What’s in a “Milk-Feed Ratio – A Peek at the Future”?
On Jan. 31, USDA published its Livestock, Dairy and Poultry Situation and Outlook Report. Lots of numbers and one of particular interest. The Milk-Feed Price ratio for January as stated as 3.63. If you have attended any of my OSU Extension dairy programs, and where paying attention, you may recall that I will generally report and comment on this number.
In this column I am going to take you up close to this number and show you how it can be used to gain insight into what may be down the road.
Defining terms. First, let’s discuss the number. The milk-feed ratio, or mfr for short, is defined as the number of pounds of 16 percent mixed dairy feed equal in value to one pound of whole milk.
The idea is that if you produce one pound of milk, you can use that income to purchase the mfr pounds of dairy feed. For January 2005, the mfr of 3.63 tells you that one pound of milk will pay for 3.63 pounds of feed. Or as viewed in an equivalent manner, the mfr is just the ratio of the current U.S. All Milk price divided by the calculated cost of a standard dairy ration of 16 percent protein.
The USDA uses estimated U.S. average values for corn, soybean, and baled alfalfa hay as the base ingredients to construct the ration. The numbers for January are corn