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 March and April were at $16.23 and $15.73/cwt, respectively. The Class III component price for March closed very close to the predicted price at $16.25/cwt but was more than $3/cwt lower in April at $13.07/cwt. The Class III future for May is lower than April component prices at $12.22/cwt, followed by a sizeable increase to $17.52/cwt in June. Longer term market outlooks are starting to normalize, but prices may continue to be volatile as the global market starts to recover.

Nutrient Prices

When comparing the prices in Table 1 to the 5-year averages, the current prices of nutrients are acceptable.The price of net energy of lactation (NEL) is about 48% lower than the 5-year average ($0.08/Mcal). However, the price of metabolizable protein (MP) and effective neutral detergent fiber (eNDF) are about 10 and 20% higher compared to the 5-year averages ($0.42/lb and $0.08/lb, respectively). The price of MP is about 30% higher than March ($0.36/lb), but the price of NEL and eNDF are both 3% and 30% lower than the last issue ($0.06/Mcal and $0.17/lb, respectively). This is reflective of the increased cost of several high protein feed ingredients, as well as the lower prices of several high energy 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 May’s issue, the income over nutrient cost (IONC) for cows milking 70 and 85 lb/day is about $7.13 and $7.56/cwt, respectively. This is more than $3/cwt lower than estimates from March ($10.61 and $11.13/cwt, respectively). The current IONC is likely not 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, or for profitability changes related to culling cows.

Overall, milk price has dropped to a greater degree than the prices of feeds, and prospects to pay down debt may be limited in the near future.

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

Economic Value of Feeds

Results of the Sesame analysis for central Ohio on May 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, May 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, May 26, 2020.

Bargains At Breakeven Overpriced
Corn, ground, dry   Soybean hulls
Corn silage Bakery byproducts Blood meal
Distillers dried grains Wheat bran Fish meal
Feather meal 48% Soybean meal Beet pulp
Gluten feed Gluten meal Molasses
Hominy   Sovent extracted canola meal
Whole cottonseed   44% soybean meal
Wheat middlings   Tallow
Soybean meal - expeller   Whole, roasted soybeans
    41% Cottonseed meal
    Alfalfa hay - 40% NDF
    Meat Meal
    Mechanically extracted canola 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 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 26, 2020.