DairyProfit Update for April 30, 2012

Gould: March MILC payment is 82.62¢ 

With USDA announcing final March prices affecting the feed adjuster, the March 2012 Milk Income Loss Contract (MILC) program payment will be 82.62¢/cwt., according to Brian Gould, University of Wisconsin-Madison Department of Agriculture and Applied Economics professor.

To see a new summary spreadsheet, go to the UW-Madison “Understanding Dairy Markets” website.

April milk-feed price ratio lowest since early 1990s

The April 2012 milk-feed price ratio could be the lowest dating back almost two decades. The index is based on the current milk price in relationship to feed prices for a ration of 51% corn, 8% soybeans and 41% alfalfa hay. 

Higher hay and soybean prices, combined with lower U.S. average milk prices, sent the April 2012 milk-feed price ratio to 1.45, down from a revised estimated of 1.48 in March 2012 and 1.81 in April 2011.

At $16.90/cwt., the U.S. average milk price is the lowest since January 2011, according to USDA’s April Ag Prices report.

Among feed ingredients, corn prices averaged $6.14/bushel in April, down 21¢ from March, but soybean prices rose to $13.80/bushel, up 80¢; and alfalfa hay prices rose $6/ton, to $207/ton.

Looking back into USDA National Ag Statistics Service archives, the June 2009 milk-feed price ratio was also announced at 1.45, but was later revised up to 1.47. DairyProfit Weekly found milk-feed price ratios frequently averaged 1.3 to 1.4 in the early 1990s. However, in some cases those ratios were also revised upward a couple years later.

California, Missouri report lowest average replacement cow prices

With milk prices headed lower, U.S. average prices for replacement cows also fell slightly in April, according to USDA’s Ag Prices report.

Replacement prices averaged $1,420 head in April, down about $20/head from January 2012, but $20 more than April 2011. Among major dairy states, average prices ranged from a high of $1,600/head in Michigan and Vermont to lows of $1,300/head in California and Missouri.

Cull cow prices continue to climb

Monthly average cull cow prices (beef and dairy combined) continue to climb. Based on USDA’s April Ag Prices report, prices averaged $84.90/cwt., likely the highest on record. The April 2012 average is up 70¢ from the revised March 2012 estimate ($84.20/cwt.) and $6.00 more than April 2011 ($78.90/cwt.).

The April 2012 average puts the beef value of a 1,200-lb. cull cow at nearly $1,020/head. 

CWT assists with 2.4 million lbs. of cheese and butter export sales

Cooperatives Working Together (CWT) accepted 13 requests for export assistance from Dairy Farmers of America, Darigold, Foremost Farms, Maryland & Virginia Milk Producers Cooperative and United Dairymen of Arizona to sell 866,417 lbs. of cheddar and Monterey Jack cheese and 1.570 million lbs. of butter to customers in Africa, Asia, the Middle East and South America. The product will be delivered May through July 2012.

So far in 2012, CWT has assisted member cooperatives in making export sales totaling 46.9 million lbs. of cheese and 40.8 million lbs. of butter to 26 countries on four continents. On a butterfat basis, the milk equivalent of these exports is 1.322 billion pounds, or the same as the annual milk production of 62,950 cows.