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August DMC Margin Lowest Ever

October 5, 2021

The August margin USDA announced for the Dairy Margin Coverage program, $5.25/cwt., fell to its lowest-ever since margin protection became the main federal dairy safety net in 2014, slipping below the previous low of $5.37/cwt. margin from May 2020. A $0.20/cwt. drop in the U.S. average all-milk price from a month earlier, to $17.70/cwt., and a $0.24/cwt. rise in feed costs, mostly due to a higher corn price, produced the August margin.

USDA has still not begun to announce the revised margins using 100 percent dairy quality alfalfa, a change to the program’s feed-cost calculation made in August at NMPF’s urging. Incorporating the change, which will be retroactive to 2020, would set the August margin at $5.03/cwt.

USDA reported that, as of Sept. 27, the 19,009 operations enrolled in this year’s DMC program are expected to receive $817,171,664 in payments, based on previously announced margins.  Margins for the remaining five months in 2021, including August, are not included in this total.  Dairy futures continue to indicate further DMC payments for $9.50/cwt coverage for every month remaining this year.