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Surging Milk Price Boosts DMC Margin

March 3, 2022

The January margin under the Dairy Margin Coverage (DMC) program rose just over $2/cwt to $11.54/cwt, fueled by the third-highest ever jump in the U.S. average all-milk price.

A spectacular $2.40 per hundredweight one-month jump in the U.S. average all-milk price in January overpowered a DMC feed-cost calculation that rose only 39 cents in the same period. The monthly milk price gain has only been surpassed in April 2004, when it rose by $2.60/cwt, and June 2020, when it leaped by $4.50 /cwt as part of a price sharp recovery from the onset of the COVID-19 pandemic. That jump returned the price to barely higher than it had been just three months earlier; by contrast, the recent spike capped a series of gains that have pushed the price up by $6.50/cwt over five months.

January’s all-milk price has only been surpassed in five months, all in 2014. Late February dairy and grain futures indicate that feed costs will tend to track milk prices over the next several months to keep the margin from rising much above its January level.

As of February 28, the 2021 DMC program has seen record payments of nearly $1.2 billion to 18,952 enrolled operations, an average of $62,773 per enrolled operation. NMPF urges all dairy farmers who haven’t yet joined DMC to do so. The deadline to sign up for the 2022 DMC program has been extended to March 25. NMPF has a page of resources here for those who may have questions about the program.