Depending on their production per cow, Midwest dairy farms are netting anywhere from $3 to $6.67/cwt after all costs are accounted for, says Robert Tigner, a Nebraska Extension dairy educator.
Tigner uses farm prices to develop monthly budgets, and then calculates break-even costs and returns for tie stall and freestall dairy operations. Note: Tigner calculates all feed fed at market prices. High milk prices and lower feed costs attribute for the good, if not record, margins.
"The net returns declined slightly from February milk, but all budgets were earning returns to management," says Tigner. "[That means] dairy farms are earning enough to pay for the debts they incurred over the past several months.
"Not until my November 2013 budget did the milk production budget finally turn positive. May and June 2013 budgets showed losses of $4.61/cwt. The February and March 2014 milk production budget has net profits near that range, but there are 10 months of 2013 milk production budgets to make up for," says Tigner.
The March 2014 milk price was pegged at $25.35/cwt with cull cows bringing $99/cwt. Corn prices had fallen to $4.60/bu, hay to $250/ton but soybean stubbornly remained at $487/ton.
In March 2013, milk prices were at $19.15/cwt and cull cows at $70. Both were considered very good, if not very strong prices. But corn was at $7.50/bu, hay was at $285/ton and soybean meal at $300/ton. Those strong feed prices resulted in $3 to $6/cwt losses when all costs were considered.