DMC Margins Rise Above Aid Threshold
October 2, 2019
A twenty-cent per hundredweight increase in the price of milk from July to August, together with a 38-cent drop in the Dairy Margin Coverage feed cost calculation over the same time boosted the DMC margin for August by 58 cents a hundredweight over July’s margin of $9.27 per cwt. to $9.85, and thus “out of the money” for generating payments under the program. The maximum margin coverage level under the program is $9.50 per cwt. for up to five million pounds of covered production history. A drop in the price of corn, assisted by lower soybean meal prices as the country heads into harvest season, generated the DMC cost reduction, the largest monthly drop since June 2018. The DMC margin will almost certainly remain above $9.50 per cwt. for the remainder of 2019.
As of Sept. 26, USDA’s DMC Decision Tool, which can be accessed online, projected the margins shown in the chart on the left.
The DMC information page on NMPF’s website offers educational resources to help farmers make better use of the program.
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