The jump to an eight-year high in milk prices outpaced increasing feed costs, meaning there will be no Dairy Margin Coverage (DMC) program indemnity payments at any level for January milk marketings.

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Editor / Progressive Dairy

The USDA released its latest Ag Prices report on Feb. 28, including factors used to calculate January DMC margins and payments. The January DMC margin is $11.54 per hundredweight (cwt), above the top Tier I insurable level of $9.50 per cwt (Table 1).

DMC payments

The January 2022 DMC margin is $2.01 higher than December‘s margin and the highest in 14 months.

Milk price highest since 2014

The January 2022 announced U.S. average milk price rose $2.40 from December to $24.20 per cwt. It’s the highest monthly average since October 2014.

January milk prices were higher than the month before in all 24 major dairy states (Table 2), with the largest increase ($3.80 per cwt) in Texas. Producers in eight states saw average prices above $25 per cwt, with a high of $26.10 per cwt in Florida. Only New Mexico had an average price of less than $23 per cwt.


Prices received for milk

Compared to a year earlier, January 2022’s U.S. average milk price was up $6.70 per cwt. Among individual states, prices were up $7 or more in Arizona, Colorado, Illinois, Kansas, Michigan, New Mexico, New York, Pennsylvania, Vermont and Washington.

DMC margin calculations

All feed prices higher

Offsetting some of the gain in the average milk price was higher average costs for alfalfa hay, corn and soybean meal (Table 3).

  • The average price for corn rose 10 cents from December to $5.57 per bushel, the highest since August.
  • The average cost of soybean meal hit a seven-month high at $421.21 per ton.
  • With the DMC change to include the price of dairy-quality alfalfa hay in feed cost calculations, January’s average price was $252 per ton, up $9 from November.

December feedstuff prices yielded an average DMC total feed cost of $12.66 per cwt of milk sold, up 39 cents from December and the highest since last August.

The enrollment period for both 2022 DMC and Supplemental DMC programs is open until March 25, 2022.

Read also: Dairy producers urged to evaluate DMC enrollment decisions.