Milk-Feed Ratio: Lowest Since June 2009
US - The preliminary April 2012 Milk-feed Price Ratio is 1.45 according to USDA’s Agricultural Prices report released this afternoon, reports Daily Dairy Report.
1 May 2012
2 minute read
The Milk-feed
Ratio reflects the purchasing power of
one pound of milk. In other words, one
pound of milk can buy 1.45 pounds of
16% protein dairy feed. This is the lowest
Milk-feed Ratio since June 2009, when
dairy farm profitability hit rock bottom. Key
factors in the ratio include: the All Milk
Price at $16.90, down 30¢ from the prior
month; prices received for corn $6.14/bu.
down 21¢; soybeans $13.80/bu. up 80¢;
and alfalfa at $207/ton, $7 higher.
Attendees at the 2012 ADPI & ABI
Annual Conference, held in Chicago this
week, listened to Tim Hunt, Global Dairy
Strategist for Rabobank International,
Mark Russo, Meteorologist, Chesapeake
Energy Corporation and Stephen
Nicholson, Commodity Procurement
Specialists/Economist for International
Food Products present key economic
drivers in the dairy industry for 2012.
Russo and Nicholson agreed that current
weather conditions could provide for a
favorable U.S. corn harvest and hence
lower prices during the second half of
2012. However, market participants
should be aware that extreme heat during
pollination and continued demand from
China could be two factors that buoy the
corn market. Tim Hunt compared the
current milk supply/demand relationship to
fitting a watermelon into a pipeline. Hunt
points out that milk checks received by
dairy producers outside the United States
have yet to transmit lower global dairy
product prices. In some markets, a 15% to
20% decrease is expected in the second
half the year. “Medium term price recovery
is a question of when not if,” stated Hunt.
In closing, he noted a third quarter Class
III price estimate of $15.67 followed by a
fourth quarter estimate of $17.83/cwt.
The CME spot barrel cheese price
closed down 0.75¢ after four trades from
$1.4350/lb. down to $1.4275/lb. The block
market settled unchanged at $1.5350/lb.
with no trading activity. The spot butter
market was offered 0.5¢ lower and closed
at$1.3550/lb. NDM closed unchanged
after no trading activity at $1.1475/lb. and
$1.1075/lb., respectively.
Further Reading
 | - | You can view the full report by clicking here. |
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