Buckeye Dairy News: VOLUME 22, ISSUE 1

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

    Alex Tebbe  and April Frye, Graduate Research Associates, Department of Animal Sciences, The Ohio State University

    Passing the Torch

    It seems like yesterday that Dr. St-Pierre was teaching me (Alex Tebbe) how to interpret milk prices and use the SESAME software. Now, after nearly five years of writing this article, I must step down as my days are numbered, and I will soon be graduating. I have thoroughly enjoyed writing these articles, but I must pass the torch to April Frye, another bright and ambitious graduate student at The Ohio State University. Currently, April is working on her MS with Dr. Luis Moraes and has plans to continue her PhD in the Department of Animal Sciences. Because of April’s strong dairy background and prior experience working with feed prices, I know she is a great fit for sustaining this section of the Buckeye Dairy News. I will be excited to sit on the other side of the desk and read what April writes.

    Milk Prices

    In the last issue, the Class III futures for November and December were at $18.44 and $20.68/cwt, respectively. The Class III component price for November closed about $2/cwt higher at $20.45/cwt and was slightly lower in December at $19.37/cwt. The Class III future for January is slightly higher than December component prices at $19.91/cwt, followed by a nearly $3/cwt drop to $17.01/cwt in February.

    Unfortunately, the $19 to 20/cwt Class III prices that we have seen the past 3 months probably will not last long. The higher than normal prices are primarily from a recent surge in exports as cheese and skim milk powder. This surge, however, has begun to tamper out. This is reflected in the lower Class III futures price. From now to deep into the late summer months, Class III futures are trading at around $17.50/cwt. The USDA has also projected a similar Class III price for 2020. Given no drastic changes in current tariffs or trade agreements, $17.50/cwt is probably an accurate estimate for all of 2020. If the Class III price stays between $17 to 18/cwt, producers should be able to make a profit but definitely not a fortune.

    Nutrient Prices

    As in previous issues, feed ingredients commonly used in Ohio were analyzed using the software program SESAME™ developed by Dr. St-Pierre at The Ohio State University. The resulting analysis can be used to appraise important nutrients in dairy rations, estimate break-even prices of ingredients, and identify feedstuffs that are significantly underpriced as of January 27, 2020. 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 comparing the prices in Table 1 to 5 year averages, the current prices of nutrients are pretty good. For NEL and MP, they are both about 15% and 18% lower compared to the 5 yr. averages ($0.08/Mcal and $0.43/lb), respectively. However, the price of e-NDF is about 20% higher compared to the five-year average. This is, of course, from the difficultly in growing forages in Ohio during 2019. The net effect of decreased NEL and MP, and increased e-NDF is about a 5% reduction on overall feed cost compared to the 5 yr average ($0.109 vs $0.115/lb of dry matter).

    To estimate profitability 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 January’s issue, the income over nutrient cost (IONC) for cows milking 70 lb/day and 85 lb/day is about $13.39 and $13.83/cwt, respectively. This is over $0.75/cwt more than estimates from November ($12.66 and $13.11/cwt, respectively). As a word of caution, these estimates of IONC do not account for the cost of replacements or dry cows. Overall, the above average milk prices and stagnant to low feed prices should be profitable, and they should give producers a chance to pay off debt or contract feed for 2020.

    Table 1. Prices of dairy nutrients for Ohio dairy farms, January 27, 2020.

    Economic Value of Feeds

    Results of the Sesame analysis for central Ohio on January 27, 2020 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, January 27, 2020.

    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 based on current nutrient values 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 value) 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, January 27, 2020.

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

    Table 4. Prices of dairy nutrients using the 5-nutrient solution for Ohio dairy farms, January 27, 2020.



  2. Consider Dietary Changes to Take Advantage of High Milk Protein Price

    Dr. Bill Weiss, Professor and Extension Dairy Specialist, Department of Animal Sciences, and Mrs. Dianne Shoemaker, Extension Farm Management Specialist, The Ohio State University Extension

    Over the past several months, the value of milk protein has more than doubled while the value of milk fat is down about 10% (Table 1 and Figure 1). For a few years, up until August of 2019, milk fat was more valuable per pound than milk protein (Table 1 and Figure 1).  Since September, milk protein has become substantially more valuable than milk fat. In November, milk protein was worth $3.91/lb compared to milk fat at $2.32/lb. The highest value for milk protein occurred in June of 2008 when it hit $4.72/lb.

    Because of the change in milk component prices, diets may need to be changed to take advantage of the price of milk protein. Increasing dietary starch at the expense of fiber usually increases milk protein yield but unfortunately reduces fat yield. Because of the high price of milk protein, consider increasing starch concentration of the diet but not so much that it causes health issues. On average, assuming the diet has adequate forage and fiber (i.e., does not cause ruminal acidosis), increasing starch concentration about 5 percentage units and reducing neutral detergent fiber (NDF) by the same amount is expected to increase the daily yield of milk protein of an average Holstein cow by about 0.075 lb but reduce milk fat by 0.06 lb. If the starch is replacing byproduct NDF, such as that from soyhulls, we do not expect dry matter intake to change. The cost of the diet per pound of dry matter likely would not change greatly, but it would depend on what ingredients are being used.  Using the average of the October and November component prices, a 5-percentage unit increase in starch could increase daily milk income by about $0.15 per cow with little effect on feed costs.

    Feeding a proven source of rumen-protected methionine (RP-met) usually increases milk protein yield. The response varies depending on diet, but on average, feeding 20 g/day of methionine from RP-met is expected to increase milk protein yield by about 0.06 lb/day which is worth about $0.19/cow.  The cost of the RP-met product needs to be deducted from that return to determine whether it is a profitable decision. Feed intake is not expected to change so only the cost of the product needs to be considered.

    Because of the high value of milk protein, increased emphasis should be placed on ensuring adequate intake of metabolizable protein and on the amino acid balance of the diet. Highly digestible protein supplements with the proper balance of amino acids are not cheap, but with milk protein worth in excess of $3/lb., feeding inadequate metabolizable protein or a diet with improper amino acid profile will likely be more costly.

    Several different sources of supplemental fat are available and they can affect milk component yields differently. However, in general, supplemental fat decreases milk protein percentage but usually has no effect on milk protein yield. Some supplements, such as saturated fatty acids, may increase milk protein yield by up 0.05 to 0.1 lb/day. Supplemental fat usually increases milk fat yield by 0.1 to 0.2 lb/day. Because of the generally consistent response in milk fat yield to supplemental fat along with the high price of milk fat observed earlier in the year, feeding some supplemental fat was usually profitable. However, with the lower price for milk fat, the effect a fat supplement has on milk protein yield has a major impact on the economic return from supplemental fat. Fat supplementation, specifically the type of fat, should be reevaluated based on current milk component prices and expected change in component yield.  

    Figure 1. Milk component prices over 2019 for Federal Order 33.

    Data Source: USDA AMS Federal Milk Marketing Order 33

    How long will milk protein be worth more than milk fat?  Some projections suggest that protein prices will gradually trend down from a November high.  To track trends, dairy farmers can find the announced prices either on their milk checks or at the Federal Milk Marketing Order 33 web site (http://www.fmmaclev.com/) in the “Class and Component Prices” report.   

    Table 1. Federal Milk Marketing Order 33 prices for milk fat and protein for first 11 months of 2019.

    Month, 2019 Milk Fat, $/lb Milk Protein, $/lb
    January 2.50 1.19
    February 2.53 1.18
    March 2.55 1.63
    April 2.54 1.99
    May 2.57 2.11
    June 2.66 2.00
    July 2.68 2.40
    August 2.66 2.44
    September 2.49 2.86
    October 2.40 3.17
    November 2.32 3.91
    AVERAGE 2.54 2.26


  3. Video Updates for Dairy Management

    Jason Hartschuh, Extension Educator, Crawford County, Ohio State University Extension

    Every year we try to come up with new programs to benefit dairy producers. This year, we are going to start a video series to help connect dairy producers with Ohio State dairy specialists. This series will update you on management practices to improve your operation and the latest research that is being conducted by OSU researchers. We will be doing our best to keep videos under 10 minutes, just the right length to watch while unloading feed, waiting on the milk system to wash, or waiting for a cow to have a calf.  Videos will be uploaded throughout the year and released through our Facebook page https://www.facebook.com/OhioDairyIndustryResourcesCenter/ and Buckeye Dairy News.

    Enjoy our latest videos:

    Udder Care

    Dr. Luciana daCosta with Ohio State University, College of Veterinary Medicine discusses Udder Care procedures for the prevention of mastitis.  https://youtu.be/34kxGdHOsP0

    Parlor Preparation for Mastitis Control

    Dr. Luciana daCosta with the Ohio State University, College of Veterinary Medicine discusses the importance of proper parlor routines to decrease the risk of mastitis. https://youtu.be/3bKRN20_dqA

    Dairy Day, Dr. Bill Weiss

    Dr. Bill Weiss discusses his extensive knowledge on dairy nutrition and some of his world travels for his research. https://www.youtube.com/watch?v=7vkir9JC2Dk&t=370s

    Dairy Day, Dr. Lee

    Dr. Chanhee Lee discusses his research on manure and nutrient management. https://www.youtube.com/watch?v=d41tgDBitLU&t=404s

    Dairy Day, Dr. Ben Enger

    Dr. Ben Enger discusses his specialization in mammary physiology and his research on mastitis. https://www.youtube.com/watch?v=oqNvmtfX1fk