DMC | DMC margin falls in February, USDA says

Lower milk prices and higher corn and alfalfa hay prices in February compared to January shrank USDA’s calculated margin between milk prices and feed costs in the Dairy Margin Coverage Program.

The February margin is $6.22 per hundredweight of milk, 92 cents below January’s $7.14 margin.

Compared with January, milk prices decreased 40 cents per hundredweight. Corn prices increased 51 cents per bushel. Alfalfa hay increased $4.50 a ton, and soybean meal decreased $11.96 per ton.

Dairy producers who enrolled milk at a $6.50 margin or higher can expect a payout for February. Coverage at the $9.50 margin would yield a payout of $3.28 per hundredweight.

At the end of March, USDA estimated payouts for January and February would total more than $93 million. The agency’s April 5 report estimated the total at $22.6 million.

A spokesperson from USDA’s communications team told Capital Press on Wednesday the weekly reports estimate payments based on enrollment. But actual payments as of April 5 were approximately $203 million — about $85 million for January and about $118 million for February.

“The vast majority of DMC payments have been made, and we don’t expect the numbers to change much for the Jan. and Feb. payments,” the spokesperson said in an e-mail.

The number of DMC contracts for 2021 totaled 18,808, according to USDA’s March 29 report. Enrollment at the $9.50 margin represents about 95% of the milk covered by those contracts, USDA told Capital Press in early March.

Producers enrolled about 163.6 billion pounds of milk production history in the program for 2021, representing 80% of the milk and about 74% of dairy operations with production history for USDA programs.

USDA told Capital Press in early March about 30% of enrolled milk had some level of margin coverage — from $4 to $9.50.

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Topics |
DMC, Margin, Milk, Prices, USDA

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