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Dairy margins widen to highest since 2017 in positive economic sign

In welcome news for the dairy economy, the September margin under the Dairy Margin Coverage program rose by $0.56 per cwt. over the August margin to reach $10.41 per cwt, the second consecutive month margins have fallen outside the threshold necessary to trigger a federal payment. The is the highest seen since the beginning of 2017, allowing for the change in the alfalfa hay price in the margin formula’s feed cost calculation. The September all-milk price was $0.40 per cwt. higher than August’s and the DMC calculated feed cost for September was $0.16 per cwt. lower than August’s, mostly due to a drop in the price of corn.

As of Nov. 6, USDA’s DMC Decision Tool currently projects DMC margin to remain above $9.50 per cwt. for the remainder of 2019 and during all of 2020. Milk prices are expected to generate most of the monthly changes in the margin forecast, while feed costs are anticipated to remain relatively stable during that time.

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