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At the time of publishing, Q2 2026 indemnities had not yet been released by USDA-RMA. As such, the most recent quarter’s indemnity payments in this report are estimated using announced class and component prices and milk yields.
Overview & Key Points
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Estimated indemnities for Q2 2026 averaged $0.10/cwt, down $1.01/cwt from last quarter. After factoring in producer premium costs, which averaged $0.34/cwt, the estimated net to producers was a loss of $0.24/cwt.
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Just under 19.9 billion pounds of milk were covered under DRP during Q2 2026, the second-largest total for the program, behind Q3 2020. 33% of the US milk supply was covered during the quarter.
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Setting aside yield adjustment factors (YAFs) and looking at class pricing alone, only Class III endorsements would have triggered indemnities in Q2 2026. The Class III price settled below the 95% coverage level on 165 of 267 days (62% of the time), whereas Class IV never dropped below the 95% level.
Coverage Performance by Horizon
Note: Q2 2026 Class IV coverage was not offered until March 13, 2025 (the final days of nearby index 5).
Participation and Performance
Impact of Yield Adjustments
The Yield Adjustment Factor (YAF) is calculated as the state or pooled production region’s actual yield released in USDA’s Milk Production report divided by the expected yield at the time of coverage. The YAF can have a positive or negative impact on indemnity payments:
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YAF > 1: When the actual yield is greater than the expected yield, the potential indemnity is reduced.
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YAF < 1: When the actual yield is less than the expected yield, the potential indemnity is enhanced.
Net to producers is equal to the indemnity paid minus the producer premium. Effective covered milk production is equal to the declared production times the protection factor. Class III versus IV coverage is calculated as the effective covered milk production times the class price weighting factor or the component price weighting factor.
Disclaimer: HighGround Insurance Group (HGIG) is an agency affiliated with HighGround Dairy (HGD). HGIG is a licensed insurance agency in many US states. HighGround Dairy is a division of HighGround Trading (HGT), an Introducing Broker (IB) registered under United States Laws. Nothing contained herein shall be construed as a recommendation to buy or sell commodity futures or options on futures. This communication is intended for the sole use of the intended recipient. Futures and options trading involves substantial risk and is not suitable for all investors. Past performance is not necessarily indicative of future results.
