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Dairy Revenue Protection (Dairy-RP) premiums have been influenced by recent Chicago Mercantile Exchange (CME) price action and option volatility. There are two major components for determining premiums:

1. Relative price: Are prices high or low?

2. Volatility: Are prices calm and in narrow ranges or are they more volatile?

Federal Milk Marketing Order (FMMO) administrator reports show producer price differentials (PPDs) were mostly positive for December milk marketings. However, extremely negative PPDs and other issues during 2020 have prompted increasing calls for FMMO reform.

Digest Highlights

• Dairy farmers gain improved access to PPP
• USDA solicits bids for cheese sticks
• General Mills’ characters adding milk mustaches
• Barometer reveals improved economic sentiment
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The USDA raised milk production forecasts for both 2020 and 2021. While 2021 annual average Class III and all-milk prices are expected to dip below 2020 levels, the latest projections improved more than $1 per hundredweight (cwt) from last month’s forecast. For dairy producers, however, soybean meal and corn prices are expected to climb.

For the first time in more than a year, monthly dairy product exports fell below year-earlier totals in November 2020, ending a consecutive growth streak at 14 months. Nonetheless, both 2020 export volume and value have already surpassed 2019 year-end levels with one month to go. Here’s a look at the topline numbers from the U.S. Dairy Export Council (USDEC):