2012 milk-feed price index will be lowest since early 1990s

Lower milk prices combined with higher alfalfa hay and soybean prices pushed the preliminary December milk-feed price ratio lower, according to USDA’s monthly Ag Prices report, released Dec. 31. At 1.65, the index is down from 1.73 in November and 1.81 in December 2011. It marks the 21st consecutive month below 2.0. 

The December preliminary index yields a 2012 average of 1.52, the lowest annual average since the early 1990s.

According to USDA, the ratio averaged 1.88 in 2011 and 2.26 in 2010. If you’re looking for the “glory days” for the milk-feed price ratio, the index was higher than 3.0 in 6 of 8 years between 1997 and 2005.

Often debated for its relevance, 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.

At $21.10/cwt., the preliminary December U.S. average all-milk price is down 90¢ from November, but $1.40 more than December 2011. With the December estimate, the preliminary 2012 all-milk price is $18.53/cwt., down from $20.14/cwt. in 2011. It surpasses the 2008 average of $18.33/cwt., but is less than the 2007 average of $19.13/cwt.

December’s average corn price was $7.01/bushel, virtually unchanged from November. The average soybean was up 40¢/bushel, and December dry alfalfa hay prices set a new high for the year.


Milk-feed price ratio

  Dec. ’12 Nov. ’12* Dec. ’11
Milk ($/cwt.) 21.10 22.00 19.70
Corn ($/bu.) 7.01 7.02 5.86
Soybeans ($/bu.) 14.70 14.30 11.50
Alfalfa hay ($/ton) 217 215 195
Milk-feed price ratio 1.65 1.73 1.81
*Revised from previous month
Source: USDA

Cull cow prices strong, steady

Estimated U.S. December cull cow prices (beef and dairy combined) averaged $76.80/cwt., unchanged from November, and $6.30/cwt. more than December 2011 ($70.50/cwt.), according to USDA’s latest Ag Prices report.

With December’s preliminary estimate, the 2012 average stands at $80.91/cwt., compared to $71.85 for all of 2011, and $54.93/cwt. in 2010.