Dairy producers enrolled in the Margin Protection Program for Dairy (MPP-Dairy) will have to wait another month to get the second half of the July-August pay period calculations. However, the July milk-income-over-feed-cost margin jumped more than $1.80 per hundredweight (cwt) from the May-June average, all but assuring any indemnity payment will be minimal, at best.
The good news is that milk income margins are improving. USDA’s Farm Service Agency (FSA) calculated a July margin of $7.59 per cwt, compared to just $5.76 per cwt in May-June.
A higher U.S. milk price, combined with lower costs for corn, soybean meal and alfalfa hay, contributed to the margin improvement (Table 1).
July corn and soybean meal prices were the lowest since April 2016, and hay prices continue to slide. Final feed costs averaged $8.51 per cwt nationally, resulting in the highest monthly income margin since February.
Stronger milk futures prices have improved forecasted MPP-Dairy margins for coming months. As of Aug. 31, two-month pay-period projections are as follows: July-August – $8.09; September-October – $ 9.94; and November-December – $10.36. Looking ahead to 2017, projected margins are between $9.90 to $10 for the first half of the year, and closer to $11 per cwt for the second half of the year.
Based on those preliminary estimates, there would be no MPP-Dairy indemnity payments through the end of 2017.
2017 enrollment extended
Conditions can change, of course, and USDA extended the 2017 enrollment period to allow dairy producers time to see how the milk price over feed cost margin outlook develops before they make coverage decisions.
The enrollment period for the 2017 MPP-Dairy program is currently underway at USDA FSA offices, but the deadline to enroll was extended until Dec. 16.
A USDA web tool allows dairy producers to calculate levels of coverage available from MPP based on price projections.
Read also: Margins rising, but use risk management tools to build a floor 
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Dave Natzke
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