DMC Margin Gains Almost $3 in August
October 4, 2023
The August Dairy Margin Coverage (DMC) margin was up by $2.94/cwt from July to reach $6.46/cwt in August, 2023’s highest margin since January and the margin’s first monthly increase this year.
As is often the case whenever there is a large monthly margin movement, the milk price was the main driver of the change. The U.S. average all-milk price added $2.30/cwt to July’s level to reach $19.70/cwt in August, the year’s first monthly milk price increase. August feed costs fell $0.64/cwt, mostly due to a drop in the price of corn, although soybean meal and premium alfalfa prices were down slightly as well.
The August margin jump in the margin was the first of several that futures markets expect will raise the margin above the maximum $9.50/cwt DMC Tier 1 coverage level. So far this year, the program has made substantial payments to that coverage level every month.
