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May DMC Margin Jumps to $10.52/cwt as Higher Prices Outstrip Feed Costs

July 8, 2024

The Dairy Margin Coverage Program rose sharply in May to levels well above the floor needed to trigger payments to dairy farmers, with milk prices rocketing past increasing feed costs to bolster dairy bottom lines.

Feed prices in May sharply reversed a falling trend of recent months to gain $0.58/cwt of milk from a month before, as measured by the DMC feed cost formula. All three formula components contributed measurably to the boost. Even so, May milk prices gained $1.50/cwt from April, rising to $22.00/cwt boosting the DMC margin by $0.92/cwt from the prior month to $10.52/cwt.

Available forecasts at the end of June indicate that the DMC margin will average about $11.50/cwt during 2024. This would be the second-highest average margin for a calendar year since margin protection became the basic federal safety net program for dairy.