No DMC Run This Month or In the Near Future, Cattle Markets Looking for Direction

Today we start with a look at the Dairy Margin Coverage program payouts. Margins are too good on dairy farms for any payments to be made, but we're still running below YOY levels. Beef markets are in a sideways pattern, looking for direction on which way to move next. And oil prices keep bouncing around. 

Transcript

0:11

Hello and welcome to Chat BDC. You've got your three news articles tagged up for today. Today is Tuesday, June 2nd, 2026. Today we're going to focus on uh DMC payments. We're going to look at uh beef prices after the Memorial Day weekend, and then we're going to look at the ever evolution of the oil prices and stock market. So let's get to it. USDA National Ag Statistics Service Ag Prices Report, which is a mouthful, was released last Friday, established last month's dairy margin coverage program calculations. Price for all key feedstuffs used to calculate the margin rose in April, revealing an income over feed cost of $10.54 per hundredweight, which is more than a dollar above the highest coverage section in Tier 1. And it comfortably positions those enrolled in the program in the clear of indemnity payments. Prices for major dairy feedstuffs that influence the margin were reported in April's USDA Act Prices report. And if you want a full list of those prices, go to progressivedairy.com. All milk price in the 24 major dairy states continue to rally in April, which is good news. On average, all milk price was $20.80 a hundredweight, which is up $1.10 per 100 weight from the previous month and a shy 30 cents under April 2025. Looking at the state-by-state basis, which is again on progressived dairy.com, every one of the 24 major dairy states dairy states saw an improvement. But even though prices improved in April, they still lag from the same month last year for many of the 24 major dairy states. Only six states recorded an all-milk price in April that was no different or better than April 2025. So we still have some work to do. April's feed costs are reflective of a market that is regaining strength, particularly for corn and soybean meal. Price per bushel for corn was up four cents in April from March, but remained 31 cents below April of last year. On the other hand, the price for soybean meal improved $4 in change from the previous month and was up $35 and a quarter per ton from April last year. Looking ahead, the DMC margin forecast for May is predicted to be 51 cents higher than last month's, with both feed costs and milk prices moving in the right direction. As of Thursday of last week, the all-milk price forecast was May for May was up to $21.43 per hundredweight, and the feed cost forecast was also up to $10.38 per hundredweight, bringing the month's DMC margin forecast to $11.05 per hundredweight, which again is beyond indemnity payments. Taking a look at cattle markets with an article by Shaley Stewart on DTN Progressive Farmer after the long three-day weekend, she says there are typically two paths the market expects the cattle complex to trade in the following weeks after. On one hand, packers expect retailers to be aggressively restocking their coolers, which drives boxed beef prices higher and can sometimes cause the Fed cash cattle market to rally as well. On the other hand, there are times when packers have strategically purchased enough Fed cash cattle through the earlier spring months, and the cash market begins to lose some of its steam with June's arrival. Pinpointing where the market falls this year is difficult because, although one would like to be bullish and point to the extremely thin show list of feedlots as a reason why the Fed cattle market should continue to rally, there are other bearish cards currently at play that are affecting the marketplace as well. One of those being that currently working against the complex is the unmatched level of volatility laced through the marketplace. Since falling below the market's 40-day moving average on May 21st, live cattle future traders haven't been able to muster up enough support to drive the contracts back above that threshold. And because the CME continues to widen the market's daily trading limits, the volatility is only going to get worse. Plus, there's that little fact that over the weekend another case of New World Screwworm was found just thirty-one miles from the US Mexico border in a flock of sheep. Finishing up in financial markets, oil prices are rising Monday following the latest fighting to threaten the US-Iran ceasefire. But Wall Street isn't worried, and U.S. stocks are hanging near their record levels. SP 500 added 0.3% to its all-time high set on Friday. The Down Jones industrial average was down 108 points or 0.2%, and the Nasdaq composite was a half percent higher. Both are also coming off records. Majority of U.S. stocks fell, and some of the worst performers were companies with big fuel bills hurt by the rise in oil prices. United Airlines lost 2.4%, and Alaska Air Group fell 2.6% after the price for a barrel of Brent crude oil climbed 5.2% to $95.86. That clawed back a chunk of Brent's loss from last week and means it's still well above its price of roughly $70 from before the war. That expensive oil has already sent inflation higher, which not only increases bills for household, but also pushes up bond yields. High yields worldwide recently have threatened to slow economies and undercut prices for stocks and all kinds of other investments. But hope seems to remain that the United States and Iran will ultimately reach an agreement to reopen the Strait of Hormuz, allowing deliveries of oil to resume from the Persian Gulf and ease the upward pressure on inflation. Keep your fingers crossed. Well, that's all for now. As always, thanks for tuning in. If you found it useful, please subscribe, comment, share, tell all your friends. I'll be back tomorrow with more business news across the ag and financial markets. Until then, I'm Mike Apperman and goodbye from now.