Revenue for dairy producers should climb in June as the trivial markets during the spring are forecast to improve with the income over feed cost margin predicted to settle at $12.30 per hundredweight (cwt). Additionally, the USDA announced upcoming changes to the Dairy Revenue Protection (Dairy-RP), Livestock Gross Margin (LGM) and Livestock Risk Protection (LRP) insurance programs that will affect dairy producers.
Here's Progressive Dairy’s look at important dates, reports and advice affecting risk management decisions, as well as other information impacting the milk check in June.
Dairy Margin Coverage (DMC) program
Following a short period of declining milk prices and rising feed costs – to the point where some producers may have been reaching break-even prices – margins are expected to improve as the month turns.
The April DMC margin and indemnity payments will be announced Friday, May 30, with May’s margin calculated June 27.
The realized DMC margin for March was $11.55 per cwt, the result of a relatively stable feed cost but sinking all-milk price as then-talks of a looming trade war pressured the export market while domestic consumer spending cooled at the same time. (Read: March DMC falls to $11.55 per cwt)
As of May 21 – prior to the announced DMC margin – the April margin forecast is predicting another drop in the income over feed cost margin to $10.42 per cwt, an anticipated bottom for the year. The forecast margin is the result of the all-milk price expected to fall nearly $1, plus corn and alfalfa also taking a hit for the month. However, the forecast feed cost is trending 20 cents higher in April from March thanks to a rally in the soybean market.
Based on current price projections, if April’s DMC margin is realized, it will be the lowest margin for 2025 before milk price rebound and feed costs are pressured to push the margin into the $12-$13 range for the remainder of the year.
Dairy-RP
Dairy producers managing risk through Dairy-RP are eligible to cover revenue quarterly, up to five nearby quarters. In June, Dairy-RP coverage is available for the third quarter of 2025 (July through September) through the third quarter of 2026. Coverage for the third quarter of 2025 closes June 15. Additionally, coverage for the second quarter of 2026 (April through June) closes June 30.
The market changes daily and Dairy-RP endorsements must be purchased between the Chicago Mercantile Exchange (CME) market closing and the next CME opening. Dairy-RP is also not available on days when applicable futures contracts move limit-up or limit-down, or on days when CME trading is closed due to holidays (see Calendar).
Also, Dairy-RP coverage cannot be purchased on days when major USDA dairy reports that could impact markets are released. This includes Milk Production, Cold Storage and Dairy Product reports.
The USDA recently announced changes to the Dairy-RP program for the 2026 insurance year. Those changes include adjusting the termination date to Jan. 31 and the premium billing date to the first day of the third month after the end date of endorsement; provide flexibilities to producers affected by animal disease for eligible losses; and increase the minimal declarable butterfat test to 4 pounds, the maximum declarable butterfat test to 6 pounds and the minimal declarable protein test to 3.2 pounds.
LGM for Dairy (LGM-Dairy) and LRP
LGM-Dairy is another subsidized margin insurance program administered by the Risk Management Agency (RMA).
The insurance program provides a protection when feed costs rise or milk prices drop, and can be tailored to any size farm. The program uses futures prices for corn, soybean meal and milk to determine the expected gross margin and the actual gross margin. LGM-Dairy is similar to buying both a call option to limit higher feed costs and a put option to set a floor on milk prices.
Coverage can be purchased on expected milk marketing over a rolling 11-month insurance period. So the coverage period during June 2025 includes the months of July 2025 through May 2026.
Sales periods for the LGM-Dairy program are open on a weekly basis. Unlike Dairy-RP, LGM-Dairy is available even if a sales period falls on the day of a USDA report. Changes to the program include a new termination date of Aug. 31 and the premium billing date to the first day of the second month after the endorsement ends.
Dairy producers may also benefit from modifications to the LRP insurance program: a risk management tool often used in the beef cattle industry offering subsidized price protection for fed and feeder cattle based on daily CME futures settlements. Beginning July 1, dairy producers will be able to protect revenue on cull cows and beef-on-dairy calves. According to the changes, unborn calves from dairy cows bred to beef bulls must be expected to weigh 0.6 to 0.99 cwt and be sold within two weeks of birth, and cull cows expected to leave the milking herd for slaughter may receive coverage with a 13-week insurance period. The latter may be useful for timing herd reductions.
“These changes underscore RMA’s commitment to ensuring producers have the tools they need to manage risk effectively,” said Ben Thiel, director of the RMA regional office in Spokane, Washington, in a press release. “The inclusion of […] coverage for unborn calves and cull cows were requested by stakeholders.”
Production and price outlooks
- Federal Milk Marketing Order (FMMO) regional uniform milk prices dropped in April but to a smaller degree than what was observed in the month prior. (Read: FMMO uniform milk prices continue downward trend in April)
- The 2025 milk production forecast is raised based on an increased cow herd and faster growth rate in output per cow. (Read: May WASDE projects increased milk per cow, growth in cow inventories)
- Quarterly average replacement cow prices in April hit a new all-time high of $2,870 per head. (Read: Replacement cow prices keep rising in 2025)
- Year-over-year export volume grew 3% in March, marking the highest monthly U.S. dairy export volume since February 2023. (Read: March dairy trade was welcomed ahead of tariff implications)
Check the Progressive Dairy website for updates affecting milk prices as they become available.
