MPP Forecast: June 2018
June 13, 2018
Under the dairy Margin Protection Program (MPP), the monthly margin for April 2018 decreased an additional $0.15 per hundredweight from March, to $6.62/cwt. This was the fifth consecutive drop in the MPP monthly margin. The April all-milk price increased by $0.20/cwt. from March, to $15.80/cwt. The April feed cost formula was up by $0.35/cwt. from March, with most of the increase – on a per-hundredweight-of-milk basis – due to an increase in the cost of alfalfa hay. The prices of corn and soybean meal also contributed smaller increases to the MPP feed cost formula calculation.
USDA’s MPP Decision Tool projects that coverage at the $8.00/cwt. and $7.50/cwt. coverage levels could result in total payments in excess of premiums and fees for up to 5 million pounds of production history, based on the May 29 CME dairy and grain futures settlement prices, shown in the accompanying graph. This will be true even if the remaining margins this year are above $8.00/cwt.
USDA has now twice extended the June MPP sign-up deadline. Producers have until June 22 to sign up for coverage for the entire 12 months of 2018. The USDA also has begun issuing payments to farmers who already elected coverage for this year.