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Dairy Margins Decline on Prices; DMC 2021 Signup Begins Oct. 12

October 2, 2020

The monthly Dairy Margin Coverage (DMC) program milk price-feed cost margin for August was $10.83 per cwt. This was down $1.58 per cwt. from the July margin but still well above the $9.50 per cwt. needed to trigger payment under the DMC. The milk price dropped by $1.70 per cwt., from $20.50 per cwt. in July to $18.80 per cwt. in August. The feed-cost calculation for August was $0.12 per cwt. lower than in July, mostly on a lower corn price. The DMC feed cost has been dropping every month since April.

The USDA-sponsored DMC Decision Tool is currently anticipating a further drop in the margin to $8.26 per cwt. in September driven by lower prices, which would generate significant payments to the higher levels of coverage for the third month this year. Following this, the margin is expected to rebound above $9.50 per cwt. for the remainder of this year.

Signup for the DMC program for 2021 coverage will begin Oct. 12 and will run through Dec. 11. The USDA DMC Decision Tool is currently projecting the margin will begin to drop below $9.50 per cwt. starting in February next year and continue to drop at least through June. Enrolling in the program for next year is strongly recommended for those operations not already signed up under the previous multi-year enrollment option.

The DMC information page on NMPF’s website offers a variety of educational resources to help farmers make better use of the program.