Dairy Outlook: February 2018

All milk price for December 2017 showed the anticipated drop from the previous month. Feed price were steady, created a slightly smaller Income over Feed Cost opportunity.
Dairy Outlook: February 2018 - Articles
Dairy Outlook: February 2018

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Overview

The final all milk price just released for December 2017 showed the anticipated drop from the previous month. Feed prices were steady, created a slightly smaller Income over Feed Cost opportunity. Projected mailbox price based on current Class III and Class IV futures indicate a lower revenue income from milk for most of 2018. This will present potential cash flow challenges for dairy operations that will need to be monitored and addressed accordingly.

Table 1: 12 month PA and U.S. All Milk Income, Feed Cost, Income over Feed Cost ($/milk cow/day)

¹Based on corn, alfalfa hay, and soybean meal equivalents to produce 75 lbs. of milk (Bailey & Ishler, 2007)

²The 3 year average actual IOFC breakeven in Pennsylvania from 2014-2016 was $8.97 ± $1.76 ($/milk cow/day) (Beck, Ishler, Goodling, 2017).

Table 2: 12 month Pennsylvania and U.S. All Milk Price, Feed Cost, Milk Margin ($/cwt for lactating cows)

¹Based on corn, alfalfa hay, and soybean meal equivalents to produce 75 lbs. of milk (Bailey & Ishler, 2007)

²The 3 year average actual Milk Margin breakeven in Pennsylvania from 2014-2016 was $12.41 ± $2.38 ($/cwt) (Beck, Ishler, Goodling, 2017).

Figure 1: 12 month PA Milk Income and Income over Feed Cost

²The 3 year average actual IOFC breakeven in Pennsylvania from 2014-2016 was $8.97 ± $1.76 ($/milk cow/day) (Beck, Ishler, Goodling, 2017).

Figure 2: 24 month Actual and Predicted* Class III, Class IV, and Pennsylvania Average Mailbox Price ($/cwt)

*Predicted values based on Class III and Class IV futures regression (Gould, 2018).

Table 3: 24 month Actual and Predicted* Class III, Class IV, and Pennsylvania Average Mailbox Price ($/cwt)

MonthClass III PriceClass IV PriceAverage PA Mailbox Price
Dec-16$17.40$14.97$18.53
Jan-17$16.77$16.19$18.86
Feb-17$16.88$15.59$18.24
Mar-17$15.81$14.32$17.91
Apr-17$15.22$14.01$16.43
May-17$15.57$14.49$16.32
Jun-17$16.44$15.89$17.17
Jul-17$15.45$16.60$17.40
Aug-17$16.57$16.61$18.25
Sep-17$16.36$15.86$17.83
Oct-17$16.69$14.85$17.49
Nov-17$16.88$13.99$17.94
Dec-17$15.44$13.51$16.96
Jan-18$14.00$13.13$16.01
Feb-18$13.54$13.30$15.85
Mar-18$13.72$13.35$15.97
Apr-18$13.87$13.60$15.34
May-18$14.22$13.83$15.63
Jun-18$14.62$14.03$15.94
Jul-18$15.08$14.20$16.28
Aug-18$15.45$14.45$16.59
Sep-18$15.67$14.66$16.81
Oct-18$15.83$14.80$17.78
Nov-18$15.74$14.90$17.79

*Italicized predicted values based on Class III and Class IV futures regression (Gould, 2018).

To look at feed costs and estimated income over feed costs at varying production levels by zip code, check out the Penn State Extension Dairy Teams DairyCentsor DairyCents Proapps today.

Data sources for price data

All Milk Price: Pennsylvania and U.S. All Milk Price (USDA, 2018)

Predicted Class III, Class IV, and Pennsylvania Mailbox Price (average of the Eastern and Western PA mailbox Price) (Gould, 2018)

Alfalfa Hay: Pennsylvania and U.S. monthly Alfalfa Hay Price (USDA, 2018)

Corn Grain: Pennsylvania and U.S. monthly Corn Grain Price (USDA, 2018)

Soybean Meal: Feed Price List (Ishler, 2018) and average of Decatur, Illinois Rail and Truck Soybean Meal, High Protein prices, National Feedstuffs (Gould, 2018).

References

Bailey, K. and V. Ishler. “ Dairy Risk-Management Education: Tracking Milk Prices and Feed Costs”. Penn State Extension. Accessed 9/20/2017.

Beck, T.J., Ishler, V.A., & Goodling, R. C. 2017. “Dairy Enterprise Crops to Cow to Cash Project,” the Pennsylvania State University. Unpublished raw data.

Dairy Records Management Systems. “DairyMetrics Online Data Report system”. Accessed 9/14/2017.

Gould, B. 2018. “Predicted Mailbox Prices (Eastern Pennsylvania”). Understanding Dairy Markets website. University of Wisconsin-Madison. Accessed 2/5/2018.

Gould, B. 2018. “National Feedstuffs: Soybean Meal, High Protein”. Summary of USDA AMS Grain Reports. Accessed 2/5/2018.

Ishler, V. “ DairyCents Mobile App”. Penn State Extension. #App-1010.

Ishler, V. “ DairyCents Pro Mobile App”. Penn State Extension. #App-1009.

Ishler, V. “Feed Price List”. Personal Communication. Accessed 2/5/2018.

Microsoft 2016. “Forecast.ets function, Office Help Website .

USDA NASS, 2018. Agricultural Prices, Quick Stats version 2.0. Accessed 2/5/2018.

The Dairy Outlook Newsletter is supported by an Annual USDA RMA grant.

Authors

Dairy Business Management Dairy Nutrition

More by Timothy Beck 

Dairy Herd Management Dairy Cattle Nutrition Dairy Feed Management Dairy Cattle Feed Management Dairy Business Management Dairy Cattle Business Management

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Data and Records Management Dairy Profitability and Management Dairy Genetics and Reproduction

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