Here is a summary of the latest news affecting the financial health of U.S. dairy operations.
- May 2024 Class I base price declines
- 2024 DMC enrollment deadline approaching
- GDT index sees minimal increase
- USDA, FarmRaise offer financial resources for agricultural producers
May 2024 Class I base price declines
The Federal Milk Marketing Order (FMMO) advanced Class I base price is reversing course, and the “average of” Class I mover pricing formula is taking its biggest hit since late 2022.
At $18.46 per hundredweight (cwt), the May 2024 advanced Class I base price is down 72 cents from April 2024 and $1.11 less than a year ago, and the lowest since February. Through the first five months of 2024, the Class I base prices averages $18.58 per cwt, again a three-year low for the period.
Class I zone differentials are added to the base price at principle pricing points to determine the actual Class I price in each FMMO. With those additions, May Class I prices will average approximately $21.28 per cwt across all FMMOs, ranging from a high of $23.96 per cwt in the Florida FMMO to a low of $20.26 per cwt in the Upper Midwest FMMO.
The spread in the monthly advanced Class III skim milk pricing factor ($3.88 per cwt) and advanced Class IV skim milk pricing factor ($8.99 per cwt) jumped for May to $5.11 per cwt, the widest since October 2022.
Based on Progressive Dairy calculations, the Class I mover calculated under the “higher of” formula would also have resulted in a Class I base price of $20.21 per cwt, about $1.75 more than the actual price determined using the “average of plus 74 cents” formula.
2024 DMC enrollment deadline approaching
Dairy producers have until April 29 to complete their enrollment in the Dairy Margin Coverage (DMC) program.
The DMC program, administered by the USDA Farm Service Agency (FSA), is a voluntary risk management program that offers protection to dairy producers when the margin between the all-milk price and the average feed cost falls below $9.50.
The revised regulations of this risk management program extend coverage for 2024, retroactive to Jan. 1, and provides an adjustment to the production history of enrolled farms with less than 5 million pounds of production. The latter was established to provide a better reflection of a dairy operation’s current production.
To evaluate the varying levels of DMC coverage for a specific dairy operation, producers can use the online dairy decision tool.
In January, producers enrolled in the Dairy Margin Coverage program received $4,038 in total payments. February was significantly less at $232 in total payments for a year-to-date total payment of $4,270.
As of April 18, the March DMC margin was forecast at $10.23 per cwt, which would not trigger any indemnity payments. Margins are expected to improve for the remainder of 2024, yet markets do change. The actual March margin will be announced April 30.
For additional information, dairy producers can visit the USDA website or contact a local USDA Service Center.
Read: 2024 DMC program enrollment to begin Feb. 28
GDT index sees minimal increase
The price index of dairy product prices sold on the Global Dairy Trade (GDT) platform increased just 0.1% in an auction held April 16. Compared to the previous auction, prices for individual product categories were mostly lower to unchanged. The prices for anhydrous milkfat and whole milk powder increased slightly by 1.7% and 0.4%, respectively. Cheese prices decreased the most with cheddar cheese down 8.5% and mozzarella down 3.8%. Lactose and butter decreased a little over 1%, while there was little to no change in butter milk powder and skim milk powder.
The GDT platform offers dairy products from several global companies: Fonterra (New Zealand), Darigold, Valley Milk and Dairy America (U.S.), Arla (Denmark), Arla Foods Ingredients (Denmark) BMI (Germany), Kerry Dairy (Ireland) and Solarec (Belgium).
The next GDT auction is May 7.
USDA, FarmRaise offer financial resources for agricultural producers
The USDA unveiled a new online Livestock Indemnity Program (LIP) decision tool and farm loan resources available to agricultural producers and cooperators who help producers access USDA disaster assistance, farm loans and other federal farm programs.
The new LIP tool and the farm loan informational video resources were developed in partnership with FarmRaise and FSA.
The newly launched LIP decision tool assists livestock producers who suffered losses from eligible adverse weather events and other causes of loss as well as cooperators who are helping disaster-impacted livestock producers navigate available federal disaster assistance programs. The optional decision tool gives producers guidance on what is needed to gather and submit required loss documentation. Using this tool, however, is not an application for benefits or a determination of eligibility.
Through use of the LIP tool, livestock producers can provide supporting documentation, inventory numbers and loss numbers to FSA county offices in advance of the initial county office visit to aid in completion of the application for LIP assistance.
In addition to the new LIP decision tool, the FarmRaise educational hub offers several easily navigated farm loan programs how-to videos designed to introduce producers to FSA’s many farm loan programs options and guide them through the application process.
More FSA program resources and tools will soon be added to the FarmRaise educational hub. Cooperators and agricultural producers are encouraged to visit the FarmRaise educational hub often to access all available resources.
