Tag: milk prices
December DMC Margin Comes in Just Above Payment Threshold
2021 narrowly missed being the first calendar year during which the Dairy Margin Coverage program would have made payments at the maximum $9.50/cwt coverage level during every month. But a milk-price surge prevented that from happening.
The December margin under the program was $9.53/cwt, $0.39/cwt. higher than November’s margin and above the threshold needed to trigger payments at the maximum coverage level. From November to December, the all-milk price gained $1.00/cwt, to $21.80/cwt, while the DMC feed cost gained $0.61/cwt. On a per hundredweight of milk basis, half of the feed-cost increase was from higher soybean meal prices, one-third from higher corn prices, and one-sixth from higher premium alfalfa prices.
Late January dairy and grain futures continued to indicate a very small likelihood for payments during 2022; still, the generally strong milk price outlook has shown volatility in recent weeks, and grain prices have been showing renewed strength.
Signup for the 2022 DMC program is underway and will close on Feb. 18. Last year’s program has paid out nearly $1.2 billion to 18,800 enrolled operations as of Jan. 31. NMPF is urging dairy farmers who haven’t yet joined DMC to do so. NMPF has a page of resources for members who may have questions here.
Dairy Market Report – January 2022
Dairy Defined Podcast: Price Forecast Positive for Dairy, NMPF’s Vitaliano Says
Dairy prices for 2022 are projected at an eight-year high, with supply adjustments and booming exports across a wide range of products shoring up farmer balance sheets that have struggled with volatility during the pandemic era, NMPF Chief Economist Peter Vitaliano says in an NMPF podcast released today.
Due to tight supplies “not only is the outlook for milk prices the best in eight years, but that’s also the case for the individual dairy products,” Vitaliano said. Peter Vitaliano. “The big question is, with milk prices this good and feed prices not going up as fast as they were last year, how long is that tightness going to continue? And how soon will it be before we see some expansion of milk production again?”
Vitaliano, who also writes NMPF’s monthly Dairy Market Report, also encouraged farmers to sign up for the Dairy Margin Coverage program, which has a deadline of Feb. 18 for 2022 assistance. “The futures markets look very good at the moment, but there are many months to go. The history of dairy farmers second-guessing the markets, even based on the futures, is not very good. And again, given how inexpensive coverage is, our recommendation continues to be you should sign up for the program.”
NMPF resources on the Dairy Margin Coverage Program can be found here.
The full podcast is here. You can find and subscribe to the podcast on Apple Podcasts, Spotify, Google Podcasts and Amazon Music under the podcast name “Dairy Defined.” A transcript is also available here. Broadcast outlets may use the MP3 file below. Please attribute information to NMPF.
Dairy Market Report – November 2021
Dairy Market Report – August 2021
DMC Margin Payment Falls in April as Milk Prices Improve
The April payment under the Dairy Margin Coverage program fell $0.48/cwt from March to $2.56/cwt for $9.50/cwt coverage, as higher milk prices that easily outstripped rising corn costs boosted margins. The April U.S. average all-milk price rose a full dollar per hundredweight from a month earlier to $18.40/cwt, while the April DMC feed cost calculation was $0.52/cwt higher, due almost entirely to a higher corn price.
Current futures prices indicate that the DMC program margins will continue to rise at a moderate pace, thus reducing monthly payments, and surpass $9.50/cwt by late summer. USDA reported last week that as of May 24, estimated DMC payments for this year have exceeded $344 million.
