Deadline extended

On December 8, 2022, USDA announced the signup date for DMC has been extended to January 31, 2023.  DMC is a voluntary risk management program available to dairy producers.  This program helps producers manage risks associated with changing milk and feed prices.  This margin protection program utilizes the All-Milk price less a ration cost to produce 100 pounds of milk.  DMC insures a producer-selected margin amount, thus providing both milk price and feed price risk management.

Market fluctuations

At the time of the January 31, 2023 deadline extension announcement, many of the dairy headlines were recounting the recent decline in Class III milk prices. They were coming off a high of approximately $20.93/cwt down to a low $19.80’s/cwt, just over $1.10/cwt change in less than 15 days.  With no crystal ball in sight and $1+/cwt changes in Class III prices occurring within each month of the previous six months, having an effective and easy-to-utilize risk management option may be welcomed by dairy producers.

DMC allows producers to select a margin per cwt coverage level at the time of enrolment, with no additional selections or adjustments made during the coverage period.  USDA reports that margin payments have been made for August and September at $0.15/cwt for the $9.50 margin coverage level.

2023 Forecast update

An early December 2022 forecast for 2023 projects an All Milk Price yearly average of $22.70/cwt resulting in an average margin for the year of $8.87/cwt.   The chart below shows 2023 DMC forecasted prices.  For the first 8 months of 2023, the forecast shows margin/cwt less than the $9.50/cwt level of coverage.  Comparing this with the 2023 forecast calculated 30 days prior, there were no months previously projected to exceed the $9.50/cwt margin level.