$1.50 Drop in Midwest Milk Prices Lead to Red Ink

February 12, 2016 04:58 PM
 
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Midwest dairy budgets are starting to bleed red with a $1.53 drop in milk from December to January, reports Robert Tigner, an Extension dairy educator with the University of Nebraska.

Tigner’s budgets are based on Central Order milk prices, whole herd feed costs and labor costs set at $13/hour.  The January milk price came in at $15.99 compared to December’s price of $17.52. “Gross return to milk production dropped over 8.7% month to month in January,” he says.

“The drop in income came from butterfat, down nearly $0.60 per pound, leading to $1.30 per cow daily and a drop in the PPD by $0.65 per hundredweight,” Tigner says. “A higher protein price, $0.45 per pound, made up for some of the income drop by increasing income per cow $0.80 daily.”  

Freestall herds producing 24,000 lb. of milk per cow were still operating in the black, with a 44¢/cwt return to management after all costs including labor were paid. But freestall herds producing just 20,000 lb./cow (roughly a 60 lb./cow tank average) were in the red to the tune of $1.26/cwt. Tie stall herds at the 24,000 lb. level were losing 74¢/cwt and those at just 20,000 lb. were losing more than $2.50/cwt. 

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