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

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

Milk Prices

In the July issue, the Class III milk future for August was $16.94/cwt and September was $17.33/cwt.  Class III milk closing price for August was $17.19/cwt, with protein and butterfat prices at $2.09 and $3.02/lb, respectively. Both component prices are increased compared to the July issue, with protein rising by nearly $0.50/lb. This issue, the Class III future for October is $16.83/cwt, with the November at $17.02/cwt.

Updated Corn Silage Price

A new corn silage price used throughout this article was calculated as corn silage harvest winds down in Ohio. This year’s approximate price for normal corn silage (32-38% dry matter), based on a $4.84/bu corn grain price at the end of day September 28, 2023, was $56.40/ton. This marks a $15.41/ton decrease in the calculated price of corn silage for 2023, leaving the feed ingredient cost closer to that of 2021. Based on its nutritive value, home grown corn silage continues to be a bargain feed in dairy cattle rations.

Nutrient Prices

It can be helpful to compare the prices in Table 1 to the 5-year averages. Compared to the July issue, nutrient costs are more closely aligned with the 5-year averages. The cost of net energy for lactation (NEL) is about 4% lower than the 5-year average ($0.09/Mcal). The cost of metabolizable protein (MP) has increased since the July issue and is currently about 37% higher than the 5-year average ($0.44/lb).

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 September issue, the income over nutrient cost (IONC) for cows milking 70 and 85 lb/day is about $10.84 and $11.25/cwt, respectively. Both values are expected to be profitable even though they are lower than in July. 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, September 28, 2023.
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Economic Value of Feeds

Results of the Sesame analysis for central Ohio on September 28, 2023 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 this issue.

Table 2. Actual, breakeven (predicted) and 75% confidence limits of 26 feed commodities used on Ohio dairy farms, September 28, 2023.

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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, September 28, 2023.

Bargains At Breakeven Overpriced
Corn, ground, dry 41% Cottonseed meal Alfalfa hay – 40% NDF
Corn silage Whole cottonseed Blood meal
Distillers dried grains Feather meal Mechanically extracted canola meal
Gluten feed Meat meal Solvent extracted canola meal
Gluten meal Soybean hulls 44% Soybean meal
Hominy 48% Soybean meal Whole, roasted soybeans
Soybean meal – expeller Tallow
Wheat middlings

WHEAT BRAN

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 Table4.

Table 4. Prices of dairy nutrients using the 5-nutrient solution for Ohio dairy farms, September 28, 2023.

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