With all the uncertainty surrounding corn and soybean markets, conditions have changed since early May and could change some more. (Read: Improving margins shrink DMC payments.)
Enrollment in DMC is scheduled to begin on June 17, and dairy farmers electing the top coverage level of $9.50 per hundredweight (cwt) margin are already ensured January-March indemnity payments well in excess of annual premium costs. Distribution of indemnity payments, retroactive to January 2019, is scheduled to begin about July 8.
April’s DMC margin will be available after the USDA releases milk, corn, soybean meal and alfalfa hay prices on May 31. Based on conditions at the close of trading on the Chicago Mercantile Exchange (CME), May 29, the latest forecast from the Program on Dairy Markets and Policy website projects DMC program margins to be near at or above $9 per cwt for April and then climb to near $9.50 per cwt in May. However, recent increases in corn and soybean futures prices have pushed expected margins lower in June, July and August, before rising again to near $9.50 per cwt in September.
Now, back to the uncertainty on the corn and soybean side of the equation. The University of Illinois farmdoc website goes into detail on all the factors affecting corn and soybean markets, which will ultimately influence milk income margins.
Read: Prevented Planting, 2019 Market Facilitation Program Payments, Disaster Assistance, and Price Dynamics and Corn Price Strength Grows on Supply Issues.
The USDA’s latest Crop Progress report revealed about 58 percent of intended corn acreage was planted as of May 26, compared to about 90 percent for both the same day a year ago and the five-year average. The report covers 18 major corn states, which collectively covers about 92 percent of U.S. corn acreage.
Trends were similar for soybeans: About 29 percent of intended soybean acreage was planted as of May 26, compared to about 74 percent a year ago and the five-year average of 66 percent. The report covers 18 major soybean states, which collectively covers about 95 percent of U.S. corn acreage.
An estimate of actual planted acres will arrive with USDA’s Acreage report, scheduled for June 28.
In addition to delayed planting and the impact on both reduced acreage and yield potential – which alone could boost prices – many corn acres will soon be eligible for prevented planting payments on corn crop insurance policies. Or, producers could take 35 percent of the corn prevented planting payment and plant soybeans after the late planting period for corn.
Enter the recently announced 2019 Market Facilitation Program (MFP). The USDA has initially stated that MFP payments will not be received on prevented planting acres, but the final details have yet to be released. MFP payments could provide incentives to plant crops and not take prevented planting payments.
Adding confusion to this situation is a disaster assistance program working its way through Congress, which may or may not adjust prevent planting payment levels. Other factors – probably not the last – relate to remaining supplies from last year’s corn crop, which has seen weakening demand from ethanol and export markets. 
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Dave Natzke
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- Progressive Dairyman
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