MPP Forecast: November 2017
November 16, 2017
The U.S. Department of Agriculture’s (USDA) Farm Service Agency (FSA) reported that the monthly Margin Protection Program (MPP) feed cost for September was $7.81/cwt. Compared to last month’s prices, the September corn price was unchanged, soybean meal rose by $7/ton, and alfalfa hay was $2/ton higher. These changes increased the September MPP feed cost calculation from August by $0.08/cwt. NASS also reported that the U.S. average all-milk price was $17.80/cwt in September, $0.20/cwt lower than the August all-milk price. The monthly MPP margin for September was $0.28/cwt lower than the prior month, at $9.99/cwt.
The CME grain futures currently indicate that the monthly MPP feed cost will rise slowly from its current level through the end of next year, but remain below $8.80/cwt throughout that time. The CME dairy futures currently indicate that the all-milk price will remain below $17/cwt during at least the first half of 2018. Combined, the futures indicate that the MPP margin will hover close to $8/cwt during the second, third and fourth bimonthly periods next year, and may drop below that level during May-June 2018. The USDA MPP decision tool margin forecast for most of next year has fallen considerably lower over the past month.