May Dairy Margin Coverage Payment $4.13
The United States Department of Agriculture (USDA) reports this week that the milk-feed margin for May was just $5.37, which will trigger a Dairy Margin Coverage (DMC) payment of $4.13/cwt for those producers who signed up for $9.50 coverage.
The payment could help soften the blow to dairy farmers’ cash flow hit by a record negative Producer Price Differential in June.
The May DMC milk-feed margin was triggered by a cratering all-milk price, which came in at $13.60/cwt, down from $14.40 in April. Feed costs were actually down in May, estimated at $8.23/cwt. That compares to $8.37 in April. The April DMC indemnity was $3.20/cwt.
The last time milk prices were this low was in May and June, 2016, when they averaged $14.65 for the two months. That triggered a Margin Protection Program payment of $2.24/cwt for dairy producers who signed up $8 coverage, the most allowed at the time.
For more data on the 2020 DMC program, click here.