Digest highlights
- May 2023 DMC payments top $172 million
- GDT index lower
- Ag producer sentiment mixed
- RMA updates Dairy-RP, LGM-Dairy Cattle handbooks
May 2023 DMC payments top $172 million
Dairy Margin Coverage (DMC) program indemnity payments on May 2023 milk marketings enrolled in the program will total about $172.3 million, according to the latest update from the USDA’s Farm Service Agency (FSA). Indemnity payments for the first five months of 2023 will be nearly $611.94 million.
The May DMC margin was $4.83 per hundredweight (cwt), triggering Tier I indemnity payments at $5-$9.50 coverage levels and Tier II indemnity payments at $5-$8 DMC coverage levels.
Read: May 2023 DMC margin plummets to $4.83 per cwt
Wisconsin led all states in January-May DMC indemnity payments at about $136.2 million. That was followed by: California – $60.6 million, New York – $58 million, Minnesota – $52.2 million and Pennsylvania – $50.4 million.
January-May DMC payments averaged $36,147 per dairy operation enrolled in 2023. All payments are subject to a 5.7% sequestration deduction.
Based on latest enrollment data as of July 3, 16,929 dairy operations are enrolled in the 2023 DMC program, representing about 73% of operations with established production history. Annual milk volume covered under the program totals 156.1 billion pounds, about 78% of production history established in 2023. The report does not include enrollment in the Supplemental DMC program.
The June DMC margin and potential indemnity payments will be announced on July 28.
GDT index lower
An indicator of world dairy prices, the latest Global Dairy Trade (GDT) price index declined in an auction held July 4. Prices in individual product categories were all down:
- Skim milk powder (SMP) was down 6% to $2,525 per metric ton (MT, or about 2,205 pounds).
- Whole milk powder was down 0.4% to $3,149 per MT.
- Anhydrous milkfat was down 3.4% to $4,759 per MT.
- Butter was down 10.3% to $4,842 per MT.
- Cheddar cheese was down 3.1% to $4,386 per MT.
The GDT platform offers dairy products from several global companies: Fonterra (New Zealand), Darigold, Valley Milk and Dairy America (U.S.), Amul (India), Arla (Denmark), Arla Foods Ingredients (Denmark) and Polish Dairy (Poland).
The next GDT auction is July 18.
Ag producer sentiment mixed
Driven by crop and cattle prices, the long-term economic outlooks of more agricultural producers improved in June, while their views of short-term conditions remained flat.
The Ag Economy Barometer provides a monthly snapshot of farmer sentiment regarding the state of the agricultural economy. The survey collects responses from 400 producers whose annual market value of production is equal to or exceeds $500,000. Minimum targets by enterprise are as follows: 53% corn/soybeans, 14% wheat, 3% cotton, 19% beef cattle, 5% dairy and 6% hogs. Latest survey results, released July 5, reflect ag producer outlooks as of June 12-16.
Nearly 75% of respondents still feel now is a bad time to make large investments in their farming operation. Respondents in June cited rising interest rates (35% of respondents) and increasing prices for equipment and new construction (37% of respondents) as key reasons for viewing now as a bad time for investments, said James Mintert, the barometer's principal investigator and director of Purdue University's Center for Commercial Agriculture.
About 43% of producers in the June survey think interest rates have peaked, and nearly a quarter of survey respondents expect to see lower interest rates within the next year.
RMA updates Dairy-RP, LGM-Dairy Cattle handbooks
The new (2024) crop insurance year started July 1, 2023. Among newly updated USDA Risk Management Agency (RMA) handbooks and other documents, those released for the 2024 and succeeding crop years include:
