The USDA’s monthly Margin Protection Program for Dairy (MPP-Dairy) calculations showed a slight improvement in June. Milk and feed futures prices point to continued improvement through the remainder of the year.
June milk prices tick upward
June 2017’s U.S. average milk price of $17.30 per hundredweight (cwt) was up just 60 cents from May, but up $2.50 compared to June 2016, according to the USDA’s monthly Ag Prices report. The January-June 2017 average of $17.58 cwt is $2.28 per cwt more than the same period a year earlier.
Among individual major states (Table 1), Arizona and Oregon (each up $1), Washington (up 90 cents) and Pennsylvania and Kansas (up 80 cents) saw the largest increases compared to May. Only Idaho saw a price decline. Compared to a year earlier, June 2017 milk prices were up $3 or more per cwt in Illinois, Iowa, Oregon, South Dakota and Wisconsin.
MPP-Dairy margin improves
The increase in the U.S. average milk price coincided with small declines in average feedstuff prices used in MPP-Dairy margin calculations.
The U.S. average price for corn received by growers was down 2 cents from May, to $3.43 per bushel. At $300.72, soybean meal was down $6.91 per ton, and alfalfa hay averaged $152 per ton, $3 off May’s eight-month high. The overall feed cost was $7.97 per cwt of milk sold, down about 11 cents from May (Table 2).
Subtracted from the average milk price, the June MPP-Dairy income margin was $9.33 per cwt, up about 71 cents from May.
The June MPP-Dairy calculations are the second half of two-month factors used to determine potential payments for the May-June pay period. The two-month margin average was $8.97 per cwt, meaning no MPP-Dairy indemnity payment will be made.
As of July 31, the Program on Dairy Markets and Policy projected monthly MPP-Dairy margins to incrementally rise during the next several months, hitting $10 per cwt in August and peaking at about $11 per cwt in October and November. Although conditions may change, those margins are well above MPP-Dairy indemnity payment triggers.
While the current MPP-Dairy pogram runs through the end of next year, an amendment included in a fiscal year (FY) 2018 agricultural spending bill could provide a head start for changes in the next farm bill.
The start date to select MPP-Dairy coverage for calendar year 2018 has been delayed until Sept. 1, running through Dec. 15, 2017. Dairy producers will receive an enrollment reminder notice from USDA’s Farm Service Agency national office. Farmers must complete and submit form CCC-782 to their FSA county office during the period. 
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Dave Natzke
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