The USDA National Agricultural Statistics Service (NASS) released its latest Ag Prices report on Jan. 31, including factors used to calculate December 2023 Dairy Margin Coverage (DMC) program margins and indemnity payments. Overall U.S. average feed costs were up and milk prices were lower, dropping the average milk income margin to a three-month low.

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Editor / Progressive Dairy

December 2023 DMC at a glance

DMC program margin factors compared to previous month:

  • Alfalfa hay: $275 per ton, up $4 from November 2023
  • Corn: $4.80 per bushel, up 14 cents
  • Soybean meal: $440.60 per ton, down $23.67
  • Total feed costs: $12.16 per hundredweight (cwt), up 4 cents
  • Milk price: $20.60 per cwt, down $1.10 per cwt
  • Margin above feed cost: $8.44 per cwt, down $1.14

Source: USDA Farm Service Agency, National Ag Statistics Service and Ag Marketing Service, Jan. 31, 2024

Milk prices lower

The December 2023 announced U.S. average milk price fell $1.10 from November to $20.60 per cwt, the lowest since August 2023. It was down $3.90 per cwt from December 2022’s average of $24.50 per cwt.

December milk prices were down across all 24 major dairy states. Price declines surpassed $1 per cwt in 16 states, with largest month-to-month declines of $1.50-$1.70 per cwt in Idaho, Oregon and Washington.


Highest prices for the month were in high Federal Milk Marketing Order (FMMO) Class I fluid milk utilization states of Florida ($25.20) and Georgia and Virginia (both $24.80 per cwt). Monthly average prices were below $20 per cwt in Arizona, Kansas, Minnesota, New Mexico and Wisconsin.

Compared to a year earlier, December 2023’s U.S. average milk price was down $3.90 per cwt, led by declines of $4.50 or more in Idaho, Iowa, Minnesota, Oregon, South Dakota and Wisconsin.

Feed prices mixed

National average costs for major feedstuffs were mixed, with higher corn and dairy-quality alfalfa hay prices offsetting a dip in the average price for soybean meal:

  • At $4.80 per bushel, the average price for corn was 14 cents higher than a month earlier.
  • The average cost of soybean meal (SBM) declined to $440.60 per ton, down $23.67 from November.
  • The December average price for dairy-quality alfalfa hay was $275 per ton, up $4 from the previous month.

The DMC feed cost for each month is calculated by summing three numbers: (1) the corn price per bushel times 1.0728; plus (2) the soybean meal price per ton times 0.00735; plus (3) the alfalfa hay price per ton times 0.0137.

December feedstuff prices yielded an average DMC total feed cost of $12.16 per cwt of milk sold, up 4 cents from November’s two-year low.

Indemnity payments return

At $8.44 per cwt, the December DMC margin triggers Tier I indemnity payments of $1.06 per cwt for producers covered at the top $9.50 per cwt coverage level. Those covered at the $9 per cwt level will see a payment of 56 cents per cwt; those at $8.50 per cwt receive 6 cents per cwt.

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

There are no indemnity payments for Tier II producers at any level.

Looking ahead

As of Jan. 31, the January 2024 DMC margin was forecast at $8.74 per cwt, which would trigger Tier I indemnity payments at $9 and $9.50 coverage levels. That actual January margin will be announced on Feb. 29.

DMC program software updates for 2024 will be announced tentatively in February or March. The new software is necessary to make milk production history modifications and enroll for the 2024 DMC coverage period. Until the 2024 coverage election period starts, production history modifications (transfers, successions in interest and dissolutions) that occurred after Dec. 31, 2023, cannot be loaded in the DMC software, delaying enrollment.

If the 2024 DMC sign-up period opens after Feb. 29, producers will be able to obtain coverage retroactively for the full year.