USDA reports influencing dairy markets remain delayed following the conclusion of the government shutdown, and at the same time, seasonal pressures from the holiday season are shaping the U.S. dairy outlook for December. Producers should evaluate their current risk management options and secure additional coverage as 2025 comes to a close.
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
In the latest report on the DMC program, dairy margins through August rose month over month as milk prices were mixed throughout the month, but feed costs diverged as corn reached new contract lows and soybean meal prices were influenced by an optimistic USDA World Agricultural Supply and Demand Estimates (WASDE) report. As a result, August’s margin was $11.52 per hundredweight (cwt). The margin did not trigger any indemnity payments for the month. (Read: August Dairy Margin Coverage margin regains strength at $11.52 per cwt)
Commodity prices used to determine the DMC margin for September and October were not available at the time of this writing. According to the USDA’s Ag Prices report schedule, the next available report will be published Dec. 11, followed by the regularly release date of Dec. 31, which would include November prices. At this time, it’s unclear if the report released Dec. 11 will encompass both September and October prices.
However, as of Nov. 21, DMC margin forecasts for the remainder of the year show volatility as both milk prices and feed costs drop, possibly leading to indemnity payments for producers who elected coverage below the $9.50 per cwt threshold. The November forecast is predicting a small indemnity payment with the margin settling at $9.40 per cwt, while December’s forecast is greater with a margin of $8.51 per cwt. If realized, these would be the only two months to trigger indemnity payments in 2025, and producers should expect delays following the government shutdown.
There were still no details available for 2026 program enrollment at the time of this writing.
Dairy Revenue Protection (Dairy-RP)
Dairy producers managing risk through Dairy-RP are eligible to cover revenue quarterly, up to five nearby quarters. In December, Dairy-RP coverage is available for the first quarter of 2026 (January through March) through the first quarter of 2027.
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, typically Dairy-RP coverage cannot be purchased on days when major USDA dairy reports that could impacts markets are released. This includes Milk Production, Cold Storage and Dairy Product reports (see Calendar).
Results from the insurance’s third-quarter performance estimated average indemnity payments to the tune of 68 cents per cwt, with producers receiving an average net return of 33 cents per cwt after adjusting for producer premiums, according to a report published by HighGround Dairy. This is the highest return since the first quarter of 2024. Class III prices settled below the 95% coverage level 76% of the time, while Class IV prices settled below the same threshold 80% of the time. During the third quarter, about 14.3 billion pounds of milk were covered under Dairy-RP, representing 25% of the U.S. milk supply.
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 December 2025 includes the months of January 2026 through November 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. 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 or when major USDA reports impacting prices are released such as Cattle on Feed. RMA also has the right to close sales at their discretion.
Production and price outlooks
- The Federal Milk Marketing Order (FMMO) advanced Class I base price for December rebounded $1.46 per cwt from November to hit $18.21 per cwt. (Read: Economic Update: Class I base milk price rebounds to $18.21 in December 2025)
- Across all FMMOs, uniform milk prices declined an average of $1.10 per cwt in October compared to September. (Read: October 2025 uniform milk prices fell in all 11 regional FMMOs as all milk class prices dropped)
- The milk production forecast for 2025 is raised from the previous report based on higher milk cow inventories and robust production per cow through the third quarter of 2025. (Read: USDA resumes monthly WASDE report with November estimates)
- Twenty states including Idaho, Texas and New York boosted milk production a combined 789 million pounds in September. (Read: Milk production continues to rise in USDA September estimates)
