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

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

Milk Prices

In the March issue, the Class III milk futures for April and May were $15.72 and $16.35/cwt, respectively.  Class III milk closing price for April was $15.50/cwt, with protein and butterfat prices at $0.83 and $3.33/lb, respectively. The Class III closing price was lower than predicted, as well as lower than for March when prices closed at $16.34/cwt. The rising price of milk fat continues to negatively impact protein price, driving the value of protein below a dollar per pound in May. In this issue, the Class III future for June is $20.48/cwt, falling in July to $20.02/cwt.

Nutrient Prices

It can be helpful to compare the prices in Table 1 to the 5-year averages. Although the cost of net energy for lactation (NE_L) has increased by about 60% compared to March, it remains about a third lower than the 5-year average ($0.09/Mcal). The cost of metabolizable protein (MP) and physically effective neutral detergent fiber (pe-NDF) decreased by about 10 and 20%, respectively, but both remain higher than the 5-year averages ($0.44 and $0.08/lb, respectively).

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 the May 2024 issue, the income over nutrient cost (IONC) for cows milking 70 and 85 lb/day is about $9.35 and $9.78/cwt, respectively. Both estimates are substantially lower than in March, but they are still expected to be profitable. 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.

Table 1. Prices of dairy nutrients for Ohio dairy farms, May 17, 2024. 

Economic Value of Feeds

Results of the Sesame analysis for central Ohio on May 17, 2024 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 local 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. Feeds for which a price was not reported were added to the appraisal set this issue.

Table 2. Actual, breakeven (predicted) and 75% confidence limits of 26 feed commodities used on Ohio dairy farms, May 17, 2024.
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 in oversized text. Conversely, feedstuffs that have moved to the left (i.e., decreased in value) are undersized text. 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.  Thus, you will notice there were no feeds that changed columns for this issue of Buckeye Dairy News. Feeds added to the appraisal set were removed from this table. 

Table 3. Partitioning of feedstuffs in Ohio, May 17, 2024. 

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 NE_L and MP contents.