The USDA National Agricultural Statistics Service (NASS) released its latest Ag Prices report on Nov. 30, including factors used to calculate October 2023 Dairy Margin Coverage (DMC) margins and indemnity payments. Compared to a month earlier, overall U.S. average feed costs were lower and milk prices were up, pushing the milk income margin up another $1 per hundredweight (cwt) to the highest level since December 2022.

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Editor / Progressive Dairy

October 2023 DMC at a glance

DMC program margin factors compared to previous month:

  • Alfalfa hay: $278 per ton, down $10 from September 2023
  • Corn: $4.93 per bushel, down 28 cents
  • Soybean meal: $416.16 per ton, up $5.09
  • Total feed costs: $12.16 per cwt, down 40 cents
  • Milk price: $21.60 per cwt, up 60 cents
  • Margin above feed cost: $9.44 per cwt, up $1

Source: USDA Farm Service Agency, National Ag Statistics Service and Ag Marketing Service, Nov. 30, 2023

Milk prices hit nine-month high

The October 2023 announced U.S. average milk price rose 60 cents from September to $21.60 per cwt, equal with February and the highest since January 2023. It was still down $4 per cwt from October 2022’s revised average of $25.60 per cwt.

October milk prices were higher than the month before in 21 of 24 major dairy states, with only Iowa, South Dakota and Wisconsin posting small declines. Largest month-to-month increases were $1.90 in Georgia, $1.70 in Florida and $1.40 in Idaho.


High prices for the month were in high Federal Milk Marketing Order (FMMO) Class I fluid milk utilization states of Florida ($26.40 per cwt), Georgia ($26.10) and Virginia ($25.90). Average prices were below $20 per cwt in Iowa and Wisconsin.

Compared to a year earlier, October 2023’s U.S. average milk price was down $4 per cwt, led by a decline of $5 or more in Minnesota, South Dakota and Wisconsin.

Feed costs lower

National average costs for major feedstuffs were lower, with declining corn and dairy-quality alfalfa hay prices offsetting an increase in the average price for soybean meal:

  • At $4.93 per bushel, the average price for corn was 28 cents lower than a month earlier and the lowest since March 2021.
  • The average cost of soybean meal (SBM) rose to $416.16 per ton, up $5.09 from September.
  • The October average price for dairy-quality alfalfa hay was $278 per ton, down $10 from the previous month and the lowest since June 2022.

The DMC feed cost for each month is calculated by summing three numbers: the corn price per bushel times 1.0728; plus the soybean meal price per ton times 0.00735; plus the alfalfa hay price per ton times 0.0137.

October feedstuff prices yielded an average DMC total feed cost of $12.16 per cwt of milk sold, down 40 cents from September and the lowest since November 2021.

Indemnity payments limited and small

At $9.44 per cwt, the October DMC margin only triggers Tier I indemnity payments of just 6 cents at the $9.50 per cwt coverage level. There are no indemnity payments for Tier II producers nor Tier I producers insured at $9 per cwt or lower.

All 2023 DMC indemnity payments are subject to a 5.7% sequestration deduction.

Looking ahead

As of Nov. 30, the November DMC margin is forecast at $9.56 per cwt, above any indemnity payment trigger. That actual margin will be announced on Dec. 29. December’s margin, to be announced at the end of January, is currently forecast at $8.79 per cwt, again triggering indemnity payments at $9 and $9.50 coverage levels.

Past payments

Through Nov. 8, DMC indemnity payments distributed through the USDA’s Farm Service Agency (FSA) for milk marketings through the first nine months of 2023 (January-September) had topped $1.27 billion.

Indemnity payments and average payments per dairy operation in the previous four years were:

  • 2022: $83.7 million, averaging $4,664 – indemnity payments were triggered in just two months (August and September).
  • 2021: $1.187 billion, averaging $62,280 – indemnity payments were triggered in 11 of 12 months.
  • 2020: $234 million, averaging $17,340 – indemnity payments were triggered in five months.
  • 2019: $451.6 million, averaging $19,319 – indemnity payments were triggered in seven months.

Based on latest enrollment data as of Nov. 8, 17,041 dairy operations are enrolled in the 2023 DMC program, representing about 74% of operations with established production history. January-September DMC payments averaged $74,553 per dairy operation enrolled in 2023.

Annual milk volume covered under the program totals 155.4 billion pounds, about 77% of production history established in 2023. The report does not include enrollment in the Supplemental DMC program.

DMC, Supplemental DMC extended through 2024

In a rare nonpartisan move in November, the House and Senate approved H.R. 6363 (the Further Continuing Appropriations and Other Extensions Act, 2024). Under the two-step plan, four of 12 fiscal year 2024 appropriations bills – including one for agriculture – were extended until Jan. 19, 2024. The remaining federal funding bills were extended until Feb. 2. (Fiscal year 2023 began on Oct. 1, 2023.)

Besides extending ag program spending at last year’s levels, the bill contains special provisions for dairy producers. It extends the DMC program though 2024 and rolls the Supplemental DMC program into the regular program. Both were set to expire at the end of 2023.

Other operating costs mixed

Outside of feed – and not factored into DMC margins – other costs were mixed.

  • The October index of prices paid for commodities and services, interest, taxes and farm wages was up 0.1% from both September 2023 and October 2022. Read also: Ag loan interest rates nearing 9% and October U.S. farm wages up 6%
  • Machinery costs were up 0.4% from September and up 0.8% from October a year ago.
  • The October fuel cost index was down 2.1% from the previous month and 12% less than a year earlier.
  • Fertilizer prices rose 1.4% from September but were 27% less than October 2022.

Market cow prices still strong

Another positive in the USDA Ag Prices report: U.S. average prices received for cull cows (beef and dairy, combined) in October averaged $108 per cwt, down $6 from September 2023 but still $24 per cwt more than October 2022.