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October DMC Margin Shows Another Large Monthly Increase

December 6, 2021

The October margin under the Dairy Margin Coverage program was $8.77/cwt, $1.85/cwt higher than a month earlier, as prices rose and feed costs fell. The October margin will produce a payment of about $0.73/cwt for coverage at the $9.50/cwt level. When eventually topped up with the full dairy-quality alfalfa cost figured in, this payment will rise to $0.96/cwt.

The October DMC feed cost dropped $0.55/cwt from a month earlier, mostly on a lower corn price, while the milk price rose by $1.30/cwt to $19.70/cwt. The increase was the third largest one-month increase since milk price-minus-feed cost margins were first calculated for federal dairy safety-net programs in 2014. Together with August’s increase, October’s margin rose $3.53/cwt over a two-month period.

The recent strength of milk prices is expected to continue through the end of the year, potentially ending this year’s unbroken string of margins below $9.50/cwt.