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August Profitable Month for Midwest Dairies

September 30, 2011

Record milk prices in August helped Midwest dairy producers bank some profit for the month, according to budgets prepared by Robert Tigner, an Extension dairy specialist with the University of Nebraska.

Tigner calculates that mid-sized freestall herds averaging 24,000 lb./cow/year were netting $3.17/cwt., based on a milk price of $22.92. Freestall herds that averaged 20,000 lb./cow/year netted about a third of that.
High producing tie stall herds also netted $1.81/cwt., he calculates. Average producing tie stall herds, at 20,000 lb./cow/year, actually lost about 40¢/cwt. But that loss to unpaid labor; these herds were still covering their cash flow needs.
The projections are based on high feed costs as well. Tigner used $7.26/bu. corn, $322/ton soybean meal and $185/ton alfalfa in his feed cost calculations. That resulted in whole-herd feed costs ranging from $14.59/cwt. of milk sold in 20,000 lb. herds down to $13.67/cwt. feed costs in 24,000 lb. herds.
September is the big worry, with futures prices down $2.50/cwt. from August levels. The good news is that feed prices, particularly in the corn complex, have dropped off as well.


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