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DMC Margin Posts Another Sizeable Drop in February

April 4, 2023

The Dairy Margin Coverage (DMC) program will pay $3.31/cwt for $9.50/cwt coverage in February, based on a margin of $6.19/cwt that month. This was $4.70/cwt less than the margin last November. A milk price drop of $1.50/cwt from a month earlier and a $0.25/cwt rise in the DMC feed cost formula combined to lower the February margin by $1.75/cwt from its level in January.

Available forecasts currently indicate that the monthly DMC margins are close to bottoming out for the year, at around $6.00/cwt in a month or two, followed by a slow rise that will not likely top $9.50/cwt until the fourth quarter. This year will return many times the cost of this very affordable means of managing margin risk.