The USDA National Agricultural Statistics Service (NASS) released its Agricultural Prices report March 31, which includes feed costs and milk prices used to calculate the February Dairy Margin Coverage (DMC) program margins and indemnity payments. February’s margin was $13.12 per hundredweight (cwt), the result of an improved market for corn coupled with a 50-cent drop in the all-milk price.
A peek at February DMC
DMC program margin factors compared to the previous month:
- Alfalfa hay: $243 per ton, up $1
- Corn: $4.58 per bushel, up 29 cents
- Soybean meal: $304.78 per ton, down $12.19
- Total feed costs: $10.48 per cwt, up 23 cents
- Milk price: $23.60 per cwt, down 50 cents
- Margin above feed cost: $13.12 per cwt, down 73 cents
Source: USDA Farm Service Agency, National Agricultural Statistics Service and Marketing Service, March 31, 2025
Milk prices trend sideways in February
The first half of February indicated milk prices were holding relatively steady, but that changed during the second half of the month. In all but two of the 24 major dairy states, the all-milk price in February was down or unchanged compared to a month prior. Both Florida and Utah posted 10-cent price improvements, albeit marginal, for February milk prices at $26.90 per cwt and $23.30 per cwt, respectively. Indiana, Oregon and Virginia saw no change in price, while Idaho posted the largest fall in prices, down $1 to $23.30 per cwt. All remaining states saw the all-milk price fall anywhere from 10 cents to 80 cents.
The announced average all-milk price for the 24 major dairy states in February was $23.60 per cwt, down 50 cents from the month prior and an improvement of $3 from February last year. Despite month-over-month variation, each of the major dairy states posted year-over-year price improvements. Wisconsin once again saw the greatest spread at $4.70 per cwt more than in February 2024, followed by other Midwest states, Iowa (up $4.50), Minnesota (up $4.40), Ohio (up $4.10) and South Dakota (up $4).
Feed costs benefit from rise in corn price
A large sell-off in the corn market contributed to higher feed costs last month, despite soybean meal prices falling more than $12 per ton. Here’s a breakdown of each feedstuff used to calculate the feed cost for the DMC margin in February.
- The average cost of corn was $4.58 per bushel, up 29 cents from the month prior and up 22 cents from February 2024.
- Dairy-quality alfalfa hay was $243 per ton, up only $1 from January but down $35 from the same month a year ago.
- At $304.78 per ton, February’s price for soybean meal fell $12.19 compared to January’s price and was down $35 from this 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.
With feed prices mixed, the feed cost for February was $10.48 per cwt of milk sold. February’s feed cost was up 23 cents from January, but down $1.68 from February 2024.
February’s margin stronger than forecast
The realized DMC margin for February was $13.12 per cwt as a result of higher feed costs and a falling milk price that could not withstand the second half of the month. At $13.12, the realized margin is 16 cents higher than the forecast margin as of March 28. While feed costs rose and milk prices fell, the DMC margin remained $3.62 above the $9.50 per cwt top coverage level in Tier I, resulting in no indemnity payments for the month.
As of March 3, 73% of all dairy operations with established production history were enrolled in the 2024 DMC program. Those 15,716 operations received a collective $36.7 million in payments with each operation collecting an average of $2,333. This value does vary based on production history as well as the selected coverage percentage and coverage level under the program.
Margin predictions for March
The DMC online decision tool forecasts the margin to tighten to $12.22 per cwt in March as a result of a steep drop in the all-milk price to $21.93 per cwt, while feed costs are also expected to fall some. Current forecasts predict positive margins throughout the year, despite market headwinds expected in the coming months.
Research from HighGround Dairy shows that Tier I coverage at the $9.50 margin would have triggered payments in 65% of the months over the last decade, making the DMC program one of the most effective and affordable tools to manage risk. (Read: Dairy Risk Management Calendar: April 2025)
While 2025 forecasts appear to lean in dairy producers’ favors, markets do change.
