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September DMC Margin Is Large Improvement Over August

November 3, 2021

The September margin for the Dairy Margin Coverage program rose by $1.68/cwt from a month earlier to $6.93/cwt. The jump was driven by a mostly corn price-driven $0.98/cwt drop in the feed cost formula and an $0.80/cwt increase in the all-milk price, to $18.40/cwt.

The resulting $2.58/cwt September DMC payment for $9.50/cwt coverage will be the ninth consecutive such payment well in excess of $2/cwt this year, with the nine-month average totaling $3.08/cwt. When USDA eventually tops up the payments for this year and last with the full dairy-quality alfalfa price figured into the feed cost calculation, the 2021 average payment for the first nine months will be $3.31/cwt.

USDA is expected to pair the announced regulation on the alfalfa price change with that for the separate Supplemental DMC program.

USDA reported that, as of Oct. 25, the 19,029 operations enrolled in this year’s DMC program are expected to receive $981,249,096 in payments, for an average of $51,566 per enrolled operation, based on previously announced margins. This represents payments for January through August and does not include the eventual top-up payments from the alfalfa price change. The dairy futures continue to indicate that there will be at least another DMC payment for $9.50/cwt coverage during the final three months of the year.