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Feed cost relief may repair bottom lines

Even with the U.S. All-Milk price averaging above $22 per hundredweight (cwt.) for the first two months of 2023, profitability is suffering for most producers. It turns out that feed costs are largely to blame.

Comparing the first two months of 2023 with averages from 2010 to 2019 reveals that milk prices are $3.88 per cwt. higher. However, corn prices are also up $2.27 per bushel, soybean meal prices nearly $125 per ton higher, and alfalfa prices in the Dairy Margin Coverage (DMC) margin calculation have climbed almost $153 per ton. (Note, premium alfalfa prices for 2023 are being measured against the average alfalfa price that was used for most of 2010 to 2019).

This has left the January and February 2023 DMC margin $1.56 per cwt. lower than the average from 2010 to 2019. That’s taken place even with $22 milk. Help may be on the way regarding input costs, though.

Scott Brown April 10, 2023


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