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2013 Price Improvement Still Suggest Red Ink

September 18, 2012
By: Jim Dickrell, Dairy Today Editor

The United States Department of Agriculture released its September Livestock, Dairy and Poultry Outlook this morning, suggesting corn prices could mitigate and milk prices improve in 2013.

The changes probably aren’t enough to off-set negative cash flow, particularly for dairy farmers who buy most of their feed.

USDA is projecting 2013 corn prices in the $7.20 to $8.60/bu range, down 30¢/bu from August. Soybean meal in the $485 to $515/ton range is projected for 2013, up $25 per ton from last month. The all-milk price is up a nickel, projected to range from $17.85 to $18.85 for 2013.

These prices (and $200 per ton alfalfa) suggest break-even costs will run from $20/cwt to $24/cwt, depending on how much feed must be purchased and how productive a herd is. Based on a University of Nebraska spreadsheet, the $20 breakeven would be for Midwest herds producing 24,000 lb. of milk/cow/year and purchasing all of its feed. The $24/cwt breakeven is for a herd producing 20,000 lb. of milk/cow/year.

The complete September USDA Outlook Report can be read here.


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