News & Resources

MPP Forecast: October 2018

October 11, 2018

The monthly margin under the dairy Margin Protection Program (MPP) for August 2018 was $7.43/cwt., $0.71/cwt. higher than the July margin. The August all-milk price was $15.90/cwt., $0.50 higher than in July. The August MPP feed cost formula was $0.21/cwt. lower than the month before, the third monthly drop in a row. More than half the drop in the monthly feed cost was due to lower corn prices. The August margin makes seven months in a row during which the MPP margin has been below $8.00/cwt. in 2018, which is a record. The monthly MPP margin was below the $8.00 level six times during both calendar years 2015 and 2016, but did not fall below that level at all during 2017.

Dairy farmers who signed up in 2018 for $8.00 margin coverage at the lower, Tier 1 premium cost will receive a net return of $0.44/cwt. – after payment of premiums and sequestration reduction of payments – on their covered milk production for all of 2018, based on USDA’s MPP Decision Tool forecast, calculated using the Sept. 26 CME dairy and grain futures settlement prices, shown in the graph. USDA data shows that 21,372 producers signed up for the program this year: 20,177 of them at the $8.00 margin coverage level, and 17,088 of these for 90 percent of their 2018 production histories. As of Sept. 10, USDA had processed MPP payments totaling $230.4 million.

USDA’s MPP margin forecasts can be accessed online. NMPF’s Future for Dairy website offers a variety of educational resources to help farmers make better use of the program.