THE MILK MARGIN OVER FEED COSTS used in the Dairy Margin Coverage (DMC) program, calculated by USDA, fell to $3.65 in June. That was a new record low for the risk management program. The margin was $1.18 less than the previous record set just one month earlier.
THIS WAS THE FIRST TIME the DMC margin fell below the $4.00 mark since the program began in 2019. Although feed prices used in the calculations came down some as the year went on, historically high feed prices and a steep decline in the All-Milk price are to blame.
IN THE FIRST SIX MONTHS OF 2023, $611.9 million in DMC payments were dispersed. Payments totaled $83.7 million for all of 2022.
THE CLASS III PRICE CONTINUED its descent, falling to $13.77 per hundredweight (cwt.) in July. That price was down $1.14 from the month before and was the lowest Class III price since May 2020 when it sunk to $12.14 at the start of the global COVID-19 pandemic.
A HEARING TO AMEND PRICES in the 11 Federal Milk Marketing Orders (FMMO) will begin this month. Testimony will be heard on 22 proposals submitted by industry organizations. Read more on page 376.
AFTER A RECORD YEAR OF DAIRY EXPORTS in 2022, this year has not followed suit. In June, dairy products sent overseas fell 13.7% year over year and was the lowest volume exported since 2019. Cheese exports were down 19%, and whey exports tumbled 31.9%.
CHINA’S REDUCTION IN DAIRY IMPORTS is one reason for the decline. For example, imports of whey from the U.S. were down 42.8%.
ALTHOUGH MILK PRICES HAVE FALLEN below the cost of production for many farms, that is only part of the story, said dairy consultant Mike McCully. Risk management tools, savings from good years, and revenue sources such as cull cows help balance the low milk prices.
DAIRY COW SLAUGHTER TRENDED UPWARD through mid-July, as shown in the graph, particularly in the Southwest and California where farms are more likely to purchase feed. Learn more on page 370.
WORLD DAIRY EXPO WILL REMAIN IN Madison, Wis., through 2028 as a new five-year contract was signed with the Alliant Energy Center.