Regional dairy budgets: Mixed bag

October IOFC improves in Wisconsin

Wisconsin dairy producers’ estimated income over feed costs (IOFC) will jump in October, according to Ken Bolton, with UW-Extension’s Center for Dairy Profitability. It's the fourth month-to-month IOFC improvement in the past 10 months. October IOFC and feed cost per dollar of revenue values are at levels not experienced since very late 2011 and early 2012. 

The estimated October IOFC increased $3.16/cwt., to $12.59/cwt. for a Wisconsin herd with an annual production average of 22,000 lbs. of milk per cow. The month’s estimated income over total variable costs for the same herd was $10.44/cwt.

The October predicted Wisconsin mailbox price is $22.40/cwt., up $2.79 from September. The October Class III price is forecast at $21.02/cwt., up $2.16 from September. No Milk Income Loss Contract (MILC) payment is predicted. 

Price declines for corn and soybean meal offset increases for hay and corn silage in October. The total ration forage price increased to $113.33/blended ton of corn silage/hay (as fed), up from $108.17/blended ton in September. Feed cost per dollar of milk revenue declined 8¢, to 44¢.

October marks the seventh month in 2012 with IOFC above $8.00/cwt. at the 22,000-lb. milk production level.  That compares to only three months (of 11 evaluated) above $8.00/cwt. IOFC recorded in 2009.



Iowa/Nebraska dairy budgets worsened in September

With no projected Milk Income Loss Contract (MILC) program payment, the financial scenario for Iowa and Nebraska dairy farmers worsened in September, according to Extension educator Robert Tigner. The decline came despite higher milk prices and lower corn and soybean prices.

Milk income grew due to higher butterfat and protein tests and prices, resulting in an average milk price of $19.28/cwt. Hay and cottonseed prices rose, offsetting some of the gains from lower corn and soybean prices. A negative producer price differential (PPD) also contributed to negative cash flow. 

Without an MILC payment, Tigner’s model budget showed producers at the 20,000- and 24,000-lb. RHA milk production level covered feed costs, but producers at the 20,000-lb. level did not meet all variable costs. To cover total costs, Tigner calculated the breakeven price at the 20,000-lb. RHA was $25.41/cwt.; the breakeven price at the 24,000-lb. RHA was $22.84.