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DMC Program Starts 2023 with Sizeable Payments

March 2, 2023

The Dairy Margin Coverage (DMC) program made payments for only two of the twelve months last year, but it will pay $1.56/cwt for $9.50/cwt coverage for January. The January margin was $7.94/cwt, $1.82 lower than December’s. A one-month drop of $1.60/cwt in the U.S. average all-milk price, to $23.10/cwt, accounted for most of the margin drop. A monthly rise in the soybean meal price accounted for about two-thirds of the remaining margin fall, but higher corn and premium alfalfa prices contributed lesser amounts as well.

Available forecasts currently indicate that the monthly DMC margins will remain below $9.50/cwt until September and average just below $8/cwt for this entire calendar year. Signing up $9.50/cwt coverage for the first five million pounds is always recommended as a cost-effective risk management strategy. Even last year’s two payments more than covered the annual premium cost for that level of coverage. This year will almost certainly return many times the cost of this very affordable means of managing margin risk.