Feed markets and farmgate prices expected to fall

Published 5 June 19

After five consecutive months of decline, the milk to feed price ratio (MFPR) stabilised in May, at 1.13. Milk prices, while declining, have been relatively firm since last summer, remaining above the 5-year average. However, the increase in concentrate feed prices over the winter has pushed the MFPR down.

It is too early to tell whether this is a change in direction of the MFPR, pointing to some relief for margins. Current expectations are that both feed grain markets and farmgate prices are going to fall in the coming months.  It will be interesting to see if the fall in feed prices is enough to compensate for any declines in farmgate prices, and result in an improvement in the MFPR.

Calculated MFPR graph

Projected milk price changes

 

Returns from dairy wholesale markets, while declining, have been relatively stable since the beginning of the year. While some of this has yet to flow through to farmgate prices, only small drops are expected between now and August.

Grain and protein markets have declined recently, and are expected to continue to fall in the coming months.  Though grain prices have seen a lift recently due to heavy rains delaying US maize planting progress, the longer-term outlook is that prices will remain pressured (see page 9/10).

 

Feed grain price changes