Milk production across the U.S. has been rampant in 2026 with both processing capacity and global demand pressuring dairy farms to produce more, and a larger national dairy herd is helping keep the pace. Despite all the dynamics working in favor for U.S. dairy farmers, milk margins remain tight and risk management strategies remain critical.
As previously reported, beginning in July, dairy producers will be able to enroll in concurrent risk management insurance programs to protect milk and livestock. Most notably, dairy producers will have the ability to use Dairy Revenue Protection (Dairy-RP) and Livestock Gross Margin for Dairy (LGM-Dairy), and Livestock Risk Protection (LRP) and LGM-Cattle together in the same coverage period. (Read: Dairy risk management calendar: June 2026 or Watch: Protect What You’ve Built Before July 1)
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 in the month ahead.
Dairy Margin Coverage (DMC)
A substantially improved all-milk price from March to April drove the DMC margin to $10.54 per hundredweight (cwt), the highest margin in 2026 to date. The margin was more than $1 above the highest coverage selection in Tier I and comfortably positioned those enrolled in the program clear of indemnity payments. (Read: April DMC margin reaches yearly high of $10.54 per cwt)
At the time of this writing, the May margin is predicted to be even higher as the all-milk price forecast rises 40 cents, and the feed cost forecast climbs 12 cents with soybean meal carrying the feed commodities used in the DMC calculations as both the price of corn and premium alfalfa fall. If conditions remain, the DMC margin forecast will land at $10.82 per cwt. The actual May DMC margin will be announced later today, June 29, following the release of the USDA Agricultural Prices report.
The margin is anticipated to be strong for another month with the feed cost forecast crumbling below $10 per cwt. Then, it appears as if the all-milk price will also drop to the mid-$19s per cwt for a DMC margin forecast just shy of the $9.50 per cwt indemnity trigger in July and August. While margins will be tight for the rest of summer, they will rebound before the year comes to a close with December’s DMC margin forecast at $11.34 per cwt as of June 26. As 2026 unfolds, the only certainty is that markets are sure to change.
Dairy-RP
Dairy producers managing risk through Dairy-RP are eligible to cover revenue quarterly, up to five nearby quarters. In July, Dairy-RP coverage is available for the fourth quarter of 2025 (October through December) through the third quarter of 2026 (July through September).
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 impact markets are released. This includes Milk Production, Cold Storage and Dairy Products reports (see Calendar).
LGM-Dairy
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 marketings over a rolling 11-month insurance period. So the coverage period during July includes the months of August 2026 through June 2027. Sales periods for the LGM-Dairy program are open on a weekly basis each Thursday except when Milk Production and Cold Storage reports are released on the same day. Sales are also closed on biannual USDA Cattle Inventory report release days.
LRP
This 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-Feed 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, namely Cattle on Feed and the biannual USDA Cattle Inventory. The USDA Risk Management Agency (RMA) also has the right to close sales at their discretion.
Production and price outlooks
- The average Federal Milk Marketing Order (FMMO) uniform milk price climbed 85 cents in May for an average price of $20.87 per cwt across all 11 orders. (Read: Milk markets push PPDs, uniform prices to continue climbing in May)
- After four consecutive months of the advanced Class I base price climbing, July’s price showed some retreat at $21.33 per cwt. (Read: Economic Update: Class I base milk price dips after up-and-up run)
- USDA’s June World Ag Supply and Demand Estimates (WASDE) report raised 2026 milk production to 236.4 billion pounds on expectations of a larger cow herd and an increase in milk output per cow. (Read: USDA feed supply, price forecasts remain stagnant)
- May U.S. milk production increased from April and was also up 2.3% from USDA’s estimates a year earlier. (Read: U.S. dairy herd growth drives higher milk production in May)
- Based on the latest USDA monthly Livestock Slaughter data, the number of dairy cull cows marketed through U.S. slaughter plants in May 2026 was estimated at 191,700. (Read: Dairy cow culling slows as herd expansion continues)
