The USDA National Agricultural Statistics Service (NASS) Ag Prices report, released March 30, established February’s Dairy Margin Coverage (DMC) program calculations. Despite dairy margins strengthening – particularly in Class III and Class IV – which offered an increase in the all-milk price and offset sturdy feed costs, it was not enough for February’s margin to sit above the maximum payment threshold of the DMC program. As a result, February’s DMC margin is $8.46 per hundredweight (cwt), with indemnity payments expected for participating farms.
February DMC at a glance
The Ag Prices report showed prices for major dairy feedstuffs all inching upward (see Table 1).
DMC program margin factors for February compared to January were as follows:
- Dairy alfalfa hay: $229 per ton, up $3
- Corn: $4.11 per bushel, up 1 cent
- Soybean meal: $312.38 per ton, up $13.13
- Total feed costs: $9.84 per cwt, up 15 cents
- Milk price: $18.30 per cwt, up 80 cents
- Margin above feed cost: $8.46 per cwt, up 65 cents
Milk prices reflect soft rebound
All but three states in the 24 major dairy states saw a price increase in February compared to January’s all-milk prices. The average all-milk price was reported at $18.30 per cwt, up 80 cents from the month prior but a whopping $5.30 per cwt below that of February 2025 (Table 2).
Comparing the prices from month to month, Idaho saw the strongest price improvement in February from January, up $2.20 from $16.70 to $18.90 per cwt. Washington, Arizona, New York, Pennsylvania and Vermont also saw improvements greater than $1 per cwt (up $1.40, $1.20 and the three remaining at $1.10, respectively) in February. On the contrary, Georgia recorded a price decline of 70 cents from $23.20 to $22.50 per cwt, while Florida and Virginia saw the all-milk price fall 60 cents to $21.50 and $21.90, respectively.
The all-milk price in February 2025 was $23.60 per cwt. Every state in the 24 major dairy states reported a year-over-year price difference greater than $4, with 19 states posting a $5 per cwt or larger decline in February’s prices compared to a year ago.
Steady feed costs keep margin below trigger point
February’s feed costs climbed 15 cents as every commodity used to calculate the feed cost rose modestly throughout the month. The largest price increase came from soybean meal, which was up $13.13 per ton from the month prior, and up $7.60 per ton from February 2025.
The DMC feed cost for each month is calculated by 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.
The steady feed cost could not be offset by a rising milk price and resulted in a DMC margin of $8.46 per cwt in February. Operations enrolled in Tier I will receive indemnity payments based on the selected coverage level of either $9.50, $9 or $8.50 per cwt. All payments are subject to a 5.7% sequestration deduction.
Looking ahead
Markets in March are looking up, but indemnity payments are still expected. As of March 27, the DMC margin forecast is at $9.40 per cwt for the month, the result of a climbing milk price to $19.47 per cwt coupled with rising feed costs at $10.07 per cwt. If realized, March’s margin would trigger a small indemnity payment for producers under the $9.50 per cwt coverage level.
However, as the second quarter of 2026 gets underway, the milk price moves up nearly $2, which is predicted to support margin improvements. At the time of this writing, the DMC margins from April through December sit comfortably in the $11 range. Remember though, markets do change.
