MPP Forecast: June
June 6, 2017
The U.S. average all-milk price dropped to $16.50 per hundredweight in April, an $0.80 decline from March, as reported by USDA’s National Agricultural Statistics Service (NASS). This was the fourth straight monthly drop in the benchmark national milk price, driven by lower Class I and Class III federal order prices. The Class III price continued during the spring to come under pressure from milk production growth, which has increased domestic cheese production and stocks.
Compared to March, feed ingredient prices announced by NASS and USDA’s Agricultural Marketing Service for April were lower for corn and soybean meal, but higher for alfalfa hay. These feed ingredient price changes were completely offset in the monthly Margin Protection Program (MPP) feed cost formula, which computed the same feed cost of $7.95 per hundredweight in April as it did in March. The MPP monthly margin for April was $8.55 per hundredweight, down from $9.35 per hundredweight in March. This created a bimonthly MPP margin for March-April of $8.95 per hundredweight, meaning there will be no payments for the second of the six two-month windows in 2017.
USDA’s current MPP margin forecast, based on late May CME futures settlements, projects the margin will remain well above $8 per hundredweight during 2017, with virtually no probability that it will fall below the $8 level for the remainder of 2017. USDA’s MPP margin forecasts are updated daily online. NMPF’s Future for Dairy website offers a variety of educational resources to help farmers make better use of the program.