June Expenses Drive Milk Production Costs to 3-Year Highs

July 29, 2011 10:23 AM

USDA data shows that June’s purchased feed cost is highest since 2008.

Rising feed prices drove the June 2011 overall monthly dairy cost of production to $23.62 per cwt., the highest level since December 2008, USDA’s Economic Research Service reported July 26.

As part of the total average cost of running a U.S. dairy in June, overall feed costs rose to $11.77 per cwt., also the highest since December 2008, ERS said in its Monthly Milk Cost of Production report.

In 2010, total feed costs for U.S. dairies averaged $11.17 per cwt.

Costs for purchased feed averaged $7.26 per cwt. in June 2011, Tuesday’s report noted. That’s the highest level since February 2011’s $7.59. Costs for homegrown harvested feed averaged $4.37 per cwt., just below May 2011’s $4.41 level, which was the highest of the year.

Those expenses helped push dairies’ total operating costs through June 2011 to $15.26 per cwt., the highest since October 2008. Those costs include feed, veterinary and medicine, bedding, fuel and electricity, repairs and interest on operating capital. In addition, allocated overhead increased to $8.36 per cwt., the highest level since April. Those overhead costs include labor, taxes and insurance.

June 2011’s total milk production cost of $23.62 per cwt. compared to $23.32 in May 2011, $22.62 in March and April, $23.00 in February, and $23.22 in January. It also compares to 2010’s total operating cost of $22.67. 

In its Agricultural Prices report released today, USDA said July’s corn price, at $6.46 per bu., is up 8 cents from last month and $2.97 above July 2010. The all-hay price, at $170 per ton, is up $7.00 from June and up $58.00 from last July. In addition, USDA said the soybean price, at $13.40 per bushel, increased 20 cents from June and is $3.61 above July 2010.
It also pegged the July all-milk price at $22.10 per cwt., up 90 cents from last month and $6.20 from July 2010.


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