National Milk dairy economist Roger Cryan has raised his May Milk Income Loss Contract Payment (MILC) projection. He had projected something around 12 cents per hundredweight last week but, based on the latest NASS product prices, he has raised his projection to 17 to18 cents. The April payment was 21 cents.
Cryan estimates that dairy producers will receive about $30 million in MILC payments this year, down from the $1 billion in 2009. He sees no additional MILC payments for the next two years, based on what current futures are indicating. This is despite some weak projected milk feed margins, according to Cryan.
A milk feed cost adjustor was added to the MILC program in the last farm bill, he admitted, an improvement, he said, but “that adjustor only covers a fraction of the feed cost increases we’ve seen and leaves producer margins exposed when corn is as high as $3.80 and soy is $9.50.
Existing legislation mandates the MILC program run until September 2012 and, as things look right now, Cryan does not project any payments for the rest of the program although he admits things change and “this program does respond to the markets.” Cryan’s updates are posted here.