The monthly margin under the Dairy Margin Coverage (DMC) program in September set its second straight record high at $15.57/cwt, the result of relatively high milk prices and falling feed costs. Meanwhile, U.S. dairy export volumes are recovering from a mid-year slump, achieving in September the second highest percentage of domestic milk solids production for that month.

Monthly milk production grew slightly in August and September, ending a consecutive 13-month stretch during which it remained below year-earlier levels, but increasing milk production remains difficult due to scarce dairy replacement heifers and high costs to build and equp facilities to accommodate bigger herds. Brisk increases in the component composition of producer milk continue to provide a relatively low cost means of increasing supplies to meet available demand that doesn’t require additional animals or facilities.