The USDA National Agricultural Statistics Service (NASS) released its Agricultural Prices report Dec. 31, 2024, which includes feed costs used to calculate the November Dairy Margin Coverage (DMC) program margins and indemnity payments. As expected, the margin fell to $14.29 per hundredweight (cwt).
A peek at November 2024 DMC
DMC program margin factors compared to the previous month:
- Alfalfa hay: $235 per ton, down $1
- Corn: $4.07 per bushel, up 8 cents
- Soybean meal: $316.18 per ton, down $26.67
- Total feed cost: $9.91 per cwt, down 12 cents
- Milk price: $24.20 per cwt, down $1
- Margin above feed cost: $14.29 per cwt, down 88 cents
Source: USDA Farm Service Agency, National Agricultural Statistics Service and Marketing Service, Dec. 31, 2024
Milk prices dip in November
The announced all-milk price for November 2024 was down $1 from October to settle at $24.20 per cwt, with all but two states in the 24 major dairy states recording month-over-month declines in milk price. However, the markets were improved year over year with November’s average all-milk price settling $2.60 per cwt more than November 2023.
As most all major dairy states posted declines in milk price from October, the largest spreads were noticed in the Upper Midwest where Class III prices weakened due to the cheese and butter markets. Leading with the greatest decline in milk price was Minnesota, down $3 from October; followed by Iowa, down $2.60; and South Dakota and Wisconsin, both down $2.50 from a month prior. The smallest decline in milk price was noted in Virginia, only down 10 cents. The two states that posted increases were Florida and Georgia, seeing a 10-cent price improvement in November from October.
All 24 major dairy states posted strong price improvements in November 2024 compared to November 2023. Both Arizona and Kansas posted milk prices $3.70 per cwt above November 2023. The smallest increase was noted in New York at $1.70 per cwt more than this month last year.
Feed costs fall
In November, total feed costs fell 12 cents from a month prior, influenced by a strong drop in soybean meal prices as corn and dairy-quality hay remained relatively stable.
- The average cost of corn was $4.07 per bushel, up 8 cents from a month ago but down 59 cents from a year prior.
- The average price for dairy-quality alfalfa hay was $235 per ton, down $1 from last month and down $36 from November 2023.
- At $316.18 per ton, November’s price for soybean meal was down a staggering $26.67 from a month ago. At this time last year, the commodity was $464.27 and the lowest since March 2020.
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.
With corn and alfalfa prices moving just slightly in both directions, but the price of soybean meal tanking month over month, the feed cost for November resulted in $9.91 per cwt of milk sold. That was 12 cents lower than October and $2.21 lower than November 2023.
November margin lowers as feed, milk prices weaken
A slight uptick in milk production, coupled with weaker cheese and butter markets, are a few reasons that kept the market under pressure. This, along with mixed feed costs, resulted in a realized DMC margin of $14.29 per cwt in November. At this margin, the November DMC margin is $4.79 above the $9.50 per cwt top coverage level in Tier I, resulting in no indemnity payments for the month. November is now the ninth consecutive month where no payments were issued.
Margin predictions for December
The DMC online decision tool forecasts the margin to rebound slightly to $9.59 per cwt in December. If realized, 2024 would end with just three monthly margins triggering indemnity payments in Tier I. The actual margin for December will be announced Jan. 31, 2025. Be mindful as markets do change.
As of Dec. 2, 73.2% of all dairy operations with established production history are enrolled in the 2024 DMC program. Those 15,704 operations are expected to receive a collective $36.8 million in payments by the year’s end with each dairy receiving an estimated $2,345. This value does vary based on production history as well as the selected coverage percentage and coverage level under the program.
