The first milk checks reflecting the Federal Milk Marketing Order (FMMO) revisions are arriving in producers’ mailboxes, reflecting both benefits and drawbacks of the revisions. At the same time, milk prices are softening after several months of relatively strong performances, perhaps the result of increased cow numbers and expanded processing capacity available in the marketplace now, among other influencing factors.
In early July, President Donald Trump signed the One Big Beautiful Bill Act into law, which provides updates to the Dairy Margin Coverage (DMC) program. And it’s been nearly one month since changes to the Livestock Risk Protection (LRP) insurance plan allows dairy producers to manage risk and secure revenue from cull cows and beef-on-dairy calves.
Taking all of this into consideration, here’s Progressive Dairy’s look at important dates, reports and advice affecting risk management decisions, as well as information that will affect dairy producers.
Dairy Margin Coverage (DMC) program
Despite the all-milk price falling in 2025, and only now showing a small comeback to finish out the year, feed costs have continued to be low with an ample supply of commodities, creating favorable margins for dairy producers enrolled in the DMC program.
The May DMC margin was announced Friday, June 27, providing a 2-cent improvement from the month prior. June’s margin will be calculated July 31, and July’s margin will be announced Aug. 29.
The realized margin for May was $10.40 per hundredweight (cwt), falling just 2 cents from April’s margin and resulting in the lowest DMC margin to date in 2025, according to the USDA’s Farm Service Agency. It’s worth noting that based on Progressive Dairy’s calculations using the same pricing factors, the margin came in only 1 cent lower in May compared to April. The all-milk price showed some strength for the first time since March, and feed costs had a slow start before finishing out the month strong, leading to May’s DMC margin. (Read: May Dairy Margin Coverage program margin drops slightly to $10.41 per cwt)
As of July 21, the June DMC margin forecast is showing a stronger all-milk price paired with a feed cost nearly $1 lower than the month prior for a DMC margin of $11.85 per cwt. This is anticipated to be the trend for the remainder of 2025, with no indemnity payments dispersed to participating operations for all of the program year.
There are revisions to the DMC program as a result of the One Big Beautiful Bill Act being signed into law. Not only does the legislation extend the program through 2031, it also allows producers to update their production history to the highest annual volume of 2021-23 and offers a 25% discount on premiums for producers committed to five years of enrollment during the 2026 sign-up period.
Most notably, the law increases the annual limit on Tier I coverage to 6 million pounds effective in the 2026 program year. This change allows more milk to be covered through the program, although the DMC program continues to provide the greatest benefit to smaller farms, according to HighGround Dairy. (Read: One Big Beautiful Bill signed into law, increase estate tax exemption)
Dairy Revenue Protection (Dairy-RP)
Dairy producers managing risk through Dairy-RP are eligible to cover revenue quarterly, up to five nearby quarters. In August, Dairy-RP coverage is available for the fourth quarter of 2025 (October through December) through the fourth quarter of 2026.
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. Also, the 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 (see Calendar).
Livestock Gross Margin for Dairy (LGM-Dairy)
LGM-Dairy is a subsidized insurance program administered by the USDA Risk Management Agency (RMA).
LGM-Dairy provides 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 for LGM-Dairy can be purchased on expected milk marketing over a rolling 11-month insurance period. So the coverage period during August 2025 includes the months of September 2025 through July 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.
Livestock Risk Protection (LRP)
LRP is another subsidized insurance program administered by the RMA and is available for dairy producers to secure revenue from cull cows and beef-on-dairy calves effective as of July 1.
The program is a valuable tool for dairy producers as beef-on-dairy and strategic culling decisions are key parts of herd management and business decisions. For dairy producers, LRP coverage is available as LRP-Feeder Cattle (beef-on-dairy calves) and LRP-Fed Cattle (cull cows) with four additional options to select the appropriate coverage, including head count, targeted marketing weight, and coverage length and level. No more than 12,000 head can be covered in a specific coverage endorsement with an annual limit of 25,000 head per farmer per crop year (July 1 to June 30).
The sales period for LRP coverage is open each afternoon after futures prices are settled and closes the following morning. Similar to Dairy-RP, LRP is not available on days when CME trading is closed due to holidays nor when major USDA reports impacting prices are released such as Cattle on Feed. The RMA also has the right to close sales at their discretion.
Production and price outlooks
- June FMMO uniform milk prices reflect formula amendments with prices mostly improved from the previous month. (Read: FMMO uniform milk prices mostly improve in June)
- The milk production forecasts for both 2025 and 2026 are raised from June based on higher cow inventories and an increased rate of growth in milk output per cow. (Read: July WASDE forecasts higher milk yield per cow, rising cow numbers)
- Global feed production grew 1.2% in 2024, with strong gains in dairy feed, especially in Latin America, Europe and Africa. (Read: Global feed production growth highlights the resilience and adaptability of the international agriculture industry)
