Tag: dairy margin coverage

DMC Margin Drops Below $4 for First Time Ever

Posted on by Theresa Sweeney

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.

NMPF’s Galen on Farm Bill Progress

Posted on by Alan Bjerga

NMPF Senior Vice President Chris Galen discusses the state of play in the upcoming farm bill on Dairy Radio Now.  Current spending debates are slowing progress on the five-year reauthorization of USDA programs, which include nutrition assistance and commodity payments. The current law expires Sept. 30 — because many commodity programs, including dairy, run on a calendar-year basis, any threat of near-term disruption is limited, Galen said.

DMC Margin Drops More than $1 in May to Record Low

Posted on by Theresa Sweeney

The May Dairy Margin Coverage (DMC) margin dropped by $1.01/cwt from April to $4.83/cwt, the lowest it’s ever been and the first time below $5/cwt during the life of the current program or that of its predecessor, the Margin Protection Program (MPP), triggering payment at both the Tier I and Tier II levels.

The May all-milk price dropped by $1.40/cwt from a month earlier to $19.30/cwt, while the DMC feed cost eased lower by $0.39/cwt in that time, on lower corn and soybean meal prices. The May payment for the maximum Tier 1 coverage at the $9.50/cwt level will be $4.67/cwt. The May payment for the low-cost Tier 2 coverage at the $5.00/cwt level will be $0.17/cwt.

Available forecasts anticipate the margin dipping down closer to $4/cwt during early summer, with a bottom in July, and not rebounding above $9.50/cwt until early in 2024.

NMPF Board of Directors Approves Comprehensive Farm Bill Recommendations

Posted on by Alan Bjerga

NMPF’s Board of Directors approved June 7 a suite of farm bill policy priorities covering the commodities, conservation, trade, and nutrition titles, working to enhance federal support for producers and expand access to nutritious dairy products for consumers at home and abroad.

With the current farm bill set to expire Sept. 30, Congress is working to enact a new bipartisan five-year farm bill.  NMPF’s recommendations will aid in enacting an on-time farm bill that provides dairy producers the certainty they need as they manage their risks and resources while seeking market opportunities at home and abroad.

“The farm bill is crucial both to dairy farmers seeking to effectively manage their risk and to the consumers who benefit from the nutritious products dairy farmers work every to provide,” said Randy Mooney, chairman of NMPF’s board and a dairy farmer outside Rogersville, MO. “We stand ready to work with lawmakers as they craft this complex, extremely important legislation that touches everyone.”

In the Commodities title:

NMPF seeks to build on its successes in the last farm bill to strengthen the dairy safety net and provide producers with access to a range of risk management tools.  NMPF’s board voted to support continuing the Dairy Margin Coverage safety net while updating the program’s production history calculation.  The board also voted to prioritize improving the Livestock Gross Margin-Dairy and Dairy-Revenue Protection programs should new funding become available.

The board also voted to seek farm bill language to direct USDA to conduct mandatory plant cost studies every two years to provide better data to inform future make allowance reviews. This would complement the near-term make allowance update NMPF is pursuing through its Federal Milk Marketing Order initiative via the USDA hearing process announced last week. Similarly, the board also voted to pursue restoring the previous “higher of” Class I mover in the most expeditious manner possible, either administratively via the FMMO process or legislatively through the farm bill, in which the mover was last changed in 2018.

In the Conservation title:

NMPF is advocating for policies that better position the dairy industry to meet its voluntary, producer-led goal of becoming greenhouse gas neutral or better by 2050. NMPF’s board voted to support maintaining robust funding for voluntary conservation programs, such as the Environmental Quality Incentives Program that supports dairy farmers in their ongoing land and water resource management efforts, with additional emphasis on feed and manure management both of which are major areas of opportunity in sustainability. The board also voted to seek relief from program payment limitations that prevent the family farmers that produce most of the nation’s milk supply from fully using these programs.

In the Trade title:

NMPF will support policies recognizing the growing importance of trade for U.S. dairy, with exports accounting for one-sixth milk of all U.S. milk production, a share expected to grow. NMPF’s board voted to support enhancing funding for trade promotion programs like the Market Access Program and the Foreign Market Development program, which promote American-made dairy and agriculture products that compete with heavily subsidized foreign products and return well over $20 in export revenue for every dollar invested.

The NMPF board also voted to seek language to protect common food names, as embodied in the bipartisan, bicameral SAVE Act that would establish an official list of common food and beverage names and direct USDA and the U.S. Trade Representative to prioritize this issue in international trade negotiations.

In the Nutrition title:

NMPF will support policies that reflect dairy’s role as an excellent source of 13 essential nutrients, some of which are under-consumed, according to the most recent Dietary Guidelines for Americans. The Supplemental Nutrition Assistance Program is vital to linking the food we produce as farmers to families across the country facing difficult circumstances.  NMPF’s board voted to support the enhancement of federal nutrition programs to provide nutritious dairy products to beneficiaries.  NMPF also supports the bipartisan Dairy Nutrition Incentives Program introduced in the Senate to encourage SNAP participants to choose healthful dairy products at the grocery store.

 

DMC Margin Drops Below $6 in April

Posted on by Theresa Sweeney

The April Dairy Margin Coverage (DMC) margin dropped by $0.25/cwt from a month earlier to $5.84/cwt, the first time the margin fell below $6 since August 2021. The April all-milk price was $20.70/cwt, down $0.40/cwt from March, while the DMC feed price was down for the month by $0.15/cwt, due entirely to a lower soybean meal price. The April payment for maximum Tier 1 coverage at the $9.50/cwt level will be $3.42/cwt. T

Available forecasts continue to indicate that monthly DMC margins will stubbornly remain around $6 into the summer and then slowly rise during the second half of the year, not topping $9.50/cwt until November.

DMC Margin Decline Slows Significantly in March

Posted on by Theresa Sweeney

Following three straight months when the Dairy Margin Coverage (DMC) margin dropped by well over $1.00/cwt, the margin dropped again in March, but by just 11 cents from February.

The milk price was down again, for the fifth month in a row, to $21.10/cwt, $0.50/cwt less than the month before, and feed costs were down by almost as much, $0.40/cwt, the first monthly drop on the DMC feed cost since last November. The lower feed costs were driven almost equally by drops in the prices of all three feed components of the formula, when expressed on a milk equivalent basis. The March DMC margin of $6.08/cwt will result in a payment of $3.42/cwt for Tier 1 coverage at the maximum $9.50/cwt level.

Available forecasts currently indicate that the monthly DMC margins are close to bottoming out for the year, at around $6.00/cwt in a month or two, followed by a slow rise that still looking may not exceed $9.50/cwt until the fourth quarter.

DMC Margin Posts Another Sizeable Drop in February

Posted on by Theresa Sweeney

The Dairy Margin Coverage (DMC) program will pay $3.31/cwt for $9.50/cwt coverage in February, based on a margin of $6.19/cwt that month. This was $4.70/cwt less than the margin last November. A milk price drop of $1.50/cwt from a month earlier and a $0.25/cwt rise in the DMC feed cost formula combined to lower the February margin by $1.75/cwt from its level in January.

Available forecasts currently indicate that the monthly DMC margins are close to bottoming out for the year, at around $6.00/cwt in a month or two, followed by a slow rise that will not likely top $9.50/cwt until the fourth quarter. This year will return many times the cost of this very affordable means of managing margin risk.

DMC Program Starts 2023 with Sizeable Payments

Posted on by Theresa Sweeney

The Dairy Margin Coverage (DMC) program made payments for only two of the twelve months last year, but it will pay $1.56/cwt for $9.50/cwt coverage for January. The January margin was $7.94/cwt, $1.82 lower than December’s. A one-month drop of $1.60/cwt in the U.S. average all-milk price, to $23.10/cwt, accounted for most of the margin drop. A monthly rise in the soybean meal price accounted for about two-thirds of the remaining margin fall, but higher corn and premium alfalfa prices contributed lesser amounts as well.

Available forecasts currently indicate that the monthly DMC margins will remain below $9.50/cwt until September and average just below $8/cwt for this entire calendar year. Signing up $9.50/cwt coverage for the first five million pounds is always recommended as a cost-effective risk management strategy. Even last year’s two payments more than covered the annual premium cost for that level of coverage. This year will almost certainly return many times the cost of this very affordable means of managing margin risk.

2022 Ends with No DMC Payments; 2023 May Be Different

Posted on by Theresa Sweeney

The December DMC margin was $9.76/cwt, down $1.13/cwt from the month before but still above the $9.50/cwt threshold for federal payments at the highest insurance level. Much of this decline was contributed by a $0.90/cwt fall in the U.S. average all-milk price, to $24.70/cwt. The DMC December feed cost rose $0.23/cwt from November, on higher corn and soybean meal prices.

The DMC margin fell below the highest coverage level of $9.50/cwt during just two months of 2022, as record high feed costs were generally topped by record high milk prices. This year’s outlook is very different, with the DMC margin currently projected to fall below $9.50/cwt every month until sometime next fall and to average around $8.00/cwt for the year.