High corn and soybean meal prices continue to be a plague on dairy profitability, according to budgets prepared by Robert Tigner, an extension educator with the University of Nebraska.
"My budgets price feed costs, corn, corn silage and hay at market prices," he says. "So those dairy farmers that produce most or all of their feed will be in better financial shape than ones that must purchase it. However those same dairy farmers are missing out on the ability to capture the profit from the commodities that they grow."
Tigner used $7.22/bu corn, $540/ton soybean meal and $250/ton alfalfa hay prices in is budgets. As a result, feed costs are about $17.17/cwt of milk produced (dry cow and replacement feed included) for a herd averaging 20,000 lb. milk per cow. The number drops to $15.70 for herds producing 24,000 lb. per cows.
The $19.35/cwt milk price Tigner uses in his June budgets does cover variable costs. But returns to management, when all costs such as labor and fixed costs are included, quickly bleed red ink. The 20,000 lb. herd loses $4.61/cwt and the 24,000 lb. herd loses $2.39/cwt.