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

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

Milk prices

In the last issue, the Class III futures for June and July were $24.34 and $24.47/cwt, respectively. Class III milk closing price for June was $24.33/cwt, with protein and butterfat prices at $3.42 and $3.33/lb, respectively. The component price for protein is unchanged from the May issue, with butterfat price increasing as we approach Autumn. For this issue, the Class III future for August is $20.67/cwt, continuing to further decrease in September to $20.21/cwt.

Nutrient prices

It can be helpful to compare the prices in Table 1 to the 5-year averages. Since the May issue, the price of metabolizable protein (MP) has decreased by about 13%, alongside a slight increase in the price of net energy for lactation (NEL). The current price of NEL and MP are about 75 and 12% higher than the 5-year averages ($0.08/Mcal and $0.41/lb, respectively), and physically effective neutral detergent fiber (pe-NDF) is about 5% lower than the 5-year average ($0.09/lb). These nutrient costs are reflective of recent trends in ingredient costs, largely following swings in the cost of protein and energy ingredients.

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 July issue, the income over nutrient cost (IONC) for cows milking 70 and 85 lb/day is about $15.70 and $16.28/cwt, respectively. 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, July 22, 2022.

Estimate of Nutrient Unit Costs
Nutrient name Estimate
NEl – 3X (2001) 0.147764 **
Metabolizable Protein (MP, g/kg) 0.459976 **
e-NDF 0.085522 ~
ne-NDF -0.119643 *
– A blank means that the nutrient unit cost is likely equal to zero
– ~ means that the nutrient unit cost may be close to zero
– * means that the nutrient unit cost is unlikely to be equal to zero
– ** means that the nutrient unit cost is most likely not equal to zero

Economic Value of Feeds

Results of the Sesame analysis for central Ohio on July 22, 2022 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 in this issue.

Table 2. Actual, breakeven (predicted) and 75% confidence limits of 26 feed commodities used on Ohio dairy farms, July 22, 2022.

Calibration set
Name Actual [/T] Predicted [/T] Lower limit Upper limit Corrected 75.0% CI 75.0% CI
Alfalfa Hay – 40 NDF 20 CP 150 RFV 210 263.233 225.063 301.403 289.744 251.574 327.914
Blood Meal, ring dried 1630 821.571 750.396 892.746
Canola Meal, mech. extracted 481 323.86 308.355 339.365
Corn Grain, ground, dry 230 304.954 269.43 340.478
Corn Silage, 32-38% DM 60.75 100.31 87.067 113.553 100.31 87.067 113.553
Cotton Seed Meal, 41% CP 430 389.104 364.367 413.842
Cotton Seed, Whole w lint 440 396.189 342.135 450.244
Distillers Dried Grains w Sol 250 311.232 285.165 337.299
Feathers Hydrolyzed Meal 600 652.305 610.108 694.502
Gluten Feed, dry 200 275.17 255.725 294.615
Gluten Meal, dry 660 673.063 626.915 719.212
Hominy 200 264.144 237.221 291.066
Meat Meal, rendered 515 519.284 487.323 551.246
Solvent Extracted Canola Meal 481 329.051 312.931 345.172
Soybean Hulls 208 148.139 102.68 193.599
Soybean Meal, expellers 534 547.72 519.828 575.612
Soybean Meal, solvent 44% 460 410.335 388.693 431.977
Soybean Meal, solvent, 48% 470 474.25 450.561 497.939
Soybean Seeds, whole roasted 530 475.91 443.207 508.613
Tallow 1145 709.85 576.69 843.01
Wheat Bran 170 171.624 141.065 202.183
Wheat Middlings 175 203.483 177.114 229.853
Appraisal set
Name Actual [/T] Predicted [/T] Pred.-Act. 75.0% CI 75.0% CI Corrected
Alfalfa Hay – 32 NDF 24 CP 190 RFV 0 290.595 290.595 259.472 321.718 370.128
Alfalfa Hay – 36 NDF 22 CP 170 RFV 0 287.16 287.16 252.723 321.597 340.182
Alfalfa Hay – 44 NDF 18 CP 130 RFV 0 249.429 249.429 206.636 292.223 249.429
Alfalfa Hay – 48 NDF 16 CP 110 RFV 0 233.153 233.153 185.126 281.18 206.642
Bakery Byproduct Meal 0 299.521 299.521 261.036 338.007
Beet Sugar Pulp, dried 0 224.624 224.624 198.274 250.974
Citrus Pulp dried 0 241.904 241.904 218.093 265.714
Fish Menhaden Meal, mech. 0 676.096 676.096 633.738 718.455
Molasses, Sugarcane 0 219.107 219.107 186.075 252.138

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. Feeds added to the appraisal set were removed from this table.

Table 3. Partitioning of feedstuffs in Ohio, July 22, 2022.

Bargains At Breakeven Overpriced
Alfalfa hay – 40% NDF 48% Soybean meal Mechanically extracted canola meal
Feather meal Soybean meal – expeller Whole roasted soybeans
Corn silage Wheat bran

Soybean hulls

Distillers dried grains Gluten meal 44% Soybean meal
Gluten feed Whole cottonseed Solvent extracted canola meal
Meat meal Blood meal
Corn, ground, dry

41% Cottonseed meal

Hominy
Wheat middlings

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 NEL and MP contents.

Appendix

For those of you who use the 5-nutrient group values (i.e., replace MP by rumen degradable protein and digestible rumen undegradable protein), see Table 4 below.

Table 4. Prices of dairy nutrients using the 5-nutrient solution for Ohio dairy farms, July 22, 2022.

Estimate of Nutrient Unit Costs
Nutrient name Estimate
NEl – 3X (2001) 0.141102 **
RDP 0.147803 ~
Digestible RUP 0.424871 **
e-NDF 0.103028 ~
ne-NDF -0.076797 ~
– A blank means that the nutrient unit cost is likely equal to zero
– ~ means that the nutrient unit cost may be close to zero
– * means that the nutrient unit cost is unlikely to be equal to zero
– ** means that the nutrient unit cost is most likely not equal to zero