Milk Prices Help October Cash Flows

November 19, 2012 07:38 AM

A $1.84/cwt improvement in milk prices in October is helping Midwest dairy farmers cash flow, says Robert Tigner, an Extension educator with the University of Nebraska.

"The October budget showed improved cash flow for dairy producers, enough so that nearly all costs are covered except unpaid labor and management," he says. "For the 20,000 lb./cow budget, income rose by about $340 and variable expenses rose by about $40. That is a good improvement. Next month’s budget should show declines in feed cost."

Tigner’s projected budgets include feed costs at market values: $7.67/bu for corn, $435/ton soybean meal, $309/ton cottonseed and $288/ton hay. The budgets include costs for dry cows and replacements. The milk price in October was $12.12/cwt, up from $19.28 in September.

For 20,000 lb. herds, that means a positive 69¢/cwt return over variable costs. For 24,000 lb. herds, there’s a $2.69/cwt return over variable costs.

Returns to labor and management for the 20,000 lb. herd are still negative, at $1.64. The 24,000 lb. herds are seeing a 55¢/cwt positive return to labor and management. When you subtract the cost of labor, the return to management is -$4.44/cwt for the 20,000 lb. herd and -$1.79/cwt for the 24,000 lb. herd, says Tigner.



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