The USDA National Agricultural Statistics Service (NASS) released its Agricultural Prices report Feb. 28, which includes feed costs and milk prices used to calculate the January Dairy Margin Coverage (DMC) program margins and indemnity payments. January’s margin was $13.85 per hundredweight (cwt), continuing momentum from the program’s historic margins realized in 2024.
A peek at January DMC
DMC program margin factors compared to the previous month:
- Alfalfa hay: $242 per ton, up $12
- Corn: $4.29 per bushel, up 6 cents
- Soybean meal: $316.97 per ton, up $13.34
- Total feed costs: $10.25 per cwt, up 33 cents
- Milk price: $24.10 per cwt, up 80 cents
- Margin above feed cost: $13.85 per cwt, up 47 cents
Source: USDA Farm Service Agency, National Agricultural Statistics Service and Marketing Service, Feb. 28, 2025
Milk prices improve in most major dairy states
In all but four of the 24 major dairy states, the all-milk price was up in January compared to December 2024. States that boasted the greatest price improvement were Iowa and South Dakota, up $1.60 per cwt from December 2024, Wisconsin up $1.50, Minnesota up $1.30, Michigan up $1.20 and Illinois up $1.10. The states that did not see a price improvement were Utah and Virginia, both posting the same all-milk price as December 2024, and Florida and Georgia, both down 30 cents and 40 cents per cwt, respectively, from the month prior. All remaining states saw the all-milk price rise anywhere from 20 cents to $1.
The announced average all-milk price for the 24 major dairy states in January was $24.10, up 80 cents from the month prior and a stunning $4 improvement from January 2024. Despite some variation in prices from month to month, every state posted a strong rise in the all-milk price in January compared to the same month last year. Wisconsin saw the greatest spread, recording a price $5.90 per cwt more than in January 2023.
Feed costs make marginal comeback
For the first time since September 2024, the price of each feedstuff used to calculate the feed cost for the DMC margin improved from the month prior.
- The average cost of corn was $4.29 per bushel, up 6 cents from December 2024 but down 45 cents from the same month a year prior.
- Dairy-quality alfalfa hay was $242 per ton, rising $12 from last month yet falling $32 from January 2024.
- At $316.97 per ton, January’s price for soybean meal climbed $13.34 from December 2024, but down a staggering $61.43 from this time last year.
The DMC feed cost each month is calculated summing three numbers: the corn price per bushel times 1.0728, plus the soybean meal price per ton times 0.00735, plus the alfalfa hay price per ton times 0.0137.
With all feed prices improving month over month, the feed cost for January was $10.25 per cwt of milk sold. January’s feed cost was up 33 cents from December 2024 but down $1.37 from the same month a year ago.
January’s margin continues trend from 2024
The realized DMC margin for January was $13.85 per cwt as a result of a higher all-milk price but also higher feed costs, down 65 cents from the forecast margin of $14.50 per cwt as of Feb. 27. While feed costs helped tighten the January margin, it is still $4.35 above the $9.50 per cwt top coverage level in Tier 1, resulting in no indemnity payments for the month and a positive start to the 2025 program year. This margin is now the 10th consecutive month where margins land above the $9.50 per cwt top coverage level threshold in Tier 1.
As of Feb. 5, 73.2% of all dairy operations with established production history were enrolled in the 2024 DMC program. Those 15,725 operations received a collective $36.7 million in payments with each operation collecting an average of $2,333. This value does vary based on production history as well as the selected coverage percentage and coverage level under the program.
Margin predictions for February
The DMC online decision tool forecasts the margin to tighten to $13.58 per cwt as the all-milk price is predicted to fall, while all commodity prices used to calculate feed costs continue to improve.
Current forecasts predict a relatively stable year, but with impending tariffs, increased processing capacity coming online, and fluctuating corn and soybean markets, margins are sure to change. Enrollment for the 2025 DMC program closes Monday, March 31. (Read: 2025 Dairy Margin Coverage enrollment begins Jan. 29)
