DMC Margin Drops Below $4 for First Time Ever
August 2, 2023
The June Dairy Margin Coverage (DMC) margin dropped by $1.18/cwt from a month earlier to $3.65/cwt, the first time it’s been below $4/cwt since margin protection became the basic federal safety net mechanism for dairy in 2014. It will generate a lot of $0.35/cwt payments for Tier 2 coverage at the free $4/cwt coverage level, as well as payments of $5.85/cwt for coverage at the maximum $9.50/cwt Tier 1 coverage level. The June all-milk price was $1.40/cwt lower than in May, the same as the April to May drop a month earlier, while the DMC June feed cost was only $0.22/cwt of milk lower than May’s, due relatively evenly to slight drops in the prices of all three feed formula components.
Available forecasts indicate the margin will improve slightly in July from the June level, then increase rapidly from August through October and approach $9.50/cwt by December.
