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Dairy Outlook: March 2019

Up and Down Continues

All Milk Price for December and January remained relatively flat just below $18.00/cwt. Class III and Class IV futures indicate potential strengthening in milk price, averaging $15.92/cwt and $16.53/cwt, respectively, for 2019. These modest income gains are currently being consumed on the feed side in Pennsylvania. Feed costs for the last year averaged $6.33/cwt, but in the last two months have been over $7.30/cwt. That average $6.33/cwt is nearly 4% higher than the average 2 years ago. Market prices for alfalfa hay and corn grain are the primary drivers causing this most recent increase in feed costs. Monitoring IOFC on farm with actual costs for home raised feeds are a better indicator of farm level situations.

Income Over Feed Cost, Margin, and All Milk Price Trends

Table 1: Twelve month Pennsylvania and U.S. All Milk Income, Feed Cost, Income Over Feed Cost ($/milk cow/day)


¹Based on corn, alfalfa hay, and soybean meal equivalents to produce 75 lbs. of milk (Bailey & Ishler, 2007)
²The 3 year average actual Milk Margin breakeven in Pennsylvania from 2015-2017 was $12.33 ± $2.29 ($/cwt) (Beck, Ishler, Goodling, 2018).
 

Table 2: Twelve month Pennsylvania and U.S. All Milk Price, Feed Cost, Milk Margin ($/cwt for lactating cows)

¹Based on corn, alfalfa hay, and soybean meal equivalents to produce 75 lbs. of milk (Bailey & Ishler, 2007)
²The 3 year average actual Milk Margin breakeven in Pennsylvania from 2015-2017 was $12.33 ± $2.29 ($/cwt) (Beck, Ishler, Goodling, 2018).

Figure 1: Twelve month Pennsylvania Milk Income and Income Over Feed Cost ($/milk cow/day)


 

²The 3 year average actual IOFC breakeven in Pennsylvania from 2015-2017 was $9.00 ± $1.67 ($/milk cow/day) (Beck, Ishler, Goodling, 2018).

Figure 2: Twenty-four month Actual and Predicted* Class III, Class IV, and Pennsylvania All Milk Price ($/cwt)


 

*Predicted values based on Class III and Class IV futures regression (Gould, 2019).

 

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