Tag: dairy margins

June DMC Margin Gains $1.14/cwt to $11.66/cwt

Posted on by Theresa Sweeney

The Dairy Margin Coverage Program margin in June was $11.66/cwt after adding $1.14/cwt over the previous month.

The June all-milk price was $22.80/cwt, up $0.80/cwt from May, and the DMC feed cost dropped by $0.34 for the month, mostly on a lower premium alfalfa price. The DMC margin calculated by USDA has risen $2.06/cwt over the past two months, reaching a level well above the threshold at which payments are generated by falling margins.

Futures-based forecasts at the end of July indicate that the DMC margin will average about $11.90/cwt during 2024, $0.40/cwt higher than similar forecasts indicated a month ago, with a peak in October, a sign that producers may have an opportunity to repair battered balance sheets over the next several months.

DMC Margin Gains Almost $2 in September

Posted on by Theresa Sweeney

The Dairy Margin Coverage (DMC) margin in September rose rapidly from August, as markets have been anticipating for months. The margin was $8.44/cwt for the month, rising $1.98/cwt over August, which itself was up almost $3 from July’s record low of $3.52/cwt.

As with the August increase, September’s DMC margin rise was driven primarily by a higher all-milk price, which rose by $1.30/cwt over August to hit $21.00/cwt. The September DMC feed cost formula shed $0.68/cwt, due mostly to a lower corn price, with a smaller drop in the September soybean meal price partially offset by a small rebound in the price of premium alfalfa hay.

The September margin will generate $1.06/cwt payments to $9.50/cwt DMC Tier 1 coverage. The futures markets are currently expecting the DMC margin to hover around that maximum coverage level each month during the fourth quarter of the year.

DMC Margin Decline Slows Significantly in March

Posted on by Theresa Sweeney

Following three straight months when the Dairy Margin Coverage (DMC) margin dropped by well over $1.00/cwt, the margin dropped again in March, but by just 11 cents from February.

The milk price was down again, for the fifth month in a row, to $21.10/cwt, $0.50/cwt less than the month before, and feed costs were down by almost as much, $0.40/cwt, the first monthly drop on the DMC feed cost since last November. The lower feed costs were driven almost equally by drops in the prices of all three feed components of the formula, when expressed on a milk equivalent basis. The March DMC margin of $6.08/cwt will result in a payment of $3.42/cwt for Tier 1 coverage at the maximum $9.50/cwt level.

Available forecasts currently indicate that the monthly DMC margins are close to bottoming out for the year, at around $6.00/cwt in a month or two, followed by a slow rise that still looking may not exceed $9.50/cwt until the fourth quarter.