Dairy could have a rough start to the new year. If futures markets are accurate, the strong All-Milk price and falling feed costs in 2022 may not stick around. The Dairy Margin Coverage’s (DMC) “milk margin above feed costs” was $10.89 in November, $1.39 per hundredweight above the $9.50 threshold to initiate DMC payments.
However, milk prices may be falling faster than feed costs have been. The January to June 2023 Class III six-month bundle has fallen $1.40 from December to January. Class IV has fallen $.65 in the same time. Just before Christmas, the seven-product bundle fell 3.8% and another 2.8% on January 3. Given the evolving equation, price risk mitigation will be vital in this first quarter of 2023.
Read more on DMC and Dairy Revenue Protection (DRP) here.
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