MPP Forecast: September
September 11, 2017
The U.S. Department of Agriculture’s (USDA) Farm Service Agency announced in August that the monthly Margin Protection Program (MPP) feed cost for July was $8.22/cwt. NASS also reported that the U.S. average all-milk price was $17.30/cwt. in July, which was unchanged from June. The monthly MPP margin for July was $9.08/cwt.
Following recent drops in cash markets, particularly for block cheese, the current CME dairy futures have become less optimistic about the milk price outlook through the end of the year. They now indicate that there may be about another $1/cwt. of upside from the July all-milk price by November, the heart of the holiday season. The grain market futures collectively indicate that the MPP feed cost will remain relatively flat through the end of the year and that the monthly MPP margin will therefore advance to just over $10/cwt. by November. USDA’s current MPP margin forecast, based on late August CME futures settlements, is slightly more optimistic. As shown, it forecasts that the last bimonthly margin for the year will be about $10.50/cwt.