Tag: dmc dairy

DMC Margin Drops Again in June

Posted on by Theresa Sweeney

The June margin under the Dairy Margin Coverage program dropped 65 cents from May’s margin to $6.24/cwt, which will generate a June payment of $3.26/cwt for $9.50/cwt coverage. The DMC feed cost calculation for June was lower by $0.16/cwt of milk from May, mostly on lower soybean meal prices, while the June U.S. average all-milk price took a larger than expected drop of $0.80/cwt from May, a return to April levels. The blended alfalfa hay price increased in June, for the ninth straight month.

The current futures-based price outlook indicates that the DMC margin will not rise much above $7.00/cwt through the summer and remain below $9.50/cwt through the end of 2021. USDA reported that estimated DMC payments for the 2021 program exceed $543 million as of July 26.

DMC Payments Increase in May

Posted on by Theresa Sweeney

The May margin under the Dairy Margin Coverage program dropped 5 cents from April to $6.89/cwt, which will generate a May payment of $2.61/cwt for $9.50/cwt coverage, as increases in feed costs more than offset gains in milk prices.

The May U.S. average all-milk price rose by $0.80/cwt from April to $19.20/cwt, but the May DMC feed cost calculation also rose from a month earlier, by $0.85/cwt. This was the largest one-month jump in the margin program’s feed cost calculation since margin protection first became the main federal safety-net program for dairy in early 2014. Corn prices were higher in May by the equivalent of $0.64/cwt of milk in the formula, which was also the highest ever single-month increase since the inception of dairy margin protection in the formula’s corn-price component. Meanwhile, the blended alfalfa hay price increased by the equivalent of $0.15/cwt of milk in the formula, the highest single month increase in the formula’s alfalfa price component since premium alfalfa was added to it at the beginning of 2019.

The current futures-based price outlook indicates that the national all-milk price will not likely further rise much more than a dollar per hundredweight above its May level through the end of 2021, while the DMC program’s feed cost calculation may not recede much from May, thus raising the prospect that the margin could stay below $9.50/cwt for all of 2021. USDA reported that estimated DMC payments exceeded $446 million as of June 28.

DMC Margin Rises in March

Posted on by Theresa Sweeney

The March margin under the federal Dairy Margin Coverage Program rose $0.24/cwt above February’s to $6.46/cwt, with forecast for future margin’s indicating that February may have been the year’s low.

The March U.S. average all-milk price was $17.40/cwt, $0.30/cwt higher than in February, while the DMC March calculated feed cost was just $0.06/cwt higher than February’s. On a per hundredweight of milk basis, a higher corn price in March was almost entirely offset by a lower cost of soybean meal. The March payment for $9.50/cwt DMC program coverage is $3.04/cwt. On an annualized basis, the DMC program will have already paid the equivalent of $2.17/cwt for coverage at $9.50/cwt during the first quarter of 2021 alone.

Current futures prices indicate that the DMC program margins going forward may remain below $9.50/cwt until late summer, as rising milk prices compete with higher costs for corn and hay. USDA reported that 164.7 billion pounds of production history, or 79.4 percent of the total, was enrolled in the 2021 DMC program, with an estimated $223 million in payments for disbursement as of April 19.