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

April Frye White, Graduate Research Associate, Department of Animal Sciences, The Ohio State University

Milk prices

In the last issue, the Class III futures for January and February were at $19.91 and $17.01/cwt, respectively. The Class III component price for January closed nearly $3/cwt lower at $17.05/cwt and was only slightly lower in February at $17.00/cwt. The Class III future for March is slightly lower than February component prices at $16.23/cwt, followed by a drop to $15.73/cwt in April. Longer term market outlooks are uncertain as global health events continue to impact the economy and demand.

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 March 26, 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 the 5-year averages, the current prices of nutrients are good. For NEL and MP, they are both about 23% and 15% lower compared to the 5-year averages ($0.08/Mcal and $0.43/lb, respectively). However, the price of e-NDF is still about 20% higher compared to the 5-year average. The price of MP and e-NDF are both about 5% and 62% higher than January ($0.35/lb and $0.11/lb, respectively). This is reflective of the quality of forage harvested last year, as well as the increased cost of several high protein feed ingredients shown in Table 2.

To estimate profitability at these nutrient prices, the Cow-Jones Index was used for average US cows weighing 1500 lb and producing milk with 3.9% fat and 3.2% protein. For March’s issue, the income over nutrient cost (IONC) for cows milking 70 and 85 lb/day is about $10.61 and $11.13/cwt, respectively. This is nearly $3/cwt lower than estimates from January ($13.39 and $13.83/cwt, respectively). The current IONC should be profitable for Ohio dairy farmers. As a word of caution, these estimates of IONC do not account for the cost of replacements or dry cows.

Overall, the lower forecasted milk prices but stagnant to low feed prices should still give producers a chance to continue to pay down debts the rest of 2020.

Table 1. Prices of dairy nutrients for Ohio dairy farms, March 26, 2020.

Economic Value of Feeds

Results of the Sesame analysis for central Ohio on March 26, 2020 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 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 26 feed commodities used on Ohio dairy farms, March 26, 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, March 26, 2020.

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

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 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 below.

Table 4. Prices of dairy nutrients using the 5-nutrient solution for Ohio dairy farms, March 26, 2020.