September 30, 2016

MPP Milk-Feed Margin Soars

 |  By: Jim Dickrell

What a difference a few months make.  In May and June, the U.S. All-Milk price tumbled below $15 and whole herd feed costs soared to $9.  The result was a milk-feed margin that averaged $5.76/cwt, triggering the largest MPP indemnity payments in the program’s history.

Yesterday, USDA announced an All-Milk price of $17.10 and feed costs of $7.84 for August, resulting in a MPP margin of $9.26. In other words, in just a couple of months, milk prices climbed more than 15%, feed prices fell 12%, and the milk-feed margin jumped 46%.

When the August milk-feed margin is averaged with July’s margin of $7.59, the July-August period margin is $8.43/cwt. Result: No MPP indemnity payments for the period.

The August All-Milk price is up a full dollar up from July and up 40¢/cwt from a year ago. Florida’s milk price leads the nation, at $19.90/cwt, but Oregon came in at $19.50. South Dakota was third highest, with an All-Milk price of $18.80 in August.

Michigan, with its continued glut of milk, had the lowest All-Milk price of $15.60 in August. California was the only state to report an All-Milk price below $16, at $15.96. But that’s up a buck from July. You can view all milk prices here. Scroll to page 28.




Unless of course you live in Michigan where there is a price deduction on the small dairies and a price increase for the larger dairies, or a payment policy called "kill the little guy" managed by BIG farmer run Co-ops. With the Michigan average price paid at $15.60 and the smaller dairies receiving $14.80 or 80 cents per hundred less than the average that could mean someone is receiving 80 cents more than the average or $16.40 per hundred. So at the highest futures level the dairy industry has seen, small dairies in Michigan who haven't grown to flood the market, are getting financially murdered by the states Industry leaders who deducted $2.50 per hundred from their milk checks. That's a more than 14% theft.
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