The USDA National Agricultural Statistics Service (NASS) released its Agricultural Prices report Aug. 29, which includes feed costs and milk prices used to calculate the July Dairy Margin Coverage (DMC) program margins and indemnity payments. July’s margin was $10.94 per hundredweight (cwt) as a result of both weaker feed costs and an all-milk price.
While the all-milk price was weighed down by expanded processing capacity for cheese and an increase in milk supply, it was the price of soybean meal and its new contract lows that drove feed costs down and ultimately pushed the DMC margin lower than June.
A peek of July DMC
DMC program margin factors compared to the previous month:
- Alfalfa hay: $245 per ton, up $1
- Corn: $4.29 per bushel, down 18 cents
- Soybean meal: $259.10 per ton, down $21.60
- Total feed costs: $9.86 per cwt, down 34 cents
- Milk price: $20.80 per cwt, down 50 cents
- Margin above feed cost: $10.94 per cwt, down 16 cents
Source: USDA Farm Service Agency, National Agricultural Statistics Service and Marketing Service, Aug. 29, 2025
All-milk prices take a hit
July’s average all-milk price settled at $20.80 per cwt, 50 cents below both May and June prices. Not only was the all-milk price down from the month prior, but it was also down from the same month a year ago at exactly $2 below July 2024.
In the 24-major dairy states, all but five states reported a decline or no change in the all-milk price. While Indiana, Pennsylvania and Vermont all recorded no change month over month in their all-milk prices, the remaining states that reported a drop did so by as much as $1.90 per cwt as noted in South Dakota with an all-milk price of $20 per cwt in July. Ohio posted the smallest loss of 10 cents for an all-milk price of $22.40 per cwt. The five states that recorded an increase in their all-milk price included California (up 10 cents), Florida (up $1.50), Georgia (up $1.60), Virginia (up $1.10) and Washington (up $40 cents).
The year-over-year comparison on a state-by-state basis was staggering. All 24-major dairy states reported significant losses in July 2025 compared to the same month a year ago with South Dakota leading the pack, down $3.40 per cwt in July 2025 from the year prior. Oregon also had quite the swing, down $3.10 per cwt. The smallest difference was in Vermont where the July 2025 all-milk price was only 60 cents below the July 2024 all-milk price.
Feed costs crash with market news
The outlook for commodities used to calculate the feed cost for the DMC margin were marginal in July. Both corn and soybean meal prices fell substantially. For corn, the price settled at a value last seen in early 2025. In the case of soybean meal, July’s price was the lowest price yet recorded under the DMC program calculations due to an increased use of soybean oil toward biofuel production.
Here’s a breakdown of each commodity price used to calculate the total feed cost for the DMC margin in July:
- The average cost of corn was $4.29 per bushel, down 18 cents from June but 6 cents higher than the same month last year.
- Dairy-quality alfalfa hay was $245 per ton, up $1 from the previous month and up $8 from July 2024.
- At $259.10 per ton, July’s price for soybean meal stumbled $21.60 compared to June’s price and was down a shocking $105.20 per ton 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.
With corn and soybean meal taking such hits in July, the feed cost for July came in at $9.86 per cwt, down 34 cents from the month prior. For comparison, the feed cost for July 2024 was $12.33 per cwt.
July’s margin lowers, but avoids indemnity payment threshold
The realized DMC margin for July was $10.94 per cwt, 16 cents lower than June’s $11.10 per cwt as both the all-milk price and feed costs contributed to the dip. However, despite the margin falling from the month prior, it was still not lower than the $9.50-per-cwt coverage level to trigger an indemnity payment in July.
Margin forecasts for August
The DMC online decision tool forecasts the August DMC margin at $11.57 per cwt with the all-milk price rising to $21.07 per cwt and the feed cost dropping to $9.50 per cwt as of Aug. 28. The realized margin will be announced Sept. 30. The rest of 2025 is looking about the same with the all-milk price in the $21-per-cwt range and feed costs around $9.50 per cwt for margins ranging from $11.87 to $12.02 per cwt. However, markets do change.
Enrollment details for the 2025 program were not yet available at the time of this writing.
As a reminder, premium payments for the 2025 coverage year are due Sept. 1 to the Farm Service Agency. In most years, the premium payments are deducted from indemnity payments throughout the year. (Read: Weekly Digest: Dairy Margin Coverage premium payments due Sept. 1)
