January milk:feed ratio was worst ever

It’s the yardstick that perhaps illustrates most clearly of all just how steep the uphill battle is to make a profit with dairy cows these days – the milk:feed price ratio.

It’s a measurement of milk producer profitability that USDA began using in 1985, representing the number of pounds of 16-percent protein mixed dairy feed that could be bought with the value of one pound of whole milk. Rising milk prices tend to push the ratio higher; rising feed prices tend to pull it lower.

In all the years of roller-coaster ups and downs since then, the milk:feed ratio had never gone as low as it did in January 2009 – just 1.69. To put that figure into context, a ratio of 3.0 is considered to be the level at which buying feed and producing milk becomes profitable.

Sadly, it’s a record that seems destined to last for only one month. February’s announced Class III price of $9.31 was sharply lower than the January price of $10.78. On top of that, the prices of feed grains continued to rise. That’s the “perfect storm” scenario for more bad news for dairy producers, who are long overdue for a financial forecast that contains some sunshine.