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Dairy Margins Remain Well Above DMC Trigger on Prices

February 4, 2020

The margin for December 2019 under the Dairy Margin Coverage program was $11.95 per cwt., $0.26 per cwt. lower than the November DMC margin, with falling milk prices more than offsetting a drop in feed costs. The margin remains well above the trigger necessary for DMC assistance.

From November to December, the all-milk price dropped by $0.30 per cwt., to $20.70 per cet., and the DMC feed cost calculation was $0.04 lower. USDA’s DMC Decision Tool projected at the end of January that the DMC margin would fall sharply for that month and remain well below its late 2019 values through this spring, the slowly rise to just above $11.00 per cwt. by the fourth quarter of 2020. This drop would be mainly generated by a drop in milk prices. Other forecasts also point to a milk-price decline at the beginning of 2020, but not as steep as the USDA Tool projected. The USDA DMC Tool does not currently indicate that the DMC margin would drop below $10.00 per cwt. anytime during 2020, thus staying above the trigger level of $9.50/cwt. and generating no payments this year.

As of Jan. 27, USDA reported that 12,989 dairy operations, or 47.64 percent of operations with production histories, had enrolled in the 2020 DMC program. Many of these enrollees are operations that signed up for 5-year coverage last year. Enrolling in the DMC program at the generous coverage and affordable premiums available will always be a highly recommended risk-management option for dairy farmers.

The DMC information page on NMPF’s website offers a variety of educational resources to help farmers make better use of the program. NMPF also posted a new video explaining how farmers can benefit from the DMC.