LUBBOCK, TX – Dairy producer margins improved in June, but the National Milk Producers Federation warns the cushion could shrink enough to trigger Dairy Margin Coverage payments later this summer as milk prices weaken and feed costs rise.
The June margin increased 26 cents to $10.88 per hundredweight. The All-Milk price slipped to $21.10, while feed costs fell to $10.22, providing enough relief to keep margins above the $9.50 maximum coverage threshold.
Conditions may become less favorable in August. Current forecasts indicate the margin could fall below $9.50 as higher feed costs combine with softer milk prices.
Corn prices fell in June, while soybean meal remained considerably above year-ago levels. Feed-market volatility could therefore remain an important driver of producer profitability.
For dairy farms, the outlook suggests margins could tighten even while milk production remains strong, increasing the value of risk-management coverage during the second half of 2026.
Farm-Level Takeaway: Dairy margins remain positive, but rising feed costs and softer milk prices could bring coverage payments back into play.