Small declines in milk prices and climbing feed costs give way to tighter margins as we head into the spring months. Yet, margins are still swaying in a dairy producer’s favor. Impending tariffs, increasing milk processing capacity and uncertainty in the corn and soybean markets are all reminders that risk protection is a sound business decision as markets do change.
Here's Progressive Dairy’s look at important dates, reports and advice affecting risk management decisions, as well as other information impacting the milk check in March.
Dairy Margin Coverage (DMC) program
The enrollment period for the 2025 DMC program coverage year will close Monday, March 31. 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 January DMC margin and indemnity payment will be announced Friday, Feb. 28, with March’s margin calculated Monday, March 31.
The realized DMC margin for December 2024 was $13.38 per hundredweight (cwt), driven by a declining milk price and relatively stable feed costs from the month prior, and rounded out the year with an average DMC margin of $11.98 per cwt. In 2024, the program only triggered payments during the first two months of the year, resulting in about $36.8 million in payments to the 15,715 operations enrolled. (Read: December rounds out 2024 with no DMC payment)
As of Feb. 28 prior to the announced DMC margin, the January margin forecasts show a higher margin with a rising all-milk price the driving factor for that equation. Forecasts predict the all-milk price coming in at $24.09 per cwt, 79 cents above December 2024’s value. Additionally, feed costs are predicted to drop 33 cents from the month prior with all feedstuffs lower in January. Looking ahead to February, margins tighten as feed costs are predicted to remain relatively unwavering, but the milk price falls nearly $1.
Dairy Revenue Protection (Dairy-RP)
Dairy producers managing risk through Dairy-RP are eligible to cover revenue quarterly, up to five nearby quarters. In March, Dairy-RP coverage is available for the second quarter of 2025 (April through June) through the third quarter of 2026. Coverage for the second quarter of 2025 closes Saturday, March 15.
The market changes daily and Dairy-RP endorsements must be purchased between the Chicago Mercantile Exchange (CME) market closing and the next CME opening. Dairy-RP is also not available on days when applicable futures contracts move limit-up or limit-down, or on days when CME trading is closed due to holidays (see Calendar).
Also, Dairy-RP coverage cannot be purchased on days when major USDA dairy reports that could impact markets are released. This includes Milk Production, Cold Storage and Dairy Products reports.
Livestock Gross Margin for Dairy (LGM-Dairy)
LGM-Dairy is another subsidized margin insurance program administered by the USDA’s Risk Management Agency (RMA).
The insurance program provides a protection when feed costs rise or milk prices drop and can be tailored to any size farm. The program uses futures prices for corn, soybean meal and milk to determine the expected gross margin and the actual gross margin. LGM-Dairy is similar to buying both a call option to limit higher feed costs and a put option to set a floor on milk prices.
Coverage can be purchased on expected milk marketing over a rolling 11-month insurance period. So the coverage period during March 2025 includes the months of April 2024 through February 2026.
Sales periods for the LGM-Dairy program are open on a weekly basis. Unlike Dairy-RP, LGM-Dairy is available even if a sales period falls on the day of a USDA report. Premium payments are due at the end of the insurance period.
Production and price outlooks
- U.S. milk production rose about 0.1% in January compared to the same month a year prior. Production also increased from December 2024. (Read: Milk production higher to start 2025)
- In January, statistically uniform milk prices declined in three of the 11 regional Federal Milk Marketing Orders (FMMOs) compared to December 2024. The declines were in regions with the highest Class I milk utilization. (Read: January 2025 FMMO uniform milk prices mixed)
- The FMMO advanced Class I base price took a dip for March at $21.02 per cwt compared to $21.27 per cwt in February, but $2.22 per cwt higher than in March 2024. (Economic Update: Class I base price dips for March)
- In the USDA’s latest monthly report, a smaller dairy herd and higher demand and prices for dairy cow replacements have impacted cull cow slaughter rates for more than a year. (Read: January report on dairy cows culled for beef)
Check the Progressive Dairy website for updates affecting milk prices as they become available.
