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 July and August were at $24.23 and $22.84/cwt, respectively. The Federal milk order price for June protein is $4.53/lb, leading to a higher Class III milk price. The Class III futures for September was ~$6/cwt lower than August at $16.35/cwt, followed by $18.86/cwt in October.

Updated Corn Silage Price

A new corn silage price used throughout this article was calculated this month as corn silage harvest winds down across the state. This year’s approximate price for normal corn silage (32 to 38% dry matter), based on a $3.65/bu corn grain price at start of day September 28, 2020, is $46.63/ton. Based on its nutritive value, home grown corn silage continues to be a bargain feed in dairy cattle rations.

Nutrient prices

When comparing the prices in Table 1 to the 5-year averages, the current prices of nutrients are favorable. The price of NEL is about 36% higher than the 5 yr. average ($0.08/Mcal). However, the price of MP and eNDF are about 40 and 10% lower compared to the 5-year averages ($0.42/lb and $0.08/lb, respectively). The price of MP is about 40% lower than May ($0.43/lb), but the price of NEL is 229% higher than the previous issue ($0.05/Mcal). These swings in nutrient prices are likely related to missing price information for ring dried blood meal, as well as some larger shifts in the prices of other feeds. Feed prices are 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 September’s issue, the income over nutrient cost (IONC) for cows milking 70 lb/day and 85 lb/day is about $13.85 and $14.30/cwt, respectively. This is lower than estimates for July ($15.97 and $16.39/cwt, respectively), but the current IONC is likely to 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, or for profitability changes related to culling cows.

Volatile feed prices continue as in recent issues, but current feed and milk prices may offer some positive opportunities.

Table 1. Prices of dairy nutrients for Ohio dairy farms, September 22, 2020.

Economic Value of Feeds

Results of the Sesame analysis for central Ohio on September 22, 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. For this issue, a price for ring dried blood meal was not reported, so blood meal was added to the appraisal set in order to provide a price prediction range.

Table 2. Actual, breakeven (predicted) and 75% confidence limits of 26 feed commodities used on Ohio dairy farms, September 22, 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, September 22, 2020.

Bargains At Breakeven Overpriced
Bakery byproducts Whole cottonseed Mechanicall extracted canola meal
Corn, ground, dry Soybean meal - expeller 4
Corn silage Wheat bran Fish meal
Distillers dried grains Soybean hulls Beet pulp
Feather meal Gluten meal Molasses
Gluten feed Alfalfa hay - 40% NDF Solvent extracted canola meal
Hominy Blood meal* 44% Soybean meal
Meat meal   Tallow
Wheat middlings   Whole, roasted soybeans
    48% Soybean meal
  *Price not reported  

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.

Table 4. Prices of dairy nutrients using the 5-nutrient solution for Ohio dairy farms, September 22, 2020.