Milk swirl
November 15, 2016

Softer Component Prices Narrow Milk Margins in October

 |  By: Jim Dickrell

A drop in prices for butterfat and protein led to much tighter dairy margins in October for herds in the western corn belt, reports Robert Tigner, a University of Nebraska Extension educator.

Butterfat prices declined 25¢/lb and protein dropped 28¢/lb between September and October milk checks. But a 60¢/cwt jump in the Producer Price Differential, from -7¢ to +53¢, helped soften the blow, says Tigner. The net result: Mailbox milk prices dipped 77¢/cwt to $16.55 in October.

Feed prices were mixed, with corn up a little, soybean meal and cottonseed down a little, and hay unchanged.

“The result was that returns to management were -$0.01/cwt for the 20,000 pound freestall budget. The 20,000 pound tiestall showed a -$1.38/cwt return to management,” Tigner says. “Both 24,000 pound budgets, freestall and tiestall, showed positive return to management.”

The high producing freestall herds were showing a $1.64/cwt return to management while the tie stall herds at this production level were +44¢/cwt.