The USDA National Agricultural Statistics Service (NASS) released its Agricultural Prices report Nov. 29, which includes feed costs used to calculate the October Dairy Margin Coverage (DMC) program margins and indemnity payments. The margin slipped to $15.17 per hundredweight (cwt).
A peek at October 2024 DMC
DMC program margin factors compared to the previous month:
- Alfalfa hay: $236 per ton, up $9
- Corn: $3.99 per bushel, up 1 cent
- Soybean meal: $342.85 per ton, down $3.49
- Total feed costs: $10.03 per cwt, up 10 cents
- Milk price: $25.20 per cwt, down 30 cents
- Margin above feed cost: $15.17 per cwt, down 40 cents
Source: USDA Farm Service Agency, National Ag Statistics Service and Marketing Service, Nov. 29, 2024
Milk prices cooled in October
The announced all-milk price for October 2024 was down 30 cents from September 2024 to $25.20 per cwt. Yet, as prices cooled over the last month with concerns of production limitations due to a replacement shortage, and butter and cheese supplies tightening, October prices fared much better than the same month a year ago, up $3.70 per cwt.
Just as the announced all-milk price slipped, many of the 24 major dairy states also saw a marginal dip in month-over-month milk price from September to October. Over half of the states noted no change or a decrease in milk price, with Colorado, Michigan, Washington and Wisconsin all posting the smallest loss of 10 cents per cwt; Ohio was unchanged at $26 per cwt. The greatest drop in month-over-month milk price was seen in Oregon at $2.20 per cwt to settle at 25.50 per cwt. The remaining 10 states posted a slight increase in milk price from September to October with Florida and Georgia leading, up 40 cents to $28.20 and $28.70 per cwt, respectively.
While it was a mixed bag for month-over-month milk prices, the month certainly carried its own when comparing markets to a year ago. All 24 major dairy states posted significant gains in October 2024 compared to October 2023. States in the Upper Midwest led with prices up over $5 per cwt from a year prior, including South Dakota ($5.40), Wisconsin ($5.80), Iowa ($6.10) and Minnesota ($6.30). The smallest gain was in Oregon at $1.30 per cwt more in October 2024 than in October 2023.
Feed costs show slight rebound
Total feed costs rose a dime in October compared to September with corn and alfalfa hay prices showing sensible gains.
- The average cost of corn was up 1 cent at $3.99 per bushel in October 2024 but down 94 cents from a month prior.
- The average price for dairy-quality alfalfa hay boomeranged from September to October, back up $9 to $236 per ton. A year ago, the price for this feedstuff was $728 per ton.
- At $342.85 per ton, October’s price for soybean meal was down $3.49 from a month ago. At this time last year, the commodity was $416.16 per ton.
The DMC feed cost each month is calculated summing three numbers: (1) the corn price per bushel times 1.0728; plus (2) the soybean meal price per ton times 0.00735; plus (3) the alfalfa hay price per ton times 0.0137.
As two of the feedstuffs used to calculate the feed cost for the DMC program calculation posted modest increases, the feed cost for October resulted in $10.03 per cwt of milk sold. That was up 10 cents from a month prior and down $2.13 from a year prior.
October margin slips with market conditions
The realized DMC margin for October was $15.17 per cwt, a 40-cent fall from a month ago, but still one of the highest in the program’s history. At this margin, the October DMC margin is $5.67 above the $9.50 per cwt top coverage level in Tier I, resulting in no indemnity payments for the month. October became the eighth consecutive month where no indemnity payments were issued.
Margin predictions in November
The DMC online decision tool forecasts the margin to fall to $13.45 per cwt in November and finish out the year down another $1.09 to $12.36 per cwt in December. The actual margin for November will be announced Dec. 31. Remember, markets do change.
As of Nov. 12, almost three quarters of all dairy operations with established production history are enrolled in the 2024 DMC program. Those 15,696 operations are expected to receive a collective $36.8 million in payments by the year’s end with each dairy receiving an estimated $2,347. This value does vary based on production history as well as the selected coverage percentage and coverage level under the program.
