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 final week of January. Highlights from the most recent report include:
- There were 4,237 Dairy-RP policies sold with active endorsements through the week ending Jan 31st, up 33 from the previous week. Wisconsin led all states in the number of policies sold with active endorsements, followed by Minnesota, California and Michigan.
- Dairy-RP policies sold through the week ending Jan 31st have covered a total of 63.7 billion pounds of milk, the equivalent of 14.4% of total 2019-2020 USDA projected milk production volumes. 94.4% of all milk covered has been at the 95% coverage level. California led all states in pounds of milk production covered within the Dairy-RP program through the week ending Jan 31st, followed by Wisconsin, Idaho and Minnesota.
- 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. More recently, 12-month rolling average Class III Milk volumes figures reached a 28 month high level during the final week of Jan ’20, while 12-month rolling average Class III Milk open interest figures declined to a record low level.
Additional Report Details
Policies Sold:
There were 4,237 Dairy-RP policies sold with active endorsements through the week ending Jan 31st, up 33 from the previous week. The increase in Dairy-RP endorsements remained below historical average levels for the sixth consecutive week but was the largest increase in endorsements experienced throughout the six week period.
Dairy-RP policies have been sold throughout 45 states through the week ending Jan 31st. Policies with active endorsements have been sold throughout 41 states, led by Wisconsin, Minnesota, California and Michigan. Wisconsin has accounted for over 30% of all policies sold with active endorsements through the week ending Jan 31st.
Pounds Covered:
Approximately 63.7 billion pounds of milk have been covered through the Dairy-RP program through the week ending Jan 31st, which is the equivalent of 318,500 Class III milk contracts. The weekly increase in pounds covered was the largest on record. 94.4% of all milk production covered has been at the 95% coverage level through the week ending Jan 31st.
California led all states in pounds of milk production covered within the Dairy-RP program through the week ending Jan 31st, followed by Wisconsin, Idaho and Minnesota. The aforementioned states combined to account for over 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. More recently, 12-month rolling average Class III Milk volumes figures reached a 28 month high level during the final week of Jan ’20, while 12-month rolling average Class III Milk open interest figures declined to a record low level.
Dairy-RP milk production volumes covered through the week ending Jan 31st were equivalent to 14.4% of total 2019-2020 USDA projected milk production volumes. For comparison, CME Class III Milk open interest as of the week ending Jan 31st was equivalent to just 0.9% of total 2019-2020 projected production volumes.