Milk-feed price ratio matches mid 2009; cull cow prices rise

Milk-feed ratio matches mid 2009 

                                           Milk-feed price ratio 

                                    March      Feb.     Mar.     May

Product                        2012      2012*    2011    2009

Milk ($/cwt.)                17.40     17.70    20.40   11.60

Corn ($/bu.)                  6.48       6.28      5.53      3.96

Soybeans ($/bu.)       13.10      12.20    12.70   10.70

Alfalfa hay ($/ton)         201        198       142      137

Milk-feed ratio              1.48       1.55      2.12     1.48

* Revised from previous month

Source: USDA National Ag Statistics Service

Higher feed prices, combined with lower U.S. average milk prices, sent the March 2012 milk-feed price ratio down to 1.48, its lowest level since June 2009 (1.47). 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 $17.40/cwt., the U.S. average milk price is the lowest since January 2011.

March corn prices averaged $6.48/bushel, up 20¢ from February; soybeans averaged $13.10/bushel, up 90¢; and alfalfa hay averaged $201/ton, up $3 from February.

To see how the dynamics of dairy economics has changed, compare milk and feed prices to May 2009, which also had a milk feed-price ratio of 1.48. While current milk prices are nearly $6.00/cwt. higher than May 2009, that’s offset by feed costs that are substantially higher.

Cull ’em if you got ’em

March 2012 cull cow (beef and dairy combined) prices closed in on $85/cwt., likely the highest on record, according to USDA’s preliminary estimates. March 2012 prices averaged $84.50/cwt., up $2.50/cwt. from February 2012’s revised estimate of $82.00/cwt., and $9.30/cwt. more than the March 2011 average of $75.20/cwt. The March 2012 average puts the beef value of a 1,200-lb. cull cow at more than $1,000/head.