, respectively). The price of e-NDF is about 4¢/lb higher than May, whereas ne-NDF is relatively unchanged from March (i.e., feeds with a significant content of non-effective NDF are priced at a discount).

To estimate the cost of production at these nutrient prices, I used the Cow-Jones Index for cows milking 70 lb/day or 85 lb/day at 3.7% fat and 3.1% protein. In the May issue, the average income over nutrient costs (IONC) was estimated to be $8.21/cwt for cows milking 70 lb/day and $8.61/cwt for cows milking 85 lb/day. For July, the IONC for our 70 lb/day and 85 lb/day cows are slightly higher than May at $8.41/cwt and $8.85/cwt, respectively. These IONC may be overestimated because they do not account for the cost of replacements or dry cows. Overall, IONC prices for July are slightly better than May but are still not great.

Table 1. Prices of dairy nutrients for Ohio dairy farms, July 25, 2018.

Economic Value of Feeds

Results of the Sesame analysis for central Ohio on July 25, 2018 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 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.

Table 2. Actual, breakeven (predicted) and 75% confidence limits of 27 feed commodities used on Ohio dairy farms, July 25, 2018.

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. These shifts (i.e., feeds moving columns to the left or right) in price are only temporary changes relative to other feedstuffs within the last two months and do not reflect historical prices.

Table 3. Partitioning of feedstuffs, Ohio, July 25, 2018.

Bargains At Breakeven Overpriced

Corn, ground, dry

Bakery byproducts

Alfalfa hay – 40% NDF

Corn silage

Beet pulp

Blood meal

Distillers dried grains

Feather meal

Mechanically extracted canola meal

Gluten feed

Soybean hulls

Citrus pulp

Gluten meal

48% Soybean meal

41% Cottonseed meal


Wheat middlings

Fish meal

Meat meal

Whole, roasted soybeans


Soybean meal - expeller


Solvent extracted canola meal

Whole cottonseed


44% Soybean meal




Wheat bran

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 NEL and MP contents.


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 the Table 4 below.

Table 4. Prices of dairy nutrients using the 5-nutrient solution for Ohio dairy farms, July 25, 2018.