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.