With an improved All-Milk price and lower commodity prices compared to much of last year, dairy farmers’ pocketbooks are feeling less squeezed so far in 2024. That looks to continue as USDA projects that both corn and soybean production will be greater this year.

On Friday, the monthly World Agricultural Supply and Demand Estimates (WASDE) released by USDA included a 10-cent per bushel reduction in corn price from last month to $4.30. Corn production for the coming harvest is now estimated to be up 1.6% to reach 15.1 billion bushels. This is driven by predictions of more corn acreage instead of a change in yields.

The corn price used in the Dairy Margin Coverage (DMC) program calculations last year peaked at $6.80 per bushel in February before falling the rest of the year and finishing 2023 at $4.80. That’s a remarkable difference from the $7.37 per bushel peak utilized in June 2022.

Soybean meal has followed a similar trend. It peaked at $510.90 per ton in August 2022 and got as high as $500.53 per ton last year (also in February) before slipping over the rest of the year and finishing at $440.60 last December. Prices this year have not yet topped $400 per ton.

Last week’s update saw USDA reduce expected soybean acreage for 2024 slightly, but year-over-year production is still expected to be 6.5% higher.

The other feed component of the DMC margin, premium alfalfa hay, has so far stayed relatively close to where it ended 2023 at $275 per ton.

If these projections hold, the milk margin above feed costs could remain above the minimum $9.50 per hundredweight (cwt.) level and not trigger DMC payments. Producers who signed up at that level received payments in January and February of this year, but the margin has not dropped below $9.50 since. The March and April margins hovered close to that level, but then surged to $10.52 per cwt. in May; it had not previously been above $10 since November 2022 when strong milk prices offset the still-high feed prices.

Of course, we are still only about halfway through the growing season, and weather concerns — whether hot temperatures or flooding and standing water — remain challenges for farmers in many parts of the country. How much of the national corn and soybean crop is damaged or lost could play significantly into where these prices end up in the next few months.