The May Dairy Margin Coverage (DMC) margin dropped by $1.01/cwt from April to $4.83/cwt, the lowest it’s ever been and the first time below $5/cwt during the life of the current program or that of its predecessor, the Margin Protection Program (MPP), triggering payment at both the Tier I and Tier II levels.
The May all-milk price dropped by $1.40/cwt from a month earlier to $19.30/cwt, while the DMC feed cost eased lower by $0.39/cwt in that time, on lower corn and soybean meal prices. The May payment for the maximum Tier 1 coverage at the $9.50/cwt level will be $4.67/cwt. The May payment for the low-cost Tier 2 coverage at the $5.00/cwt level will be $0.17/cwt.
Available forecasts anticipate the margin dipping down closer to $4/cwt during early summer, with a bottom in July, and not rebounding above $9.50/cwt until early in 2024.
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