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

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

Milk prices

In the last issue, the Class III futures for September and October were at $16.35 and $18.86/cwt, respectively. The Federal milk order price for October protein and butterfat were $5.01/lb and $1.64/lb, respectively, and the Class III skim milk price continues to be about $4/cwt higher than Class I. The Class III future for November is ~$4/cwt higher than October at $23.10/cwt, followed by $16.09/cwt in December.

Nutrient prices

It can be helpful to compare the prices in Table 1 to the 5-year averages. The price of MP and eNDF are about 23 and 31% lower compared to the 5-year averages ($0.42/lb and $0.08/lb, respectively). However, the bulk of total nutrient cost comes from the cost of NEL (about 51% over the last 5 years), followed by MP (39%), and NDF (10%). Consequently, overall nutrient costs are heavily influenced by increases in the cost of NEL, which in this issue is 55% higher than the 5-year average ($0.08/Mcal). Overall, nutrient cost is about $0.80 higher than the 5-year average ($7.21 vs. $6.45), but nutrient cost is not reliable as a sole predictor for profitability.

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 October’s issue, the income over nutrient cost (IONC) for cows milking 70 lb/day and 85 lb/day is about $15.06 and $15.52/cwt, respectively. This is more than a dollar higher than estimates for September ($13.85 and $14.30/cwt, respectively), and 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. Overall, current higher prices for components should help to offset the increase in nutrient costs.

Table 1. Prices of dairy nutrients for Ohio dairy farms, November 16, 2020.

Economic Value of Feeds

Results of the Sesame analysis for central Ohio on November 16, 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, November 16, 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, November 16, 2020.

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

*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 Table 4 below.

Table 4. Prices of dairy nutrients using the 5-nutrient solution for Ohio dairy farms, November 16, 2020.