Tag: USDA dairy margin

No DMC payments again for November

Posted on by Theresa Sweeney

The November DMC margin was $10.89/cwt, eighteen cents higher than the October margin, as costs fell faster than prices.

The U.S. average all-milk price dropped $0.30/cwt in November from a month earlier to $25.60/cwt, while the DMC November feed cost was $0.48/cwt lower than the prior month, driven mostly, in equal measure, by lower soybean meal and premium alfalfa hay prices.

Available forecasts currently project the DMC margin will fall below $9.50/cwt during the first three quarters of 2023.  Enrollment for both calendar year 2023 DMC and Supplemental DMC closes on Jan. 31.

DMC Pays Again in September

Posted on by Theresa Sweeney

The September margin under the Dairy Margin Coverage program was $8.62/cwt, up by $0.54/cwt from the August margin and generating a payment of $0.88/cwt for Tier 1 coverage at the $9.50/cwt level under the program.

The September U.S. average all-milk price rose $0.10/cwt from August. The DMC feed cost formula produced a $0.45/cwt lower feed cost for the month, due almost entirely to lower soybean meal and corn prices (numbers don’t add exactly due to rounding).

Together, the September payment and the August one for $1.42/cwt will return more to producers enrolled for $9.50.cwt Tier 1 coverage than their annual premium payments. Current forecasts indicate that, of the remaining three months in 2022, additional margin coverage payments are most likely to occur in December.

USDA’s Farm Service Agency opened enrollment for both calendar year 2023 DMC and for Supplemental DMC on Oct. 17. The deadline to enroll is Dec. 9, 2022.

August DMC Margin Lowest Ever

Posted on by Theresa Sweeney

The August margin USDA announced for the Dairy Margin Coverage program, $5.25/cwt., fell to its lowest-ever since margin protection became the main federal dairy safety net in 2014, slipping below the previous low of $5.37/cwt. margin from May 2020. A $0.20/cwt. drop in the U.S. average all-milk price from a month earlier, to $17.70/cwt., and a $0.24/cwt. rise in feed costs, mostly due to a higher corn price, produced the August margin.

USDA has still not begun to announce the revised margins using 100 percent dairy quality alfalfa, a change to the program’s feed-cost calculation made in August at NMPF’s urging. Incorporating the change, which will be retroactive to 2020, would set the August margin at $5.03/cwt.

USDA reported that, as of Sept. 27, the 19,009 operations enrolled in this year’s DMC program are expected to receive $817,171,664 in payments, based on previously announced margins.  Margins for the remaining five months in 2021, including August, are not included in this total.  Dairy futures continue to indicate further DMC payments for $9.50/cwt coverage for every month remaining this year.

DMC Margin Payment Falls in April as Milk Prices Improve

Posted on by Theresa Sweeney

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.