The USDA National Agricultural Statistics Service (NASS) released its Agricultural Prices report April 30, which includes feed costs used to calculate March Dairy Margin Coverage (DMC) program margins and indemnity payments. Consistent feedstuff prices and a slight improvement in the all-milk price brought the average milk income margin to $9.65 per hundredweight (cwt).
A glance at March 2024 DMC
DMC program margin factors compared to the previous month:
- Alfalfa hay: $271 per ton, down $7 per ton
- Corn: $4.36 per bushel, no change from February’s price
- Soybean meal: $362.17 per ton, down $1.46
- Total feed costs: $11.05
- Milk price: $20.70
- Margin above feed cost: $9.65
Source: USDA Farm Service Agency, National Ag Statistics Service and Ag Marketing Service, April 30, 2024
All-milk price increases 10 cents
The March 2024 announced U.S. average all-milk price was $20.70, a dime more than in February but 30 cents lower than March 2023.
A majority of the 24 major dairy states saw a modest increase in milk price with several states’ milk price improving by 50 cents or less. Only two states recorded growths by $1 or more: Georgia ($1.40 per cwt higher than in February) and Virginia ($1 per cwt). Idaho and Pennsylvania were the only two states to see a decrease in their milk checks from the previous month at 30 cents less per cwt and 20 cents less per cwt, respectively.
Looking back a year, March’s 2024 U.S. average all milk price was down 30 cents per cwt. The largest declines ($1 per cwt or more) were mostly noted in the Upper Midwest with South Dakota leading at $1.80 per cwt less than March 2023. Other losses of that magnitude included Wisconsin, Minnesota and Iowa as well as Idaho, Colorado and Oregon.
Feed prices hold steady
National average costs for major feedstuffs remained relatively unchanged from February in the three categories used to calculate feed costs.
- At $4.36 per bushel, the average price for corn remained the same from the previous month.
- The average cost of soybean meal declined slightly from $363.63 per ton to $362.17 per ton in March.
- The March average price for dairy-quality alfalfa hay was the largest change, down $7 from a month earlier at $271 per ton.
The DMC feed cost for each month is calculated 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.
March feedstuff prices generated an average DMC total feed cost of $11.05 per cwt of milk sold, down 11 cents from February.
Indemnity payments not triggered
At $9.65 per cwt, the March DMC margin is just a dime above the $9.50 per cwt top coverage level in Tier I, resulting in no payments for dairy producers enrolled in the dairy risk management program. This is the first time a payment has not been triggered since December 2022 when the margin was $9.76 per cwt.
In January, producers enrolled in the DMC 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 for those enrolled in the 2024 program period.
2024 enrollment closed, margin forecasts for remainder of year
Enrollment for the 2024 DMC program closed April 29. Last year, the risk management program was utilized by 17,120 dairy operations (75% of all dairy operations with established production history). In total, those farms received nearly $1.3 billion in payments with an average payment of $75,654 dispersed to each operation, touting a net benefit (indemnity payments minus premiums) of $2.52 per cwt.
As of April 30, the DMC forecast does not indicate margins below the $9.50 per cwt threshold for indemnity payments for the remainder of the year, although markets do change. The April DMC margin is forecast at $9.82 per cwt, just 32 cents above the top coverage level. The actual April margin will be announced May 31.
