I have found myself taking more time than usual to read articles and commentaries on milk price predictions, new-crop feed pricing, and the resulting margin realities for the end of the fourth quarter and for all of 2026. In addition to finally feeling the long-awaited seasonal shift to cold weather, I am also feeling a shift of mindset among dairy producers.
It is a long way from being dire and in no way a panic. But at the same time, the feeling that every incremental feed investment will have a good return on investment (ROI) may be behind us. Converting feed cost to improve a ration may be going from what has felt like an uncontested layup to more of a 3-point shot.
To be sure, milk price changes may be more impactful in different regions with different class utilization. Likewise, I recently worked on a ration modeling project and gathered some feed prices from three different regions across the U.S. I was amazed by the wide discrepancy of the prices of several key dairy ration ingredients. After seeing those input cost differences, I am guessing the collective reduction in milk pricing will hit some regions harder than others.
New year, new changes
In general, purchased feed prices are certainly down. This is good. However, not all prices are necessarily lower. Among these are forage crops harvested in the 2025 growing season along with vitamins, minerals, and feed technology additives. Forage costs are a big contributor, and the best situation for forage cost management is high yields making big denominators for total crop input cost. This may only help if the dairy owns the ground growing the feed.
The other real cost starting to be discussed in forage inventories is interest expense. Having an extra year of forage on hand as a risk management strategy is good, but now it comes at a higher price.
I am sure different geographies will have varying relationships to changes in all three price sectors: purchased feed, forage costs, and milk price. It is time to be sure we are doing the math on all three. Are there nutritional strategies that worked easily for the last 12 to 18 months that might need tweaking for 2026? I am thinking yes.
A new principle on the marginal value of the last pound of milk recently gelled in my mind. We have all been taught that the extra pound of milk at a dairy or ton of feed at a feed mill is the most profitable either because all of the fixed costs are already paid, or because you are dividing the total cost by that one more unit of production. This is sound economics. Maybe it is a feed mill that has already paid all of the fixed costs and an extra order of feed on the last day of the month only has variable cost. That indeed was a profitable sale for the feed company. In a dairy model, if you can find a way to get another pound of milk out of the cows, not only has the fixed cost of the dairy already been paid, but the cow’s maintenance nutrients have also been supplied and paid for. Thus, this last pound of milk is less burdened by metabolic and economic cost and can add to net income. However, the biology of that last pound of milk has a nuanced difference.
The offensive
This biological reality should make us think about incremental feed cost added to make rations support more milk. I am not necessarily suggesting that the final answer will be any different, but going back to the basketball analogy, more thought may go into the 3-point shot than the layup.
So, what is this sneaky reality? It stems from the incremental addition of some nutrient building blocks for additional milk. When we think about creating additional dry matter intake with a balanced ration, healthy rumen, and healthy manure piles, the overall nutrient supply above what is needed for the maintenance of the animal should contribute to more milk at a higher efficiency. This supports the general goal in dairy production to manage and feed for high intakes in the modern dairy cow. More feed usually means more milk at a steady efficiency in a high-producing dairy.
Chasing more
There are at least two areas in ration formulation that have recently received much attention. This expectation of high-efficiency conversion of nutrients to milk at larger levels of milk production isn’t quite straightforward. The first of these is the upper end of normal for the incremental supply of amino acids (AA) and metabolizable protein (MP). Both support milk protein synthesis and milk revenue if you are paid for milk protein.
The response curve for this milk protein building block is curvilinear. This means that at some level of AA or MP intake, the efficiency of each additional unit of dietary AA and MP drops. Nutrition software programs don’t model this perfectly. Thus, we risk over predicting milk support. This same dynamic exists with adding more and more palmitic acid (C16:0) to increase butterfat test. This biology informs the economic return as well and should be considered when lowering and raising the feed rate. This is also not modeled in ration software but can be calculated by hand.
The defensive
One last point concerns the potential ration formulation changes with expectations of tighter margins. When considering potential feed cost savings as a response to lower milk prices, remember that the impact of these savings on margins is more significant than when considering them as a percentage of total feed cost. A 20-cent feed cost savings per cow is only 2.5% of cost assuming an $8 per cow per day total feed cost. If margin per cow is $2 per day and you save 20 cents on feed cost through things like optimization, smart use of additives, and maintaining milk, this same 20-cent cost delta is a 10% boost in margin. In many cases, formulations to allow for cost savings might impact milk yield, reproduction and/or health and should be considered accordingly.
Tight margins make for better dairy producers and better nutritionists. In no way am I suggesting that we stop feeding higher levels of MP and balancing for AA, nor should we move away from adding palmitic acid to diets. However, we need to be sure we are using good math on this tricky biology. No matter the milk price, we should always look for smart ways to save on feed cost and invest in a better nutrient supply. We are usually best at doing things when margins are tight. I always remember the things I learned in 2009 that have made our clients money ever since. Helping cows convert feed to milk is about both economics and biology.
