Northeast Dairy Margins Likely to Shrink

January 27, 2012 05:10 AM

Dairy margins in the Northeast, and in Pennsylvania in particular, are likely to shrink in 2012 if dairy futures prices are predictive, suggests analysis by Jim Dunn, an economist with Penn State University.

Dunn projects the Pennsylvania all-milk price to average $20.08/cwt in 2012, based on futures prices posted on January 25. The Pennsylvania all-milk price averaged $22.15 in 2011.
Income over feed costs (IOFC) on a per cow basis (with that cow producing 65 lb. of milk/day) were the best in three years in Pennsylvania last year, says Dunn. IOFC/cow were $8.94 in 2011, $7.89 in 2010 and $5.30 in 2009.
The Pennsylvania milk margin on a per hundredweight of milk produced was $13.75 in 2011, which was $1.62 higher than in 2010.
Dunn’s complete January 2012 outlook can be read here.

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