The USDA National Agricultural Statistics Service (NASS) released its Agricultural Prices report Oct. 31, which includes feed costs used to calculate the September Dairy Margin Coverage (DMC) program margins and indemnity payments. The month’s margin was $15.57 per hundredweight (cwt).
A peek at September 2024 DMC
DMC program margin factors compared to the previous month:
- Alfalfa hay: $227 per ton, down $9
- Corn: $3.98 per bushel, up 14 cents
- Soybean meal: $346.34 per ton, up $2.94
- Total feed costs: $9.93 per cwt, down 5 cents
- Milk price: $25.50 per cwt, up $1.90
- Margin above feed costs: $15.57 per cwt, up $1.85
Source: USDA Farm Service Agency, National Ag Statistics Service and Marketing Service, Oct. 31, 2024
Milk prices continue reaching historical highs
The announced all-milk price for September was $25.50 per cwt, up $1.90 from September and a remarkable $4.60 greater than this time in 2023. The pattern of these historically high milk prices seen in the last several months are pushing margins in a very favorable direction for dairy producers.
With last month’s already strong price, every 24 major dairy state saw a marginal increase in month-over-month milk price from August to September. The greatest climb was Minnesota, up $3 from a month prior to settle at $27 per cwt. Closely following were South Dakota, up $2.90 to $27 per cwt also, and Idaho, up $2.80 to $26.70 per cwt. Four states posted milk price improvements less than $1, including Arizona (up 80 cents), Florida (50 cents), Georgia (60 cents) and Virginia (80 cents).
Prices are certainly stronger than a year ago with this month’s report indicating all 24 major dairy states seeing a minimum $3.10 per cwt improvement comparing September 2024 to September 2023. Minnesota led the way, where prices were up $6.70 per cwt in September 2024 from a year prior. Five other states joined Minnesota to post a year-over-year increase greater than $5 per cwt, including Idaho ($5.70), Iowa ($5.80), South Dakota ($5.70), Texas ($5.10) and Wisconsin ($5.40).
Feed costs remain low
The total feed costs were down a nickel in September compared to August, with alfalfa hay falling but corn and soybean meal prices climbing some.
- The September average price for dairy-quality alfalfa hay was down $9 from the previous month. A year ago, the price for this feedstuff was at $288 per ton.
- The average cost of corn was up 14 cents at $3.98 per bushel. At this time last year, corn prices were at $5.21 per bushel.
- At $346.34 per ton, September’s price for soybean meal was up $2.94 from a month prior and down $64.73 from the same time last year.
The DMC feed cost 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.
While some price increases were recorded in September, it was not enough to improve total feed costs for the DMC program calculation. The month resulted in a total feed cost of $9.93 per cwt of milk sold, down 5 cents from August and dropping $2.63 from a year prior.
September margin shatters previous month’s record
The DMC margin forecast for September predicted a staggering $15.25 per cwt margin, with slightly higher feed costs and a higher milk price offsetting one another. The realized margin for September surpassed the forecast by 32 cents for an income-over-feed cost at $15.57 per cwt. At this margin, the September DMC margin is $6.07 above the $9.50 per cwt top coverage level in Tier I, resulting in yet another month of no indemnity payments. This is now the seventh consecutive month in 2024 where indemnity payments were not issued.
Margin predictions in October
The DMC online decision tool forecasts the margin to recede some to $15.02 per cwt in October and continue falling for the remaining two months of the year. The actual margin will be announced Nov. 29. As of Oct. 30, the forecasts were at $13.72 and $13.32 per cwt for the months of November and December, respectively. Be mindful as markets do change.
As of Oct. 7, nearly 73% of all dairy operations with established production history are enrolled in the 2024 DMC program. Those 15,679 operations are expected to receive a collective $36.9 million in payments by the year’s end with each dairy receiving an estimated $2,356. This value does vary based on production history as well as the selected coverage percentage and coverage level under the program.
