Report for March
Effective risk management continues to be essential for dairy farmers, even as price forecasts for 2021 have somewhat improved on robust domestic demand and at least some hope that milk-production gains may be moderating.
2021 began with particularly strong domestic consumption growth of butter, American-type cheese and yogurt, as well as milk in all products, but also saw export declines related to shipping problems. Meanwhile, milk production growth slowed as the year began, although revised data showed a more modest slowdown than initially reported.
The combined effect of these changes have raised milk-price forecasts, though not enough to push Dairy Margin Coverage program margins above the maximum $9.50 per cwt coverage level under the program, making government payments a near-certainty for the next several months and a worthy investment for farmers who enrolled. For context: The January DMC payment alone will more than cover the cost of enrolling in the program at this maximum coverage level for the entire year.