The USDA National Agricultural Statistics Service (NASS) released its Agricultural Prices report Jan. 31, 2025, which includes feed costs used to calculate the December 2024 Dairy Margin Coverage (DMC) program margins and indemnity payments. December’s margin came in at $13.38 per hundredweight (cwt), concluding a year of mostly confident margins for dairy producers.
A peek at December 2024 DMC
DMC program margin factors compared to the previous month:
- Alfalfa hay: $230 per ton, down $5
- Corn: $4.23 per bushel, up 16 cents
- Soybean meal: $303.63 per ton, down $12.55
- Total feed cost: $9.92, up 1 cent
- Milk price: $23.30 per cwt, down 90 cents
- Margin above feed cost: $13.38 per cwt, down 91 cents
Source: USDA Farm Service Agency, National Agricultural Statistics Service and Marketing Service, Jan. 31, 2025
All-milk price falls 90 cents
Last month’s markets provided no reprieve from declining milk prices, albeit the prices were significantly improved from this time last year. The announced all-milk price for December 2024 fell 90 cents from the month prior to end the year at $23.30 per cwt, with 11 of the 24 major dairy states posting prices at or below that threshold. States posting the smallest decline in prices were Wisconsin down 50 cents per cwt from November 2024, and Minnesota and Ohio, both down 60 cents. The states that took the largest hits were Illinois and New Mexico, falling $1.40 per cwt from the month prior.
All 24 major dairy states posted price improvements in December 2024 from December 2023, ranging from 10 cents in Oregon to $3.90 per cwt in Arizona. The average all-milk price in December 2024 was $2.90 per cwt more than the same month last year.
Feed costs make marginal improvement
In December 2024, total feed costs rose 1 cent from the month prior, with corn boosting the price as both alfalfa hay and soybean meal prices fell.
- The average cost of corn was $4.23 per bushel, up 16 cents from the previous month but down from $4.80 in December 2023.
- Dairy-quality alfalfa hay was $230 per ton, down $5 from last month and down $45 from the same month last year.
- At $303.63 per ton, December’s price for soybean meal took the largest hit in the feed costs category, down $12.55 from a month prior and down $136.97 from December 2023.
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 the prices of alfalfa hay and soybean meal fell, but the price of corn rose modestly, the feed cost for December 2024 resulted in $9.92 per cwt of milk sold. That was just 1 cent higher than the month prior but $2.24 lower than December 2023.
December’s margin falls with declining milk price and relatively stable feed costs
The realized DMC margin for December 2024 was $13.38 per cwt, higher than the forecast margin of $13.20 per cwt as of Jan. 30. At this margin, the December 2024 is $3.88 above the $9.50 per cwt top coverage level in Tier 1, resulting in no indemnity payments for the month.
As the month’s margin wraps up the DMC program during the 2024 coverage year, it showed a glimpse into the relatively stable dairy markets this past year. The DMC margin only triggered payments during the first two months of the year, resulting in about $36.8 million in payments dispersed to the 15,715 operations enrolled in the program, according to the program’s monthly review updated Jan. 6.
Enrollment for 2025 coverage year
Enrollment for the DMC program for the 2025 coverage year began two days ago and will remain open through Monday, March 31. All dairy operations a part of the 2024 coverage year program with multiyear lock-in contracts requesting to continue to lock in at the same coverage levels for 2025 must enroll during the coverage election period. As was the case last year, enrollment for the 2025 coverage year will be effective retroactive to Jan. 1. Dairy producers can submit applications to their local USDA Farm Service Agency (FSA) office to secure coverage. (Read: 2025 Dairy Margin Coverage enrollment begins Jan. 29)
The markets for 2025 are looking relatively strong with initial forecasts predicting DMC margins greater than $12.50 per cwt for the year, although the realized margins will depend on many factors, including trade, milk production and processing. As of Jan. 31, the DMC online decision tool forecasts the margin to rise to $13.97 per cwt with an improved all-milk price and lower feed cost. The actual margin for January will be announced Feb. 28.
