The USDA has extended the application deadline for the Dairy Margin Protection Program to December 19th. Milk price forecasts are showing significant decline in prices over the next several months.
Bob Parsons, University of Vermont Ag Economist, has shared these figures below that show the probability of margins dropping below various coverage levels….
“From the table below, the % numbers are the probability of return over feed cost dropping below the amount on the left hand column. For example while the expected return over feed costs for March-April is $8.52, the probability of it dropping below $7 is 18% and 10% chance of dropping below $6.50. Remember that in the past that when milk prices drop, they tended to drop further than the markets predicted.”
| Margin Level | Nov-Dec 2014 | Jan-Feb 2015 | Mar-Apr 2015 | May-Jun 2015 | Jul-Aug 2015 | Sep-Oct 2015 | Nov-Dec 2015 | Jan-Feb 2016 |
| Expected | $12.91 | $9.20 | $8.52 | $8.64 | $9.18 | $10.13 | $10.12 | $9.79 | |
| < $8.00 | – | 13% | 39% | 39% | 30% | 15% | 21% | 29% | |
| < $7.50 | – | 6% | 28% | 29% | 21% | 10% | 15% | 23% | |
| < $7.00 | – | 2% | 18% | 20% | 15% | 6% | 10% | 17% | |
| < $6.50 | – | – | 10% | 12% | 10% | 3% | 6% | 12% | |
| < $6.00 | – | – | 5% | 7% | 6% | 1% | 4% | 8% | |
| < $5.50 | – | – | 2% | 4% | 3% | 1% | 2% | 5% | |
| < $5.00 | – | – | 1% | 2% | 2% | – | 1% | 3% | |
| < $4.50 | – | – | – | 1% | 1% | – | – | 1% | |
| < $4.00 | – | – | – | – | – | – | – | 1% | |