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

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

Milk prices

In the last issue, the Class III futures for March and April were at $13.78 and $15.09/cwt, respectively. The Class III component prices for the month of March and April closed about $1/cwt higher than predicted at $15.04 and $15.96/cwt, respectively. The class III future for May is similar to April’s component price at $15.76/cwt followed by a jump to $16.44/cwt in June. Overall, it appears that milk prices are on the rise.

Nutrient prices

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 significantly underpriced as of May 23, 2019. 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.  

When looking at the appraised nutrient prices, the price of protein has gone down and NEL has gone up. For MP, its current value is down nearly $0.15/lb (March: $0.45/lb), whereas the cost of NEL has gone up 3¢/Mcal (March: 6.3¢/Mcal). The price of e-NDF and ne-NDF are nearly identical to last month.

To estimate the cost of production at these nutrient prices, the Cow-Jones Index was used for average US cows weighing 1500 lb and producing milk with 3.7% fat and 3.1% protein. For this issue, the income over nutrient cost (IONC) for cows milking 70 lb/day and 85 lb/day is about $9.97/cwt and $10.38/cwt, respectively. These IONC are $1.70/cwt greater than what I estimated in March ($8.23 and $8.60/cwt, respectively). The current IONC also suggest Ohio dairy farmers may actually be making a profit for a change. Granted, these IONC may be partially overestimated because they do not account for the cost of replacements or dry cows.

Table 1. Prices of dairy nutrients for Ohio dairy farms, May 23, 2019.

Economic Value of Feeds

Results of the Sesame analysis for central Ohio on May 23, 2019 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, May 23, 2019.

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 in Ohio, May 23, 2019.

Bargains At Breakeven Overpriced
Bakery byproducts Gluten meal Alfalfa hay - 40% NDF
Corn, ground, dry Soybean hulls Beet pulp
Corn silage 48% Soybean meal Blood meal
Distillers dried grains Soybean meal - expeller Mechanically extracted canola meal
Feather meal Whole cottonseed Citrus pulp
Gluten feed Wheat bran 41% Cottonseed meal
Hominy   Fish meal
Meat meal   Molasses
Wheat middlings   Solvent extracted canola meal
    44% Soybean meal
    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 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 Table 4.

Table 4. Prices of dairy nutrients using the 5-nutrient solution for Ohio dairy farms, May 23, 2019.