US dairy margins poised to be best in a decade

A window has opened for dairy farmers to consider locking in some positive margins based on futures contracts, according to a recent market report from CoBank. Overall, 2024 should go in the books as a top-three milk price year. On the flip side, grain prices have been dropping steadily this summer to reach a five-year low – admittedly not good for crop farmers but an opportunity for livestock producers. In July, the margin above feed costs to produce milk moved to the best level since May 2022 at $12.33 per cwt. Forecasts for the remainder of the year show margins improving to nearly $16 per cwt., based on calculations from the Dairy Margin Coverage (DMC) program. The positive movement in milk prices has been driven largely due to tighter supplies rather than stronger dairy demand. Milk supplies have gotten tight among the big three dairy product exporters – New Zealand, the EU, and the US Stateside milk production is on pace to be down for two straight years. If the trend plays ...