Executive Summary

Dairy Revenue Protection (Dairy-RP) participation figures provided by the USDA Risk Management Agency (RMA) were recently updated with values spanning through the fourth week of October. Highlights from the most recent report include:

• There were 3,641 Dairy-RP policies sold with active endorsements through the week ending Oct 25^th, up 37 from the previous week. Wisconsin led all states in the number of policies sold with active endorsements, followed by Minnesota and Michigan.
• Dairy-RP policies sold through the week ending Oct 25^th have covered a total of 47.39 billion pounds of milk, the equivalent of approximately 236,900 Class III milk contracts and 10.8% of total 2019-2020 USDA projected milk production volumes. 93.2% of all milk covered has been at the 95% coverage level. Wisconsin has led all states in pounds of milk production covered within the Dairy-RP program through the week ending Oct 25^th, followed by California, Idaho and Minnesota.
• CME Class III Milk volume and open interest figures increased substantially following the initial wave of Dairy-RP sign-ups. CME Class III Milk volume figures have trended back towards levels experienced prior to Dairy-RP sign-ups but finished at a five week high during the week ending Oct 25^th. Class III Milk open interest figures declined to a nine year low during the first week of August, prior to rebounding over more recent weeks of data, finishing at a 17 week high during the week ending Oct 25^th.

Additional Report Details

Policies Sold:

There were 3,641 Dairy-RP policies sold with active endorsements through the week ending Oct 25^th, up 37 from the previous week. The increase in Dairy-RP endorsements was the second smallest experienced throughout the past seven weeks, finishing below historical average figures, however prices were only quoted three days of the week due to the USDA milk production and cold storage reports.

Dairy-RP policies have been sold throughout 45 states through the week ending Oct 25^th. Policies with active endorsements have been sold throughout 40 states, led by Wisconsin, Minnesota and Michigan. Wisconsin has accounted for nearly one third of all policies sold with active endorsements through the week ending Oct 25^th.

Pounds Covered:

Approximately 47.39 billion pounds of milk have been covered through the Dairy-RP program through the week ending Oct 25^th, which is the equivalent of 236,900 Class III milk contracts. 93.2% of all milk production covered has been at the 95% coverage level through the week ending Oct 25^th.

Wisconsin has led all states in pounds of milk production covered within the Dairy-RP program through the week ending Oct 25^th, followed by California, Idaho and Minnesota. The aforementioned states combined to account for over one half of all pounds of milk production covered within the Dairy-RP program.

CME Volume & Open Interest:

CME Class III Milk volume and open interest figures increased substantially following the initial wave of Dairy-RP sign-ups. Class III Milk volumes reached a 22 month high during Oct ’18 while Class III Milk open interest reached a 19 month high during Feb ’19. CME Class III Milk volume figures trended back towards levels experienced prior to Dairy-RP sign-ups until increasing to a 33 month high level during the third week of September. Class III Milk volume figures finished at a five week high during the week ending Oct 25^th. Class III Milk open interest figures declined to a nine year low during the first week of August, prior to rebounding over more recent weeks of data. Class III Milk open interest figures finished at a 17 week high during the week ending Oct 25^th.

Dairy-RP milk production volumes covered through the week ending Oct 25^th were equivalent to 10.8% of total 2019-2020 USDA projected milk production volumes. For comparison, CME Class III Milk open interest as of the week ending Oct 25^th was equivalent to just 1.0% of total 2019-2020 projected production volumes.