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MPP/DMC Forecast: February 2019

February 6, 2019

The U.S. Department of Agriculture (USDA) is gradually catching up on releasing data delayed by the partial government shutdown. The monthly margin under the now-expired Margin Protection Program (MPP) for November 2018 was $8.66/cwt., down $0.30 from the October margin. The November all-milk price dropped $0.40 from October, to $17.00/cwt., and the November MPP feed cost calculation was 10 cents lower than the previous month at $8.34/cwt. Under the new Farm Bill signed in December 2018, the program will go forward as the Dairy Margin Coverage (DMC) program. The USDA MPP Decision Tool currently projects that the margin will remain above the old $8.00/cwt. maximum margin coverage level during December 2018 and for every month during 2019 but will remain all this year below the new maximum DMC margin coverage level of $9.50/cwt. for the first 5 million pounds of a producer’s milk production history under the program, as shown in the chart. Under this current forecast, payments for $9.50 coverage, which would cost $0.15/cwt. for the year, would amount to just over $0.30/cwt. when averaged over the year. No date has been set for USDA to announce the sign-up period for DMC coverage in 2019.

The new Farm Bill also removes the previous restriction that prohibited producers from enrolling milk in both the MPP and the Livestock Gross Margin for Dairy (LGM-Dairy) program during the same month. It further allows farmers previously prevented from enrolling in MPP during 2018 due to this restriction to enroll retroactively in MPP and collect payments for 2018 for the months during which they were prevented from doing so.

USDA’s MPP margin forecasts can be accessed online.