Margin outlook has significantly improved from a few months ago as sustained high cheese and butter prices drive milk prices higher and lower feed costs all contribute to the positive outlook.

Margins appear encouraging with the recent swell in Class III prices and improved feed costs. Cheese exports to Mexico have also been critical for U.S. dairy producers as shipments to China and Southeast Asia have slowed. Yet, with extreme weather conditions and the continued spread of avian influenza, having a strategy to manage risk is essential.

The dairy landscape is seeing rapid, much-welcomed improvements as milk markets rallied in May with Class III futures surpassing $20 per hundredweight (cwt), $4 above April’s prices. Coupled with feed costs receding, dairy margins are looking better for the remainder of the year.

Dairy producers in non-major dairy states will notice a change to how their Dairy-Revenue Protection (Dairy-RP) insurance coverage is determined.

As predicted, milk prices recovered some in April with Class III at $15.57 per hundredweight (cwt) during the last full week of the month and futures jumping more than $1 for May and June. Unpredictability is still expected in the marketplace, and producers are encouraged to enroll in the Dairy Margin Coverage (DMC) safety net program.

Here is a summary of the latest news affecting the financial health of U.S. dairy operations.