Dairy Margin Coverage Program Payment Triggered at $6.50 Level
June 2, 2020
Dairy farmers with dairy margin coverage at or about the $6.50 mark will receive a payment for April. The April milk over feed margin landed at $6.03 per cwt. The lowest all-milk price recorded for the year, $14.40, met the lowest feed costs recorded in 2020 at $8.37 per cwt.
This is the second payment triggered by DMC in 2020.
“The steep drop in the April margin has been long anticipated by the dairy futures, which currently indicate another drop to around $5 per cwt. in May,” says the National Milk Producers Federation. “However, as bad as this year’s second quarter will be for the nation’s struggling dairy farmers, the recent futures are continuing to show a considerably brighter light at the end of the current very dark pandemic tunnel.”
In the beginning of May, the outlook was for a very slow and painful recovery for margins throughout the remainder of 2020, with June being as bad as May and the margins remaining below $9.50 per cwt. through the end of the year, they note.
However today, the outlook now shows the June margin recovering to $8.50 per cwt. and the margins for the remainder of the year to remain above $9.50 per cwt, NMPF says.
Because of low expectation of DMC payments last year, many fewer farmers signed up for DMC coverage in 2020. Only 13,077 dairy farmers signed up for DMC coverage this year, 10,000 fewer than last year. In 2020, the enrolled farmers had 56% of estimated milk production history covered, compared to 82% last year.